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Coalition of Oak Ridge Retired Employees (CORRE)
Working for Fair, Equitable, and Competitive Benefits
For Former K-25, Y-12, and ORNL Employees
P. O. Box 4266
Oak Ridge, Tennessee 37831-4266
October 12, 2007
Mr. George Dials
President and General Manager
BWXT Y-12, MS 8002
P. O. Box 2009
Oak Ridge, Tennessee 37831
Dear Mr. Dials:
Our Recent Meeting at Y -12
Thank
you for meeting with representatives of the Coalition of Oak Ridge
Retired Employees (CORRE) on September 12, 2007. We appreciated the
opportunity to review with you CORRE’s goals as outlined in our 2007
Position Paper, particularly our requests for an ad hoc pension
adjustment to restore at least 75 percent of lost buying power due to
inflation and a flat rate reduction factor of 2 percent for retirees
who elected the surviving spouse option prior to July 2004.
As
noted during the meeting, there have been no contributions to the
BWXT/UT-Battelle Pension Plan since 1984. Over the years, the trust
fund has consistently maintained positive funding levels in spite of
several very severe economic downturns. And the plan continues to
perform well today. The most recent Towers Perrin valuation effective
January 1, 2007, disclosed a fund surplus of $692 million with a
funding status of 128.59 percent. Given the increase in total assets
since then, we estimate the current surplus to be about $800 million.
The last adjustment was implemented in April 2001, but was limited to
those who retired prior to April 1998. In the meantime, inflation
continues to eat away at retiree pension benefits.
We understand
your concern with budgetary problems, which have been and continue to
be a way of life in Oak Ridge. However, distributions from the pension
plan do not directly affect operating budgets unless the distributions
create a funding need. We are also aware that the Pension Protection
Act (PPA) will require more conservative actuarial assumptions having
some negative impact on the funding status of the plan. Based on the
many years of excellent financial performance, we remain confident the
plan will continue to produce a substantial surplus even with the added
liabilities. But whatever the outcome, retirees cannot in good
conscience be abandoned because of funding considerations.
An
issue which we briefly mentioned during our meeting but did not discuss
in detail had to do with the Medicare Part D Drug subsidy. In May
2006, UT-Battelle requested approval from the Department of Energy
(DOE) to apply the subsidy to the Major Medical Medicare Supplement
Plan so as to reduce the total premium cost for the employer and
retirees, an obvious win-win situation for both parties. In a letter
dated June 19, 2006, DOE denied the request, citing a violation of DOE
Notice 351.1 and certain other restrictions under the contract. We were
informed that BWXT, in view of DOE’s rejection of UT-Battelle’s
request, understandably decided not to make application. However, we
have also learned that Sandia and LANL may have been approved by DOE to
apply the subsidy. If you have information regarding the use of the
subsidy at those installations and could share it with us, we would be
greatly appreciative.
CORRE is fully committed to achieving the
two adjustments. Our request for a general adjustment for all retirees
is in keeping with a long history of periodic adjustments, dating all
the way back to 1969, designed to partially restore inflationary
losses. The 2 percent flat-rate reduction factor, which was approved
for all active employees in July 2004, should be extended to retirees
as a matter of internal equity and fairness. The combined requests are
well within the means of the pension plan.
I look forward to working with you and your staff on behalf of 12,000 retirees and survivors.
Sincerely,
David E. Reichle |
