US - The Department of Energy (DOE)'s decision to no longer reimburse expenses associated with the defined benefit pension plans of new contractor employees has been slammed for encouraging the decline of DB.
Industry experts have complained the agency is actively encouraging employers to switch away from traditional DB plans, because it said it would continue to reimburse contractors for costs of their defined contribution pension plans (similar to 401(k)) for new contractor employees.
Secretary of Energy Samuel W Bodman said the new policy would ensure future costs for benefits were more consistent with market trends.
But George Miller (pictured), senior democrat on the House Education and the Workforce Committee, said the DOE’s announcement proved the Bush administration was “actively supporting” the decline of traditional pensions.
“The Bush administration wants to encourage companies to dump their traditional pension plans and privatise Social Security, and then tell workers they are on their own,” he said.
Sylvester J Schieber, director of US benefits consulting at Watson Wyatt, said the government agency was forcing private employers to provide only do-it-yourself, 401(k)-style plans, a move he described as outrageous.
For decades, public policy has supported the notion that the best way to ensure Americans' retirement security is through guaranteed pensions. We find it curious that a government agency is threatening the retirement security of workers outside their department,” he commented.
Permanent civilian employees hired by the DOE next year will be eligible to participate in the DB Federal Employee Retirement System (FERS).
The department will continue to reimburse contractors for costs for current and retired contractor employees’ defined benefit pension plans under existing contract requirements.
By Lisa Haines
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.