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DOE may reinstate contractor DB policy: Consultant


WASHINGTON--The U.S. Department of Energy intends to reinstate a now-suspended policy of not reimbursing its contractors for defined benefit pension plan costs associated with new employees, benefit consultant Watson Wyatt Worldwide said.

Last April, the DOE said that for new employees it would reimburse contractors only for costs associated with defined contribution plans, such as 401(k) plans, so long as the costs of those plans didn't exceed certain benchmarks.

At the time, the DOE said the new policy would "improve the predictability of contractor benefit costs and mitigate the growth" of the department's liabilities. The policy was supposed to have gone into effect this year.

But the DOE's action was short-lived. In June, it suspended the pension reimbursement policy. During the suspension, the DOE said it would consult with stakeholders, including Congress, on the issue. The suspension occurred after the House of Representatives approved an appropriations bill with an amendment to bar the DOE from implementing its new pension reimbursement policy.

But Watson Wyatt says the DOE may be moving to lift the suspension. The Arlington, Va.-based benefits consulting firm says the DOE has, in recent weeks, been "briefing contractors on the policy and indicating it will be implemented."

A DOE spokeswoman, though, said no decision has been made, noting that the it is currently "engaging stakeholders to solicit their input" and adding that benefit consultants have a "vested financial interest in this issue" because they provide traditional pension plan consulting services.

The spokeswoman said the DOE now is trying to find ways to ensure the long-term stability of contractors' retirement benefit programs, while managing the department's long-term financial commitments.

Gene Wickes, a Watson Wyatt consultant in Denver, said in a statement that "the federal government should not dictate the types of plans that employers can and cannot offer to employees."