In response to General Motors’ announcement that it will end
traditional defined-benefit pension plans for its white collar workers,
Citizens Against Government Waste (CAGW) urged the federal government to
immediately reform how it reimburses contractors for their
post-retirement costs, including defined benefit plans. As CAGW pointed
out in its February 9, 2012 report,
these changes could save taxpayers billions of dollars without
adversely impacting national security or essential federal programs.
An April 2011 Government Accountability Office (GAO) report
reviewed the costs of contractor post-retirement benefits at the
Department of Energy (DOE). Under federal accounting standards, the
government is responsible for paying certain costs of these benefits,
which include pensions and healthcare. The GAO report noted that “DOE’s
costs for reimbursing contractor pension and other postretirement
benefits have grown since 2000 and are projected to increase in coming
years.” Over the past 10 years, DOE’s annual costs have ranged from $43
million in 2001 to $750 million in 2009. They have increased by an
average of 8 percent annually and should increase by 9 percent annually
over the next five years, according to GAO. In 2010, contractors
received $3.3 billion in payments for post-retirement benefits, and
DOE’s liability over the next 10 years could reach $36.7 billion.
While
the DOE is the only agency to have produced data on its pension
liabilities, the reimbursement requirement covers the entire federal
government. The New York Times reported
on June 15, 2011, that the President’s fiscal year 2012 budget
requested $547.9 million for NASA to pay the pensions of thousands of
workers at the United Space Alliance, a joint venture of Lockheed Martin
and Boeing to operate the now-extinct space shuttle, ensuring that
taxpayers’ money will be disappearing into the atmosphere long into the
future. Senate Armed Services Committee Chairman Carl Levine (D-Mich.)
and Ranking Member John McCain (R-Ariz.) wrote a letter to GAO on
December 7, 2011, requesting a report on post-retirement benefit costs
at the Department of Defense.
The
increased expense for post-retirement costs has been caused by low
interest rates, larger numbers of retirees, and poor stock market
performance. In other words, if the market goes down, the taxpayers’
liability goes up.
“Taxpayers
(and even Washington insiders) will be shocked to learn about this
practice, which has not been widely publicized, and which certainly does
not take place anywhere outside of the federal government,” said CAGW
President Tom Schatz. “It is hard to imagine one business owner telling
another business owner, ‘you can buy my products but you have to cover
my employees’ retirement benefits for the rest of their lives.’”
“Unsustainable
pension costs were among the principal drivers of General Motors’
alarming losses prior to its enormous taxpayer bailout, and the company
is appropriately trying to right-size its liabilities,” added Schatz.
“The federal government should curtail its expenses for contractor
post-retirement costs by eliminating reimbursement for the costs of
defined benefit plans for new employees, among other suggested reforms.”
Citizens
Against Government Waste is a nonpartisan, nonprofit organization
dedicated to eliminating waste, fraud, mismanagement and abuse in
government.
(No Ratings Yet)
Loading …
Posted in 
Add to Google
In the scheme of things the federal – Congress – needs to look more closely at the wages and benefits contractors receive. When congress and our current president are trying to drop all the budget balancing on the backs of federal employees, it really hurts moral for federal employees. No wonder a lot of them are leaving government and going to work in the private sector. Oh, and, by the way a lot of private sector employees have really good pension plans as compared to federal workers. I thought GM took a bail out and Ford was the only car maker who rejected one. I read the other day that GM/Chevy are offering $7K bonuses to their employees for keeping the company from going under. Gee, didn’t we all help keep them afloat? It’s time to get some folks in Congress and White House who know how the common folks feel and who can run our country in a better way. I feel our government has stopped being a government “of the people, for the people, and by the people.” It’s time to take our coountry back and stop giving to all those who think they are so entitled to everything. Work for it people.
Try clicking into the linked words and you’ll find all the facts, of course if you’re a liberal facts mean nothing and won’t dissuade you from what you know regardless of how wrong you are.
“As the market goes down, the taxpayer liability goes up”. In 1999 the CAGW wanted to shut down SS ( http://membership.cagw.org/site/PageServer?pagename=reports_socialsecurity) If they got there way, the market crash from 1999 to 2012 would have destroyed the assets of SS. With SS fund totally broke where do you think millions of middle class baby boomers would have been forced get the money from? While the great benefits the unionized GM employees got, contributed to GM’s issues, it was small minded selfish upper management that did the most damage. These same type of people, spew ‘information’ from the CAGW.
boy what a joke, lets see some actual information before any discussion, this just incites riot without any rhyme or reason…
This is something as a federal employee that I didn’t know. Why are we paying any benefits to anyone that is contracted. We should pay the cost of the project and nothing more, this is a crime in my opinion. Like the article says, who else does this?? This is the first thing that needs to stop. Then cut federal employee’s if need be but cut out that kind of thing first.
CAGW may have taken notice of the payment of contractor pension plans by Govt Contracts, but this practice has been blessed by current and past acquisition regulations. Those regulations are primarily in Cost Principles and Cost Accounting Standards, and they are published for public comment before issued.