Energy Dept. Asks for Advice on Bringing Down Benefits Liabilities

May 28, 2007 ( - The U.S. Energy Department requested help Tuesday in figuring out how to balance its pension and health care debt with the costs of its other programs, saying that its benefits liabilities for contract employees are expected to grow at a rate that "significantly exceeds likely increases in the department's budget," the Washington Post reported.

In a Federal Register notice signed by Ingrid A.C. Kolb, the department’s director of management, Kolb said the department spent $1.07 billion in 2006 to reimburse pension and medical benefits contractors – a 226% increase since 2000, according to the newspaper. The department said that benefits received by contract employees are higher than the benefits offered to federal and private sector workers because contract employees pay less for their benefits.

According to the Post, the Energy Department had to reimburse 46 contractors, which covered benefits for about 100,000 contract workers and 100,000 retirees, dependents and beneficiaries. The benefits programs include 45 defined benefit plans, 37 defined contribution plans, 23 life insurance plans and about 260 medical benefit plans.

The department, whose current and future debt for the benefits is estimated at $15.8 billion, tried to change its pension and medical benefits by directing contractors to offer “market-based” benefits to new hires (See Energy Department Reverses Decision to Cut Pension Benefits ), but that idea was shot down by a group of legislators and pension experts, who said it wasn’t the government’s place to interfere in employers’ right to choose the benefits they wanted to offer.

Energy officials said they are seeking comments and recommendations from the public and interested parties on how to address the increasing benefit costs of the contract workforce, with the deadline for responses being May 11.

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