<nobr>May 16, 2006</nobr>

Major Employer Group Supports Effort to Block DOE Benefits Mandate

The ERISA Industry Committee, May 15, strongly urged House Committee on Appropriations Committee Chairman Jerry Lewis (R-CA) to adopt a subcommittee provision barring the Department of Energy (DOE) from denying contractors reimbursement for the cost of new employees’ defined benefit plans and health care coverage.

The subcommittee’s action would block a new mandate, announced by the Department of Energy on April 27, denying reimbursement for costs associated with providing defined benefit pension plans and comprehensive health coverage for new employees of department contractors. The mandate would arbitrarily force contractors to provide only 401(k) and profit-sharing plans to new hires, and compels contractors to replace comprehensive health care coverage with so-called “market-based” health plans.

In the letter, ERIC’s President Mark Ugoretz called the new policy “unsound” and “an inappropriate” use of the agency’s regulatory authority. The letter said the policy marked an “ominous signal” regarding the Administration’s support for voluntary benefit plans and raises questions about the Administration’s long-standing opposition to benefit mandates.

“ERIC strongly applauds the subcommittee for making it clear that Congress supports the voluntary benefit system that allows employers to design benefits that serve both their business needs and the needs of their employees,” said Ugoretz.

ERIC’s letter charged “the DOE action establishes a precedent that would allow government agencies to advance a patchwork quilt of benefit design preferences through its procurement procedures. This wholly inappropriate agency action effectively overrides an employer’s freedom to design benefits that meet its particular workforce needs, undercuts the ability of employers to provide uniform benefits to its employees, and subjects employers and employees alike to arbitrary and changing directions of multiple agencies that will cause confusion, undercut long term retirement planning and pose conflicting demands on employers who contract with multiple agencies.”

Neither federal nor state procurement rules should be used to advance backdoor benefit design preferences by a government agency, according to Ugoretz. “DOE’s action would effectively curtail an employer’s freedom to design benefit programs that best meet the needs of their workforce.”

ERIC’s letter noted that the policy exacerbates the problems of volatility and uncertainty — the very issue that DOE claims is the underlying reason for the change.

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ERIC is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America’s largest employers. ERIC’s members provide benchmark retirement, health care coverage, compensation and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members’ ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.


Text Files:

ERIC Letter to House Appropriations to Block DOE Benefits Mandate

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