<nobr>Jun 20, 2006</nobr>

DOE Withdraws Defined Benefit Pension Preclusion Under Pressure From Employers and Congress

Washington, D.C.— The ERISA Industry Committee (ERIC), a Washington, D.C. trade association comprised of the nation’s major employers, applauds Secretary of Energy Sam Bodman for suspending a policy change that would have denied Department of Energy contractors reimbursement for certain benefit plan designs, including defined benefit pension plans and comprehensive health care coverage for new employees.

In letters addressed to Senators who had expressed concern over the change, Secretary Bodman announced that he had directed the Department’s Office of Management to suspend for one year the reimbursement policy announced April 27 in DOE Notice 351.1 and to consult with stakeholders, including Congress, during the coming year to solicit their views on the issue.

“The decision to suspend the policy represents a real victory for workers and employers,” said ERIC President Mark Ugoretz. “The policy would have arbitrarily precluded contractors from offering workers the retirement security that a defined benefit pension can provide. DOE’s action would have effectively precluded an employer from designing benefit programs that best meet the needs of its workforce.”

In a May 15 letter to House Committee on Appropriations Chairman Jerry Lewis (R-CA), 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.

In both the May 15 letter and a June 14 letter to the Senate, ERIC argued that the DOE policy set a dangerous precedent that would allow government agencies to advance a patchwork quilt of benefit design preferences through their procurement policies. “Such actions would undercut the ability of employers to provide uniform benefits to employees,” said Ugoretz.

The House Committee on Appropriations, May 16, approved an amendment to the Energy and Water Development Appropriations bill that prohibited the expenditure of any funds to implement the new reimbursement policy. That bill, with the amendment, subsequently was approved by the full House and is pending in the Senate.

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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.

S. Michael Chittenden
Director, Communications
The ERISA Industry Committee
1400 L Street, N.W., Suite 350
Washington, DC 20005-3509
(202) 789-1400 Fax (202) 789-1120

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