Frequently Asked Questions
1. What are the employee and employer contributions to the defined benefit plan for fiscal year 2012?
A. Employer pension contributions will be $20 million for fiscal year 2012 and employee contributions will be 5 percent of pay. Contributions will begin in June.
2. Who is affected?
A. Employee contributions apply to only those employees who selected TCP1 during contract transition.
4. Why are pension contributions required?
A. Pension plan contributions are legally required based on the plan's assets and obligations.The assets are the cash, stocks, and bonds owned by the plan. The obligations are the amounts that the plan owes to participants - the stream of pension payments that current and future retirees (and their beneficiaries) will receive.
When a pension plan's funding ratio drops such that its assets are insufficient to cover the present value of its current obligations, contributions to the plan are legally required. The present value of the current obligations is a calculation performed by the plan's actuaries to determine the amount of dollars required today (including interest earned) to make the stream of pension payments to the plan's current and future retirees. This calculation is complex and takes into account expected years of service, age at retirement, salary, lifetime, etc.
Employee and employer contributions will help offset future payment obligations. For more information, refer to the Director Parney Albright's column.
5. Is my contribution pre-tax or after-tax?
A. The level and type of contributions permitted in the plan are governed by the Employee Retirement Income Security Act (ERISA). Under ERISA law it is required that participant contributions be made on an after-tax basis. As a result, a portion of the future retirement income that you receive that is attributable to your after-tax contributions will be tax free.
6. What happens to my contributions?
A. Participant contributions made to the plan will be tracked by Aon Hewitt and attributed to employees as required. At the time of retirement Aon Hewitt will provide participants with the necessary tax documents to identify the taxable/non-taxable portion of the benefit. The LLNS Defined Benefit Pension Plan is a retirement plan that provides a pre-determined retirement benefit to participants based upon a formula that includes factors of age, credited service and salary. The benefit is a promised lifetime monthly income that funded by a combination of employer contributions, employee contributions and plan asset accumulations.
7. How secure is my pension?
A. With a defined benefit plan the employer is legally required to make sure there is enough money in the plan to pay the guaranteed benefits. As a contractual commitment, DOE is responsible for funding the employer portion of contributions. In addition, defined benefit plans are the only type of pension insured by the Pension Benefit Guarantee Corporation (PBGC). The insurance works similarly to the federal deposit insurance that backs up bank accounts.
8. Can I opt out of TCP1 or transfer to TCP2?
A. No, you may not opt out of TCP1 or transfer to TCP2.
This BLOG is for LLNL present and past employees, friends of LLNL and anyone impacted by the privatization of the Lab to express their opinions and expose the waste, wrongdoing and any kind of injustice against employees and taxpayers by LLNS/DOE/NNSA. The opinions stated are personal opinions. Therefore, The BLOG author may or may not agree with them before making the decision to post them. Opinions not conforming to BLOG rules are deleted. Blog author serves as a moderator. For new topics or suggestions, email firstname.lastname@example.org
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