Employer contributions to TCP-1.
The following appeared in Newsline today. Are the facts correct? I thought LLNS committed to make the contributions, but never actually made a portion of them.
"Because of this reality, LLNS requested and obtained permission from DOE/NNSA to make a series of employer contributions to the plan beginning in 2012. These contributions, though not legally required by ERISA at the time, were made to ensure the long-term health of the plan and avoid otherwise mandatory (and potentially much larger) contributions in the future, at a time when many more active employees transition to retirement. The Laboratory made a $20 million contribution in 2012, a $40 million contribution in FY13 and received permission from DOE/NNSA to make a $20 million contribution this fiscal year. LLNS will continue to request permission from DOE/NNSA for additional employer contributions as prudent over the coming years. The size and timing of the employer contributions are determined in consultation with Laboratory senior management, the plan actuaries and DOE/NNSA, based on projections of the future funded status of the plan, congressional direction, interest rates, the performance and risks of the investment markets and impacts to the Laboratory's annual operating budget with implications for programs, level of staffing and infrastructure."
26 comments:
Yes
LLNL is not following the contribution schedule they laid out to us in the meeting where they explained we would be contributing.
We've held up our end. They have not.
They can spin all they want. That's a fact. I was at the meeting. I have the slides.
The statement is factual in terms of what they did.
It's deceptive/revisionist/lying-by-omission in terms of what they said they were going to do.
On the plus side, more information is always good. So, seems they are only going to put in $20m this year.
Since that must be driven by actuarial calculations, will they reduce employee contributions by a similar amount (66%) that they reduced their own contributions?
Doubtful. And thus the continuing bad feelings about this.
WOW…that's a big font!
Is the current DOE contribution to the LLNL TCP-1 reasonable?
A swag based on data from memory for comparison.
There are about 3500 employees enrolled in LLNL’s TCP1. If approximately 500 have retired, that leaves 3000 2014 FY contributors. If the average yearly salary of this pool of people is $110k, and this year and they are forced to contribute 7%, then the participating LLNL employees contribute about $23M per year.
How much does this help the plan?
Again from memory, at the end of 2012, LLNL TCP1 had about $2B in assets and had a 10% -15% surplus compared to then current accrued liabilities. If TCP1 assets are allocated 50% to equity and 50% to long-term investment grade debt, the expected returns should average about (½*7% + ½*3%) or 5% above the risk free market rate (currently 2-year treasuries yield about 0.5% but should tend toward the GDP deflator as the Fed tightens monetary policy toward normalcy.) So figure 5.5% - 7% as the expected long-term return on this LLNL TCP-1 asset allocation. If so, $2B brings in $110-$140M per year, and the LLNL employee and employer contributions supplement this with another $20M and $20M respectively. So the yearly $20M employees contribute and the irregular $20-$40M LLNL contributes are together a substantial fraction (20-30%) of the income into the LLNL TCP1 retirement plan.
The question of whether LLNS senior management colluded with DOE to decieve LLNL TCP1 contributors that DOE would make certain stated employer contributions remains open.
Why would they decieve?
A well-timed lie allows DOE/LLNS to avoid the resulting employee uproar that would have occured when forcing active TCP1 participants to resume contributions at a very high rate of 7% of after tax income, while dodging any equivalent financial commitment of the employer, who is responsible for the plan.
Did they say they would contribute more and then renege?
Why would LLNS/DOE bait and switch a larger promised TCP1 contribution?
It is natural given the players.
If an employer contributes twice what the employees do, a normal historical practice in well-managed defined benefit plans, LLNL/DOE would have to contribute about $45M per year, which either comes from DOE allocating a slightly larger budget to LLNL or LLNS managers living on less overhead as the contribution is taken from overhead.
Either way involves pissing contest between DOE and LLNS managers on whose ox gets gored. So instead they decide to gore the employee, who is not represented in the negotiation, by reducing the employer contribution.
And then they generate a bullshit party to present the favor they have done for the employee.
(and these are the same players who at the same time ask you to trust them, work hard and follow them..)
The employee lesson here is watch them very carefully.
And perhaps make it known that you are disgusted and withhold support and loyalty.
Given the current TCP1 surplus, are the employee and employer contributions to LLNL TCP1 required?
This is an essential question, one that has not been adequately addressed by material presented to employees so far.
We estimate, again from memory, that at the end of 2012 the LLNL TCP1 plan had about $2.3B in assets, and about $1.7B in current accrued liablilites, and that the expected income from return on assets, $100- $150 M per year plus another $40-$60M from employer and employee contributions, roughly exceeds the recent yearly increase in accrued liabilities of ~$150M per year.
Whether this is a sufficient or excessive employee/employer contribution depends on the composition of the participant beneficiary pool and requires actuarial calculations that as yet, have not been presented to plan participants. Generally these predictions are confidential. But given that the resumption of LLNL TCP1 participant contributions are both large and significant and that meanwhile DOE/LLNS again appears typically taciturn and duplicitous regarding employer contributions, LLNL participants wonder if they are being fairly treated.
A clear presentation of the actuarial basis for contributions, assumptions, possible outcomes,math, statistics and all, would inform the matter.
Bill is an honest, open, UC-trained guy. When presented with this question it is likely he will direct Hewitt to make a clear, detailed presentation.
I'm a LLNL employee and don't have to work hard for great benefits. I want above average salary and benefits, and above average pension benefits compared to private industry.
I like complaining, but don't realize how easy it is working for an organization that is having a hard time still retaining it's workforce even after the voluntary separation.
I'm not the loser, everyone else is.
How can the same thing be IF NEEDED by the employer and REQUIRED of the employee?
How is this fair?
The basis on which Parney sold the resumption of employee and employer contributions to strengthen TCP1 is now shown by subsequent DOE/LLNS actions to be ENTIRELY FRAUDULENT.
DOE/LLNS plans for putting 14% of salary toward retirement benefits, per LABPRICER, yet puts barely 6%, if needed, yet it requires employees to contribute 7% which after taxes requires 10+% of gross income.
UC at the same time is contributing 11% while employees contribute 7% before taxes.
LLNL employees are being defrauded because they aren't paying attention.
The shortfall if any should be paid by both parties, 1/3 employee, 2/3 employer each year. This is down from 1/6 employee, 5/6 employer under the first 40 years of UCRS. It doubles the employee contribution rate.
Under this plan, if 30 million was required in a year, $10M would come from employees and $20M from the employer. This would have the employee contribution rate from what it is today, and would share the employer contribution as mandatory rather than "if the mandatory employee contribution isn't sufficient".
Otherwise this reads, from now on the TCP1 participants foot most of the costs, "DOE/LLNS NO LONGER REGULARLY AND UNIFORMLY CONTRIBUTES ITS SHARE TO THE DEFINED BENEFIT PLAN".
DOE contributes regularly 9% of salary to TCP2 participants in 401k matching and retirement contribution, but puts less than 6% into the TCP1 shortfall, and requires no contribution of TCP2 folks? While at the same time, UC contributes 11% to the UCRS shortfall, while UC employees contribute 7% gross.
TCP1 folks are being unfairly treated by DOE/LLNS.
so anyway, trust me, work hard and follow me... i value loyalty
Bill G: please notice this. There are 2 issues:
1) Management is not being straightforward with employees on this topic. Some tricky decisions have been made, and the explanations just aren't adding up. The TCP-1 group (your most experienced employees) is getting upset about this.
2) The decisions themselves appear to be "breaking the deal" that TCP-1 folks signed up for. I don't think we expect TCP-1 to be free as it was for a few years. But it appears that the burden of funding it is now falling unreasonably on the participants. Several years ago, this was done because LLNS was betting that interest rates would quickly rebound, and employer contributions in the meantime would be more than required. It hasn't worked out that way, so it's time for LLNS to rethink the strategy and pay their fair share.
You're an honest and straightforward guy, so I know that you don't approve of the present situation. It's time to fix it.
August 14, 2014 at 11:23 AM
1. The most experienced employees took TCP-2 at the decision time.
2.
"burden of funding it is now falling unreasonably on the participants"
Translated: Why should I be expected to participate in my retirement income.
and "so it's time for LLNS to rethink the strategy and pay their fair share".
Translated: I want others to pay for me.
1. Good point. You are, of course, correct.
2. Wrong-o. What I want is for LLNS to make good on the deal that I agreed to long ago when I hired on. Nothing more, nothing less. I am grateful for the time during which I did not have to contribute, and I do not expect that to be the norm. I don't have any problem contributing to TCP-1. But I believe that the numbers show that employees are now paying for a larger fraction of TCP-1 than before, and that is not right. This was advertised by the Director as a temporary measure, made necessary by unusual economic conditions, but it has now become permanent. The current Director should correct this, as a matter of honesty and good business.
You are assuming that "unusual" economic conditions are not the new norm that redefine what a "good" business decision is.
I argue only that the ratio of employee/employer contributions should remain essentially constant, because that was the deal. If economic conditions or actuarial assumptions dictate higher contributions, so be it. But both employee and employer contributions should go up proportionately.
It was first argued that the employer contribution was unreasonably high when actuarial assumptions regarding interest rates were lowered significantly. So LLNS contributed less than what was required, in the interest of avoiding further staff reductions (money paid to retirement system came out of overall lab budget).
But, as you point out, the low interest rates have persisted longer than anticipated, and I think LLNS continues to not provide the required yearly funding dictated by the actuaries, while employees are contributing at a fairly high rate (especially when tax impact is considered). So it's time for LLNS to raise their contribution so they are in roughly the same proportion to employee contributions as before.
Quit whining.
Look at it this optimistically. LLNS will put less into your retirement now.
You will have less cash for retirement later.
Deflation will come.
So you will have more buying power per dollar than you would have had if LLNS help up their share.
It's a wash. You lose money, but same total purchasing power.
Your welcome for brightening your day.
Oh, I get it!
Thanks!
Anyone who trusts the promises of DOE or the highly compensated executive management team running the NNSA labs gets exactly what they deserve.
Without a lawyer on your side -- and the other side has many, believe me! -- you have nothing but empty hot air.
You mean like an imploded NIF target!
NO. LIKE EVERY WORD FROM Tyler PRYZBYLk.
I picked TCP 2 in 2007, the so-called transition year. It just smelled a very bad idea to jump into a drying pool, or being the last new comers in a pyramid scheme.
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