By John Fleck, Albuquerque Journal Science Writer
Tuesday, 12 May 2009 15:22
Pension benefits are not as big a policy issue as nuclear weapons design and manufacturing, but they may turn out to be one of the big hidden land mines for Sandia and Los Alamos National Laboratories in the 2010 budget year and beyond. The question is how the major contractors who run National Nuclear Security Administration sites, including Los Alamos and Sandia, will meet ongoing defined benefit pension obligations given the way the huge market downturn has eaten away pension plan assets.
Sandia's plan lost 25 percent of its value last year, according to Mark Biggs, who manages program for Sandia. In the past, earnings on the plan's assets generated enough money to pay benefits to 6,500 beneficiaries (Sandia retirees and their surviving spouses). Sandia has already had to contribute $25 million last year, and is contributing another $50 million this year, Biggs said. The money comes directly out of Sandia's budget. It has not been given any addition money by NNSA to cover pension costs.
Nationwide, the NNSA has set aside $122 million for next year to try to deal with the problem, NNSA chief Tom D'Agostino told reporters during a budget briefing last week as the budget was being rolled out. According to budget documents, $64 million of that will go to nuclear weapons design and production sites (such as Los Alamos and Sandia), with the rest going to contractors that support the Navy's nuclear power reactors. It's not clear at this point how large the total obligation is, or how much will come via extra money from the federal government and how much the labs will have to pay by moving money within their existing budgets (as Sandia has thus far done).
Biggs said uncertainties about the market make it impossible to predict how much money will be needed. The NNSA budget request puts it this way: "Whether additional funding will be needed in future years will depend on the funded status of the plans based on plan investment portfolios managed by the contractors as sponsors of the DB pension plans."