The Evolution of Contractor Pension Plans

Union Carbide Chemicals Company (UCC), through its subsidiary Union Carbide Nuclear Division (UCND), was the prime managing contractor for the Department of Energy's Oak Ridge facilities from January 1, 1946, through March 31, 1984.  In keeping with common practice within the chemical industry at that time, UCC established a defined-benefit pension plan for its employees. The pension plans in existence among Oak Ridge contractors today are direct descendents of the UCC plan.

There is a major difference in the manner in which the original pension plan was administered and the manner in which today's plans are administered—the original plan adjusted for increased costs of living, but the current plans do not.  While UCC did not include cost-of-living adjustments as we know them today, it did monitor changes in the purchasing power of the pensions of its retirees and made ad hoc adjustments to counter lost value.  Adjustments were made when the loss of pension value became sizable, rather than on a scheduled basis.  Five such adjustments were made between June 1969 and August 1980.  These adjustments restored a large fraction, but not all, of the purchasing power that retirees' pensions had lost.

Martin Marietta Energy Systems (later named Lockheed Martin Energy Systems) became the prime managing contractor of Oak Ridge facilities on April 1, 1984, and continued until March 31, 2000.   Only two pension adjustments were made during the MMES/LMES 16-year tenure.   Management of environmental cleanup programs was transferred to Bechtel Jacobs in 1998 and then to UCOR in 2011.  Security services was contracted with Wackenhut Services, Inc., in 2000 and then to NSPS in 2012.  UCOR and NSPS have management responsibility for approximately 7 percent of the retiree population.

In 2000, UT-Battelle and BWXT (now B&W Y-12) were selected as prime contractors for Oak Ridge National Laboratory and the National Security Complex, respectively.   At that time, pensions of retirees of both ORNL and Y-12 were administered under a Multi-Employer Pension Plan (MEPP), which was managed by BWXT and which served approximately 93 percent of the total retiree population.  There have been only two pension adjustments for MEPP retirees since 2000, one of which corrected partially for inflationary losses in value.   The other adjustment established a minimum level of pension for retirees and surviving spouses.  Approximately 10 percent of the retiree population was granted an increase at that time in order to meet the new minimum.

On September 1, 2010, administrative responsibility for the MEPP was divided such that ORNL and B&W Y-12 assumed responsibility for management of their own retirement benefits plans.   Assets and liabilities of the MEPP trust were divided actuarially and placed in two new trusts, in keeping with the respective retiree and employee populations of the two organizations.  Retiree benefits were not altered as a result of this change in management responsibility.

The pensions of retirees who had formerly been employed by a single contractor have now become the responsibility of four separate contractors.

Post-Retirement Adjustment History

Listed below are the ad hoc pension adjustments implemented under the pension plan provided for retirees of prime operating contractors in Oak Ridge.   The operating contractor at the time of each adjustment is identified, along with the implementation date of the increased benefit, the cut-off retirement date of those who received the increase, and the range of percentage increases (which were apportioned according to year of retirement).  The 2004 adjustment, unlike the preceding general adjustments, established a minimum monthly pension of $600 for retirees and $400 for surviving spouses.  The minimums affected approximately 1,200 retirees and survivors, or about ten percent of the total retiree population.

*$10 minimum to $25 maximum for retirees; half that for surviving spouses.

**$10 minimum to $25 maximum for retirees; half that for surviving spouses.

***Required at least 20 years of credited service to qualify for increase.