Cost Accounting
Department of Energy's Management of Contractor Pension and Health Benefit Costs Gao ID: AFMD-90-13 August 29, 1990Pursuant to a congressional request, GAO reviewed Department of Energy (DOE) policies and practices regarding the reimbursement of contractors for the costs of their employees' pension and retiree health plans.
GAO found that: (1) DOE allowed contractors to establish the amount of their contributions to employee plans, as long as the contributions fell within the minimum and maximum guidelines set by law; (2) a 1987 DOE study indicated that 20 contractors had pension assets of $2 billion, about $600 million above the value of the accrued benefits; (3) DOE lacked a formal funding policy regarding contractors' pension plans, and did not systematically determine the allocation of its resources to contractors' pension plans; (4) pension plans that are funded above plan liabilities could lead to such problems as distorted pension costs, program overcharges and undercharges, participant pressure for increased benefits, and the use of pension funds to finance health care costs; (5) DOE required contractors to have site-specific pension plans or to separate accounting for pensions from contractor employees and commercial employees; (6) DOE did not ensure that contractors followed its policy that employees who transfer between plans receive a payment from each plan; (7) DOE policy did not address all aspects of postcontract payments for pension plans; and (8) DOE financial audits of contractors' site-specific plans were limited and resulted in disclaimers of opinion, limiting DOE management oversight and control over pension plan assets.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
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