DOE Management

The Energy Department (DOE) funds the employer retirement contribution for about 18,300 University of California employees who work at DOE's three laboratories. Before revisions were made in October 1992, no limits were placed on the amount of DOE's pension fund contributions and the university was not required to obtain DOE approval of changes to pension benefits. Although the University of California retirement plan reached full funding in 1986, the university regents continued to require employer contributions until November 1990. This report examines (1) whether DOE can recover unneeded pension fund payments and (2) whether the provisions in the revised contracts will allow DOE to control its future pension costs and prevent unneeded payments. GAO recommends the renegotiation of several contract provisions to minimize future payments and better protect the government's interest.

GAO found that: (1) unneeded DOE pension payments cannot be recovered from the university because they are required by the contracts and federal regulations specify that funds deposited in approved retirement plans can only be used for the benefit of the plans' members; (2) although surplus assets can be refunded to the plan's sponsor if the plan is terminated, terminating a pension plan has costs and disadvantages that could offset the benefits achieved; (3) DOE may be able to use the pension fund surpluses by using the funds to pay postretirement health benefit costs; (4) the revised contract terms neither increase DOE ability to control how pension fund assets are used nor minimize DOE pension fund contributions; (5) although the revised contracts require the university to inform DOE of any changes that apply to its 92,000 benefit plan members, DOE approval is required only for pension benefit changes that affect DOE laboratory employees; (6) university administrators have made many benefit changes and reduced the pension fund's surplus by $1.5 billion; (7) although DOE is required to make contributions when pension fund assets are less than 150 percent of current liabilities, this requirement exceeds DOE policy requirements; and (8) DOE pension fund contracts with two other universities include few cost controls and place no limits on DOE contributions.

Recommendations

Our 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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