Assessment of Pension Benefits for Contractors' Employees in Hanford, Washington

Pursuant to a congressional request, GAO reviewed pension plans for contractors' employees at the Department of Energy's (DOE) Hanford Project. Over the past several years, the contractors and the Hanford Atomic Metal Trades Council (HAMTC), as well as DOE, have disagreed on the adequacy of pension benefits for the employees. The disagreement primarily concerns whether the DOE change from a single to a multiple contractor program at Hanford has caused a loss in pension benefits for employees represented by HAMTC. The Hanford Project was originally operated by one contractor, the General Electric Company (GE). When GE decided to leave Hanford, the former Atomic Energy Commission (AEC) adopted a multiple contractor program. Under the program, which DOE has continued, many private firms have operated the facilities and provided services formerly operated or provided solely by GE. Many former GE employees transferred to the successor contractors and remained employed at Hanford. GAO was asked to determine whether: (1) each successive contractor at Hanford had given credit to employees for continuous service; and (2) retiring employees are being given credit for all of their years of service.

First, HAMTC officials stated that AEC and the contractors did not give former GE employees adequate information on the consequences of not joining the A.E.C. Group Annuity Plan or of withdrawing from the plan. GAO found that the sample letter and other information sent to the former GE employees indicated that the obligation to educate the employees about their pension rights, benefits, and options was reasonably met. Second, HAMTC officials stated that the DOE pension arrangement with successor contractors have failed to preserve and protect the continuity of Hanford employees' pension benefits. GAO found, however, that the contractors are giving Hanford employees credit, for vesting purposes, for past and current service and that the DOE pension arrangements appear to protect the accrued pension benefits and vesting rights of employees transferring to the successor contractors. Third, HAMTC officials disagreed with a DOE study which indicated that Hanford employees will receive pension benefits from the successor contractors which are equal to or greater than the benefits which GE would have provided. During the GAO review, HAMTC and the contractors signed a new labor agreement and, as part of the agreement, HAMTC accepted the contractors' pension benefit increases. Nevertheless, GAO found that the calculations in the DOE study were accurate. Overall, GAO concluded that retirees are receiving pension benefits higher than they would have received had they remained and retired under the GE pension plan.