At a time when few Americans have any pension to speak of, should taxpayers really be forced to reimburse private contractors for certain benefits, including pensions? The Council for Citizens Against Government Waste (CCAGW) this month issued a letter to the Joint Select Committee on Deficit Reduction citing an April 2011 Government Accountability Office (GAO) report recommending the Department of Energy (DOE) comprehensively review how it manages contractor postretirement benefit costs.
The report notes that over the past 10 years, DOE's annual costs for these benefits have ranged from $43 million in 2001 to $750 million in 2009 and have increased by an average of 8 percent annually. GAO further cautions, “DOE has limited influence over contractor pension and other postretirement benefit costs…DOE nevertheless ultimately bears the investment risk incurred by the contractors.” CCAGW’s letter went on to observe that no similar cost estimates exist for other agencies, such as the Department of Defense, which uses many of the same contractors as DOE. A November 12, 2011 New York Times piece urged Congress to “stop reimbursing the costs of pensions and other retirement benefits at huge, and hugely profitable, defense contractors. Over 10 years, such a move could save an estimated $30 billion – the amount by which these pensions are collectively underfunded.” Read more about CCAGW’s call for a review of taxpayer funding of contractor pensions.