LANL Pensions Underfunded ; UC, Lab’s Plans May Be Separated

By JOHN ARNOLD Journal Staff Writer

A report on the University of California’s retirement plan shows that Los Alamos National Laboratory’s portion of the institution’s famously fat pension fund is slightly underfunded for the first time in years.

Los Alamos National Laboratory employees, who work for lab manager UC, haven’t had to contribute to their retirement plan since 1990. In 2004, the pension’s assets exceeded liabilities by more than $265 million, according to an actuarial valuation report issued to the university last month. But as of last July, Los Alamos’ portion of the retirement plan was underfunded by roughly $54 million, the report states.

The plan, which includes more than $4 billion, is still 99 percent funded, UC officials note.

“That is extremely healthy, and extremely strong and stable,” UC spokesman Chris Harrington said.

But figures show the pension’s funded percentage has been in steady decline since 2001, when it was funded at 137 percent. By 2004 that figure had dropped to 107 percent. The report shows that while the retirement plan’s assets have remained relatively stable over that time, liabilities — anticipated payouts to retirees — have gone up.

The latest retirement plan figures are being reviewed as a new lab contractor prepares to inherit them.

UC’s Board of Regents is scheduled to discuss a proposal at a meeting in San Diego today that would separate LANL employee pensions from the existing UC retirement plan.

If approved by the board and the Department of Energy, LANL employee and retiree pensions would be spun off into a new “cloned” plan. According to the proposal, it would still be managed by the university and will help facilitate the eventual transfer of pensions to a private plan belonging to the new contractor, Los Alamos National Security, LLC.

The incoming manager, a team led by UC and Bechtel National, is required to provide a “stand-alone” pension plan under the new contract, which is set to begin June 1.

While active employees would transfer their pensions to the new contractor’s plan, current retirees and those who retire before June 1 would continue to receive benefits from the new UC-sponsored cloned plan. While the proposal says no employee benefits will be reduced under that plan, it has been criticized by some lab employees who fear it could shortchange current retirees.