The U.S. Department of Energy will stop reimbursing expenses for defined benefit coverage for new contractor employees, according to a new policy announced April 27.
The department "will reimburse contractors for the costs of their market-based defined contribution pension plans (similar to 401(k) plans) and market-based medical benefit plans," the department said in a statement. "The new policy will improve the predictability of contractor benefit costs and mitigate the growth of the department's long-term liabilities for these costs."
The department will continue to reimburse contractors for pension costs for current and retired employees.
Watson Wyatt criticized the new policy, saying it will undermine the ability of government contractors to provide guaranteed retirement benefits. "For decades, public policy has supported the notion that the best way to ensure Americans' retirement security is through guaranteed pensions," Sylvester J. Schieber, director of U.S. benefits consulting at Watson Wyatt, said in a statement. "We find it curious that a government agency is threatening the retirement security of workers outside their department. Meanwhile, U.S. government workers themselves retain a rich, secure pension plan."
Megan Barnett, department spokeswoman, didn't return a call seeking further information.