One of the biggest checks NASA plans to write this year — up to $600 million — will cover the retirement costs of civilian employees working on the space shuttle.
NASA already reimburses Houston-based United Space Alliance, a joint-venture of Boeing Co. and Lockheed Martin Corp., for running USA's retirement plans, under the terms of its contract with the private contractor.
Now NASA plans to reimburse USA for its defined benefit plan investment losses.
USA is entitled to be reimbursed for estimated plan investment losses of between $500 and $600 million, Bill Hill, NASA's assistant associate administrator for the space shuttle, said in an interview.
USA announced in October that it planned to terminate the defined benefit plan, which Mr. Hill said is about 50% funded. As of April 30, the plan had $664.7 million in assets, according to Kari Fluegal, a spokeswoman for United Space Alliance.
The plan, which had been closed to new employees since 2006, was frozen effective Dec. 31, 2010, according to an Oct. 21 letter to employees from USA management. USA also offers a 401(k) plan.
NASA budget documents presented to Congress show a $550 million deficit in the plan as of Jan. 1, but note that the total payout needed to cover the deficit could go up or down by the time the plan is formally terminated.
If it were not a federal subcontractor, United Space Alliance would have been forced to make up the pension shortfall out of its own coffers.
Solvent companies are not allowed to pass on pension costs to the federal government unless they can show that paying such benefits would cause them to financially fail, said officials of the Pension Benefit Guaranty Corp., who spoke under the condition that their names not be used.
Mr. Hill said the USA pension plan, like many others, suffered major losses during the financial crisis.
“The floor dropped out from under them,” he said.