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[Sandia Lab News]

Vol. 54, No. 4        February 22, 2002
[Sandia National Laboratories]

Albuquerque, New Mexico 87185-0165    ||   Livermore, California 94550-0969
Tonopah, Nevada; Nevada Test Site; Amarillo, Texas

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Pension changes approved Robinson credits supporters Working the changes

Pension plan changes approved by DOE/NNSA

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By Bill Murphy

After an intensive year-long negotiating effort, Sandia's pension plan changes and other benefit changes affecting employees' retirement years have won approval from DOE and the National Nuclear Security Administration. The changes apply only to participants in the Labs' Retirement Income Plan. Represented employees and formerly represented retirees covered by the Pension Security Plan are not affected by any of the changes at this time. Their pension benefits are negotiated as part of the collective bargaining process.

Based on current retirement patterns and with the caveat that every employee's circumstances are unique, the new formula should increase pensions by 25 percent on average -- sometimes more, sometimes less --for employees who retired on or after Dec. 19, 2000. Employees and surviving spouses who retired before that will receive a 15 percent ad hoc increase on the fixed portion of their pensions, effective on Jan. 1, 2002.

According to Labs Deputy Chief Financial Officer Ralph Bonner (10300), the changes to the plan -- combined with the value of the company match to the 401(k) plan -- make Sandia's retirement benefit very competitive.

In a letter to Sandians Feb. 13 announcing the approval, Labs President C. Paul Robinson noted that as the give-and-take of the negotiation process moved forward, the proposed changes had strong support from Lockheed Martin, the Sandia Board of Directors, and the New Mexico congressional delegation.

Armed with a vigorous "go for it" nod from Paul and Executive VP Joan Woodard, Ralph, Mark Biggs, and Bruce Criel (both 10310) did the bulk of the nuts-and-bolts work of putting the new pension package together. Becky Statler (3341) and her team from the Benefits organization developed the changes to the medical plans.

Here's the new formula (effective Dec. 19, 2000): "High-three" average earnings (i.e., the average of the highest three years of an individual's eligible income) multiplied by credited pension service multiplied by a retirement age factor. The retirement age factors range from 2.0 percent at age 62 and above to 1.04 percent for ages 50 and below (See "Retirement age factors" chart on page 3 for the complete schedule of factors). Under the formula in place before Dec. 19, 2000, the maximum multiplier was 1.5 percent of High-5 average earnings.

The revised pension plan formula applies to Sandians whose retirement dates are on or after Dec. 19, 2000. The new formula will provide most Sandia employees with larger -- sometimes substantially larger -- pension checks when they retire. Because the new formula is designed to encourage employees to extend their Sandia careers into their early 60s and beyond, a small number of employees -- especially those who plan to retiree before age 55 -- may not fare as well under the new plan as under the old one. Those employees will have the option of retiring under the old formula through Dec. 19, 2005. At the end of that five-year period, a final calculation will be made under the old formula and employees will be guaranteed a pension of at least that amount in the future. (The Non-Qualified Pension Plan for directors and above will be discontinued for those who retire on or after Dec. 19, 2000, due to the increase in the Retirement Income Plan formula.)

In an ad hoc adjustment for retirees and surviving spouses who left prior to Dec. 19, 2000, the fixed portion of pension benefits will be increased by 15 percent across the board. That increase takes effect Jan. 1, 2002, and will be reflected in the May 2002 pension checks from Prudential.

Here are other key benefit changes, as outlined in Paul's letter to employees and retirees.

-- Bill Murphy

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Robinson credits supporters who helped get Sandia pension, other benefits changes approved

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By Larry Perrine

The pension and other benefits changes announced by Sandia President Paul Robinson Feb. 13 didn't come easily or quickly. Sandia formally began work on this package about 14 months ago (Dec. 19, 2000) after an earlier attempt failed to generate sufficient support and was "pulled back" by Sandia. The benefits changes were approved by Sandia's Board of Directors, Lockheed Martin, and DOE/NNSA.

"We had no idea how lengthy and detailed the approval process would prove to be when we first began talking about changes several years ago," says Paul, "and we absolutely couldn't have done this without tremendous support from a lot of people."

The "Sandia rumor mill" surrounding the benefits changes and their status was grinding pretty strongly for the past year, and didn't always turn out correct information, Paul says. "I'm concerned that some Sandians incorrectly branded those in the approval chain as 'opponents,' when many were actually supporters -- trying to make sure the changes were properly justified and that proper business and legal procedures were followed. I want to set the record straight and make sure those folks who 'made it happen' get some well-deserved credit.

"We thank a long list of supporters," he continues, "and our New Mexico and California congressional delegations are at the top. The support we got on this from Sen. Pete Domenici was just extraordinary. He was indefatigable in his efforts to support our retirees and work force. Without his intervention at key stages, this would not have happened. Rep. Heather Wilson, who had heard from many retirees about the deficit position of Sandia's retirement benefits versus the University of California's, took a strong stand to close the gap in many letters and talks with NNSA Administrator Gen. John Gordon. Similarly, Sen. Jeff Bingaman and Rep. Ellen Tauscher gave strong support for these changes, with Jeff both writing and directly urging NNSA 'to establish parity' for Sandians. Rep. Ellen Tauscher stepped up to strongly support these actions as well. We should all say thanks to our Congressional delegations for their support (I have)."

"When the Executive Branch consideration of the issue began to get more complicated," Paul continues, "with multiple offices attempting to 'weigh in,' the clear voices of the legislators who care most about these issues became decisive factors."

Several people in DOE and NNSA were particularly helpful and supportive, Paul says. "There are others, but Albuquerque Operations Manager Rick Glass and Gen. Gordon worked particularly hard to make it happen. We give them a great big thank-you."

Lockheed Martin officials also were supportive of the package and worked closely with Sandia and DOE/NNSA people to secure approval, says Paul. "President and Chief Operating Officer Bob Stevens and Executive VP of Technology Services Mike Camardo both supported the package completely once it was in final form. Technology Services HR VP Steve Brinch worked closely with Sandia's benefits and financial systems folks, and was very helpful to us."

Here's what some of these supporters had to say about the announcement either in news releases or in separate statements prepared especially for the Lab News:

- - Larry Perrine

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Working the pension plan changes: A conversation with Ralph Bonner

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By Bill Murphy

"This is really pretty significant; we've been trying to achieve this for a long time," says Labs Deputy Chief Financial Officer Ralph Bonner, speaking of the significant changes to the non-represented employees' pension plan and other retirement benefits.

Ralph, along with Mark Biggs and Bruce Criel (both 10310), have spent a good portion of their waking life over the past year putting together the new provisions of the Labs pension plan.

Ralph is no stranger to demanding tasks. Before taking on the Herculean labor of trying to improve the pension plan, Ralph spearheaded the profoundly non-trivial Oracle implementation project. Indeed, his recent career at Sandia calls to mind the old Army US Corps of Engineers motto: "The difficult we do immediately; the impossible takes a little longer."

When Labs President C. Paul Robinson gave Ralph, Mark, and Bruce the go-ahead to rework the pension plan, he laid down several guiding principles:

"Fundamentally, we've achieved almost everything Paul asked for," Ralph says.

The Labs pension plan has been subject of frustration among imminent retirees for a long time. At employee dialogue sessions and other occasions where employees can ask questions of senior management, the issue of the pension always, always comes up. Over the years, several attempts have been made to upgrade the Labs' pension plan, each time ending in frustration. As recently as April of 2000 Paul published a letter in the Lab News announcing that the Labs was withdrawing its then-latest pension plan proposal from consideration by DOE.

"There was a lot of disappointment," Ralph recalls, "but as we approached the fall of 2000, Mark [Biggs] and I talked about maybe going back to the drawing board and trying again."

Last Dec. 19, Ralph continues, he and Mark sat down with Executive VP Joan Woodard and went through an analysis of the issue, presenting several "straw approaches" they might take to advance the pension plan changes.

The question of the day was "Do we want to make another attempt?"

Joan and Paul, bruised but not broken by the previous pension attempts, said, Nike-style, "Just do it." The pension team of Ralph, Mark, and Bruce ran countless computer models, what-if scenarios, simulations to arrive at the golden mean: a plan that met Paul's guidelines in every particular -- save one.

"We weren't able to put in an automatic COLA," Ralph says. "We ran a number of scenarios around that, we looked at a multiplicity of options. We worked it as hard as it could be worked, but we couldn't make it work." An automatic COLA, he says, would place the plan under an unacceptable level of financial risk.

Despite the disappointment about the COLA issue, Ralph notes that Sandia has a long and good track record of making ad hoc increases to retirees' pension benefits, including the latest 15 percent ad hoc increase that takes effect at the beginning of the new year.

"This change would not have happened under our previous operating contractor," says Ralph. "After the plan change in 1975, the policy was to have the same benefit structure as AT&T. As a result, AT&T was very inflexible in accepting differences, both in the formula or in passing through additional changes of the type just made for retirees. Lockheed Martin, at a time when they are seeking to consolidate their operation, was willing to accept differences at Sandia. Mike Camardo deserves a lot of credit for taking the initial position to accept the proposal and strongly supported it within Lockheed Martin."

"As you can tell this has truly been a team effort," added Ralph. "Employees should appreciate how hard Paul and Joan worked on this change, the excellent work by Don Blanton and Frank Figueroa with Lockheed Martin, which strongly pushed for the change, the tremendous effort by Les Shepard and TJ Allard in the Executive Staff organization, the great support from Rick Glass and all the folks at DOE/AL, and the approval by Gen. John Gordon. This list would be incomplete without including the early and ongoing exceptional help from Senator Domenici, Senator Bingaman and Congresswoman Heather Wilson. This was a long journey, but well worth the time and effort." -- Bill Murphy

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Last modified: February 26, 2002

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