05.05.06

Cantwell Calls on Administration to Abandon Plan to Gut Basic Retirement Security for Hanford Workers

Proposal could cut off pension and health care benefits

WASHINGTON, DC – Friday, U.S. Senator Maria Cantwell (D-WA) joined a coalition of senators calling on the Bush Administration to abandon a proposal that would exclude new contract workers who work on Department of Energy (DOE) sites from participation in the DOE’s guaranteed defined-benefit pension plan. This would adversely affect many of the 40,000 workers with Hanford-related jobs as well as thousands of other workers across the country.

“The thousands of Hanford workers cleaning up after America’s nuclear legacy deserve better than incomplete health coverage and weak pension plans,” said Cantwell. “They deserve better than to be split into two groups with different benefit levels. We need to put an end to attempts to undermine benefit plans, and instead turn our full attention to Hanford’s pressing cleanup needs. The federal government needs to be a good employer. Anything less would set a dangerous precedent for the millions of Americans who depend on defined benefit pension plans to provide a secure retirement for themselves and their spouses.”

Under the proposed policy, current Hanford contract workers could continue participating in the existing pension and health care program, but all new contract employees would be ineligible and would have to enroll in their respective employers’ packages. In a letter sent Friday, Senators Cantwell, Harry Reid (D-NV), Edward Kennedy (D-MA), Jeff Bingaman (D-NM), Barbara Mikulski (D-MD), Patty Murray (D-WA), Max Baucus (D-MT), and Tom Harkin (D-IA) urged President Bush to reject the proposed policy and continue providing secure pensions and health benefits to all DOE contract workers.

“Defined benefit pension plans are the bedrock of retirement security,” the senators wrote. “Over 40 million workers and retirees rely on these plans to provide a guaranteed income for them in their old age… This policy is a direct attack on Americans’ retirement security. It sends a clear signal that this Administration supports the elimination of secure, guaranteed defined benefit pensions… We urge you to overturn this ill-conceived policy as soon as possible, and we look forward to a prompt reply...”

Last month, Cantwell met with Hanford workers in Tri-Cities to discuss potential changes to their pension plans. At a hearing last year, Cantwell questioned Energy Secretary Samuel Bodman about pensions and health screenings for Hanford workers.

[The text of the senators’ letter follows below]

May 5, 2006

The Honorable George W. Bush
The White House
1600 Pennsylvania Ave
Washington, DC 20500


Dear President Bush:

We are gravely concerned with Secretary Bodman’s announcement that the Department of Energy (DOE) is compelling its contractors to stop providing the secure pension and health care benefits contractors have long offered their workers. We urge you to demand that DOE withdraw its order.

Defined benefit pension plans are the bedrock of retirement security. Over 40 million workers and retirees rely on these plans to provide a guaranteed income for them in their old age. These benefits protect the elderly against poverty, by ensuring that they are not forced to bear the risk of stock market declines or of living longer than they expected. These secure pensions also provide critical protections to widowed spouses, who rely on survivor benefits to sustain them in their old age. This directive attempts to undermine the commitment that employers have made, and the employee-employer relationship that has been established, by virtue of an employer’s voluntary decision to provide secure retirement benefits.

This policy is a direct attack on Americans’ retirement security. It sends a clear signal that this Administration supports the elimination of secure, guaranteed defined benefit pensions. The timing of DOE’s actions is especially troubling with Congress now conferencing legislation to strengthen the defined benefit system, and to ensure workers receive the benefits they have earned. You have assured us that your position is to strengthen the defined benefit pension system, not to dismantle it. Yet your credibility is called into serious question when your Department’s stated policy prevents even those employers who want to provide defined benefit plans to their workers from doing so.

We are equally concerned that this new policy will erode the quality and comprehensiveness of health care benefits for employees, and could unfairly penalize the least healthy workers. The policy imposes arbitrary limitations on health care plans that DOE contractors may offer. The requirement of Secretarial approval for any augmentation of the healthcare plan will prove unworkable given that such plans are constantly updated at DOE facilities by the insurance providers. This approach goes against current DOE’s policy of providing broad policy guidance while leaving day-to-day operations of the facilities to the management and operations contractor.

In addition, many defined contribution health plans rely on less comprehensive high-deductible health plans to deliver benefits. Few of these plans employ innovative care-management techniques that have been effective in reducing costs while improving health outcomes. Reducing the comprehensiveness of coverage and imposing higher cost sharing responsibilities shifts costs to workers and puts less healthy workers at risk for spending more for their health care. Research suggests that increasing cost-sharing for health benefits causes many individuals to delay seeking care when they need it, leading to greater emergency room use and a greater number of adverse health events. In a time of rising health costs, an approach which shifts costs to workers and drives up spending system-wide is not the right solution.

We also have serious questions about this policy’s impact on the Davis-Bacon Act and Service Contract Act. These laws require that the federal government contracts provide for prevailing wages and benefits, critical protections which were designed to prevent the federal government from undermining local labor markets. By driving down workers’ benefits, the DOE notice directly contradicts this underlying policy.

We urge you to overturn this ill-conceived policy as soon as possible, and we look forward to a prompt reply to our request:

Sincerely,

Senator Harry Reid
Senator Edward Kennedy
Senator Max Baucus
Senator Jeff Bingaman
Senator Tom Harkin
Senator Barbara Mikulski
Senator Maria Cantwell
Senator Patty Murray

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