On June 15, 2007, the U.S. Department of Energy (DOE) withdrew a controversial pension proposal it first announced in April 2006. The proposal would have prohibited all DOE contractors from providing any type of pension benefit other than a 401(k) savings plan to new employees.  DOE had defended this proposal as necessary to bring its contracting costs under control, and to bring contractor pension benefits in line with the general trend of U.S. businesses that are abandoning traditional pension plans.

When the policy was first announced in 2006, there was an immediate groundswell of opposition from labor organizations as well as members of both parties in Congress. In response to this public opposition the Secretary of Energy, in June of 2006, announced a one-year moratorium on the policy during which time the Department would seek further input from the public.

This change in policy would have directly affected hundreds of IUOE members who are employed by DOE contractors throughout the country. Those members currently have defined benefit pension coverage through either the Central Pension Fund or IUOE Local Union pension funds.

Accordingly, when DOE reopened consideration of its policy this year, to protect the pension security of current and future IUOE members, General President Vincent J. Giblin notified the Department of Energy of the IUOE’s strong opposition to the proposed policy. Thereafter, staff of both the International Union and the Central Pension Fund met with DOE staff to explain their opposition, and on May 8, 2007 General President Giblin filed extensive public comments opposing the policy.

Importantly, this year not only did the labor movement oppose the DOE policy, but all of the major U.S. business groups likewise filed comments in opposition. While the IUOE and other labor organizations opposed the policy because it would have substituted risky 401(k) plans for the security of defined benefit plans, business groups, including the National Association of Manufacturers, the Business Roundtable, and the U.S. Chamber of Commerce strongly objected to the federal government dictating the type of retirement benefits that businesses can provide their employees.

In addition to the comments of business and labor, there were also hundreds of critical comments filed by employees of DOE contractors who would have been directly affected by the policy. The most succinct of those comments said simply:  “Don’t be Bozos. These people need their pensions.”

Finally, in early June the Appropriations Committee of the U.S. House of Representatives inserted language in DOE’s funding bill prohibiting expending any funds to implement this proposed pension policy. Before that bill could be voted on by the full House, DOE withdrew the policy.

Regardless of why DOE finally withdrew this misguided proposal, the process provided a very public opportunity for business, labor, Congress and the general public to come together in unified opposition to replacing valuable defined benefit pensions with risky 401(k) savings accounts. An important victory was scored for retirement security.