Sandia Labs Cuts Pensions: Agency Faces $2B Shortfall

Associated Press Modified: August 19, 2010 at 8:35 am •  Published: August 19, 2010
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MCT REGIONAL NEWS

By John Fleck

Albuquerque Journal, N.M.

(MCT)

Aug. 19--Sandia Labs on Wednesday announced cuts in future retirees' benefits as the nuclear weapons research center attempts to reduce a $2 billion pension liability.

''We have some significant cost challenges associated with our pension plan," Sandia human resources chief John Slipke said in an interview.

The reduction, which will affect employees leaving after Jan. 1, 2012, is the second major move by Sandia to deal with the costs of health and retirement benefits in the past year. In September, Sandia announced a reduction in future retirement health benefits.

The pension cuts come eight years after Sandia changed pension benefits in the opposite direction. In 2002, when Sandia's retirement accounts were flush with cash, retirees received a 15 to 25 percent pension increase.

The situation today is different. To make up a shortfall in money needed to meet future benefit requirements, Sandia will need to pump $300 million a year into the pension plan from 2012 to 2014, with a total of $2 billion needed between now and 2020 to meet the estimated pension fund obligations for the 12,900 current and future retirees eligible for benefits under Sandia's pension plan, Slipke said.

Slipke blamed the current problems on the market vola- tility in recent years, which has reduced the value of the money set aside for future pensions. Sandia officials said the 2002 increase played no role in creating the current pension system deficit.

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