Pension
changes challenge for Lawrence Livermore
Oakland Tribune , May 13, 2007
FOR
DECADES, Lawrence Livermore National Laboratory has been a unique place to
work.
During
the decades of the Cold War with the former Soviet Union, it offered
challenging work at competitive compensation that was clearly in the national
interest. During that time, work centered on nuclear weapons, a focus that
still is central to the lab, but challenges and opportunities have broadened.
As
the work world changed dramatically in the last 15 years, one of the labs huge
competitive advantages was its amazingly rich, defined-benefit contribution
system. Work there long enough, and you could retire at virtually the same pay
as your final working check and receive annual cost-of-living increases, along
with lifetime health care to supplement Medicare.
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The
golden handcuffs provided by that system allowed the lab to offer career
employment, a term that is foreign to private sector companies today.
Come
Oct. 1, it also will be a term that no longer will be used at the lab.
The
Department of Energy announced last week the results of its competitive-bidding
process for management of the lab. Management of all three Energy Department
facilities formerly managed by the University of California was put out to bid
after a series of security and management breaches, particularly at Los Alamos
National Laboratory in New Mexico, got too much for the feds to bear.
Perhaps
ironically, UC retained the contract in all three instances, but has partners
in the two national weapons labs.
The
primary partners in the group that will run Lawrence Livermore include Bechtel
National Inc., BMX Technologies Inc. and the Washington Group International
Inc. Also involved are Battelle Memorial Institute, four small business
subcontractors and Texas A&M University.
Only
time will tell whether bringing private partners into the mix will improve
laboratory performance, particularly in the security and business areas.
It
will cost much more: The maximum management fee went from $7.1 million for UC
in the fiscal year that ends this September to $45.5 million for the next year.
Perhaps
the bigger challenge will be the work force issues. Veteran Livermore employees
now must figure out what to do to retain their UC pensions even though theyre
grandfathered into the new system that is supposed to provide equivalent
benefits.
Its
the newcomers who no longer will have the golden handcuffs of defined benefits.
The new plan, by Energy Department fiat, was required to be a defined-benefit
plan similar to a 401(k) in the private sector. Theres a world of difference.
Notably,
the UC pension system has benefited from both good management of invested funds
and the rising stock markets, so that neither the government nor the employees
have had to contribute to the plan for more than a decade. Thats a great deal
compared to others with defined-benefit plans who routinely see 8 percent or
more of their paycheck withheld for their pension.
Come
Oct. 1, the retirement plan will stand by itself with just the single new
entity from just one lab, instead of the immense UC system.
From
a work force recruitment and retention standpoint, it will become much more
challenging for lab managers to bring in talented people and hold them with the
lure of the private sector and its stock option potential.
This
is particularly likely in the hot areas of bioscience, which holds much
promise, both in private companies and for government- funded labs that will
need to focus on homeland security issues.
Part
of the strength of the labs has been the capability to bring experienced people
from varied disciplines together to work on a big issue. If the labs can no
longer retain key people at the working science level, the challenge will be
much greater than it already is.
Heres
hoping the politically driven decision actually proves to be in the national
interest. The mixture of the private sector management expertise with the
science skill from the university could result in much superior results, but
the jury is still out and will be for a number of years.
Tim Hunt is the former editor and associate publisher of the Tri- Valley Herald. He is the principal with Hunt Enterprises, a communications and government affairs firm. He can be reached at HuntEnterprises1@