Your agency will need to change the way it pays contractors for some benefits, if a watchdog group gets its way. Citizens Against Government Waste says the government puts too much of its money on the hook to pay for post-retirement benefits that contractors give their employees.
Tom Schatz, the group’s president, shared his recommendations Tuesday on The Federal Drive with Tom Temin,
He said the practice of the government paying for private employees’ retirements has been a legitimate business expense for years under cost-accounting standards.
“The problem is not necessarily covering those post-retirement benefits,” Schatz said. “It’s the defined benefits plans in particular that have caused a lot of increased liability and payment over the last several years and vastly increased payments over the next 10 years, according to a Government Accountability Office report from last April.”
That report revealed the Department of Energy, with approximately 90 percent of its work provided through contractors, could be on the hook for as much as $37 billion in pensions, in particular defined-benefit liabilities, over the next 10 years.
Schatz recommended federal agencies do what lot of state and local governments — and many companys — are already doing to avoid the liablity &mdash transition from defined benefits plans to defined contribution plans.
“Unfortunately, many of the larger contractors have not done it,” Schatz said. “It could be a number of reasons, but one might be because the government is reimbursing them for the shortfall in their benefit plans.”