Benefits June 2, 2006

Feds Keep Marching towards Electronic Pension RK

June 2, 2006 (PLANSPONSOR.com) - Officials at the federal government's Human Resources office say the recent awarding of a $40 million consulting contract is an important step towards creating an electronic federal employee retirement system.
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The Office of Personnel Management (OPM) gave the contract to consultant Accenture to develop business transformation and information technology models to migrate federal retirement records onto a totally paperless platform within four years, according to a news report on the Govexec.com Web site.

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“With Accenture’s support and expertise, we are one step closer to eliminating the current, antiquated, paper-driven system of retirement benefits processing,” said OPM Director Linda Springer in a statement announcing the contract.

Accenture’s task, according to OPM, is to “align the people, processes and organization to achieve maximum benefits and efficiencies of the solution,” including training, communication, organizational design and competency assessments for the processors.

In the technological half, according to the Govexec.com report, the company will develop in-house technology for OPM to efficiently sort the data housed in the system, and harmonize the new system with OPM’s financial systems.

Bringing OPM’s retirement records into the electronic age should allow OPM to determine pension benefits within five days. The system also will improve accuracy of the claims from 90% to 93% percent in the older Civil Service Retirement System and from 95% to 97% in the Federal Employee Retirement System.

The Accenture agreement represents the second in a three-step project called Retirement Systems Modernization. In early May, OPM announced a 10-year, $290 million deal with Hewitt Associates to undertake the initial work – creating a one-stop electronic shop for federal employees and retirees to access their retirement records and for the government to compute pensions.

The final piece of the program is a contract expected to be awarded this summer to convert paper records to electronic formats.

Compliance June 1, 2006

Judge Gives Nod to Delta's Settlement with Pilots Union

June 1, 2006 (PLANSPONSOR.com) - A federal bankruptcy court judge rejected objections by the Pension Benefit Guaranty Corporation (PBGC) when he gave his blessing to a wage concession agreement between Delta Air Lines and its pilots.
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According to Aero-News.net, Delta had promised to give the pilots $650 million in notes and a $2.1 billion unsecured claim if the pilots’ pension plan was terminated. The PBGC said that it should get the money, under the Employee Retirement Income Security Act (ERISA).

The nation’s private sector pension insurer rejected the airline’s settlement with the pilots’ union, claiming that Delta’s proposal to compensate pilots for unfunded benefits in their retirement plan violated ERISA (See PBGC Says Delta’s Settlement with Pilot’s Union Defies ERISA).

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The industry news Web site reported that Judge Adlai Hardin found for the airline, clearing the way for Delta to save $280 million each year over the next three years in pilot pay and benefits – a concession agreed to in April between Delta and the Air Line Pilots Association (ALPA) – which represents Delta’s 5,930 active pilots (See Delta Deal Considers Likelihood of Pension Termination).

Hardin only ruled on the PBGC’s objection, not the concession deal between the pilots and the airline.

The judge also tried to quell concerns of some pilots that are against the settlement, saying that ratifying the new contract would be in the best interest of all parties. According to Aero-News.net, 61% of the union’s rank-and-file pilots voted in favor of the deal.

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