DOE plans to curtail pensions for contractors [View All]

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Associated Press

NEW YORK -- The Department of Energy has told contractors it no longer will pay for pensions for newly hired workers, following the lead of a growing number of private employers.

The change is drawing sharp criticism from labor unions, advocacy groups and some Senate Democrats. It comes as federal lawmakers are working on measures designed to shore up a listing pension insurance system, improve funding of pension plans and slow the move by employers away from the retirement mainstay.

The DOE's decision is intended to cut costs and ensure the predictability of future retirement obligations, said a department spokeswoman, Megan Barnett, on Friday.

"Given the fact that all the evidence is showing that 401(k)s can't do the job in providing an adequate supplement to Social Security for most workers, it's a very disconcerting move by a government agency," said Karen Ferguson, director of the Pension Rights Center.