Benefits » Retirement
Media reports in recent weeks have discussed the impact of stock market declines on the country’s pensions. While the Laboratory’s retirement plans—the Defined Benefit Pension Plan (TCP1) and 401(k) Retirement Plan (TCP2)—have not been immune to the national and global stock market fluctuations, employees can be confident that the institution’s retirement plans as a whole are financially stable and that the funds are well diversified.
Since the precise degree of fund diversification for the Laboratory’s 401(k) Retirement Plan varies with each member’s selected investment options, participants may wish to check their investment performance directly with Fidelity Investments.
Although the Laboratory’s Defined Benefit Pension Plan follows the sound strategy of having approximately 60 percent of its funds invested in equity instruments and 40 percent in fixed-income vehicles, the plan, just like the individual 401(k) retirement options, has experienced losses as a result of market fluctuations. As of October 31, 2008, the decline had translated into a 25-percent loss for the Laboratory’s Defined Benefit Pension Plan.
To minimize future losses to the Defined Benefit Pension Plan, the LANS Benefits and Investment Committee and their investment management consultant, Watson Wyatt, have been working closely with individual investment managers to ensure the quality of the investments, the performance of the investments when compared with specific market indexes, and the compliance to specific asset classes and the plan’s overall investment strategy.
Defined benefit pension plans are called such because their pension benefits can be defined, at any future point, by formula. But since no one can predict a defined benefit pension plan’s actual investment returns, it is understood that significant market fluctuations can affect how much the employer and employee might have to contribute in the future. The Laboratory has not made any final decisions regarding potential future contributions to offset the experienced stock market losses. Those decisions will be made during the first quarter of 2009 and will be the subject of a subsequent communication to all employees.
The Laboratory’s overall investment strategy remains anchored in the twin goals of keeping our retirement plans financially sound and offering retirement benefits that allow us to attract and retain top talent.