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Paying its contractors’ pension costs means a big bill at the Pentagon

The cost to the Department of Defense of funding pension plans for its contractors rose more than tenfold from 2002 to 2011.

Paying its contractors’ pension costs means a big bill at the Pentagon

Contributing to its contractors’ pension plans is costing the Department of Defense dearly. In 2002, the Pentagon paid about $420 billion into these private pension plans. In 2011, it was almost $5 billion.

Fewer Americans have traditional pension plans, and where they still exist, it’s rarer still for a company’s customers to fund them directly. But DOD considers providing these pensions a cost of doing business with its contractors. Most of those pensions are traditional “defined benefit” plans, and when the recession hurt their investment performance, the Pentagon even covered shortfalls.

Check out our infographic for more on Pentagon contractor pensions. See “What Do Others Say?” for more perspective, then add to the discussion below. Is this government expense an acceptable cost of doing business?

What do others say?

  • The New York Times: New York Times: "Dear Committee: Main Street Says Look at Pensions" More

  • Federal Times: Federal Times: "New accounting rule could cost DoD billions" More

  • Pensions & Investments: Pensions & Investments: "GAO study: Defense Department pension accounting rules need more oversight" More

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