Pension Costs Skyrocket At Pentagon

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.

defense contractor pensions

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