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.
Face the Facts USA is a project of The George Washington University’s School of Media and Public Affairs. Would you like the “Fact of the Day” beamed straight to your email inbox? Sign up here. For more fun stuff, follow them on Twitter @FaceFactsUSA, or like them on Facebook.