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.
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