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HRD-81-152 1 (1981-09-23)

handle is hein.gao/gaobabclr0001 and id is 1 raw text is: '. - A ~UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 HUMAN RESOURCrS DIVISION B-204778 SEPTEMBER 23, 1981 The Honorable Verne Orr The Secretary of the Air Force Dear Mr. Secretary: 116483 Attention: Assistant Auditor General Subject: Allocation of an Air Force Contractor's Pension Fund Assets May Be Inequitable (HRD-81-152) During our review of contractors' compliance with cost accounting standards relating to pension costs, we found that the pension plan of Pan American World Airways, Inc. (Pan Am), had experienced significant actuarial gains from unanticipated job terminations of employees working on an Air Force contract. At the time of our fieldwork in 1979, Pan Am had initiated actions to establish separate penion plans which would ensure that the Government received proper credit for these termination gains. However, as of July 1981, these actions had not been completed and it appears that the method proposed by Pan Am for allocating pension plan assets may not be equitable to the Government. We believe that you should act to ensure that the pension plan established for employees working on Government projects receives an equitable share of assets. BACKGROUND The Air Force has contracted with Pan Am for services at its Eastern Test Range, Cape Canaveral, Florida, for over 25 years. The services are provided by Pan Am's Aerospace Services Division (ASD). Although the Division had a number of contracts, the contract for services at the Eastern Test Range was the largest. (207341) I,

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