52.215-15 Pension Adjustments and Asset Reversions
Source: FAR 52.215-15 on acquisition.gov
Contractors must notify the government and equitably refund or credit the government for its share of pension assets when plans are terminated or assets revert, following specific accounting rules.
Overview
FAR 52.215-15, "Pension Adjustments and Asset Reversions," establishes requirements for contractors regarding the treatment of pension plan terminations, segment closings, curtailment of benefits, and the reversion or recapture of pension assets. The clause ensures that the government receives an equitable share of any pension fund assets that revert to the contractor, reflecting the government's historical participation in funding those pensions through its contracts. It also mandates specific accounting treatments based on whether contracts are subject to full Cost Accounting Standards (CAS) coverage or not, and requires contractors to flow down the clause to applicable subcontracts.
Key Rules
- Notification Requirement
- Contractors must promptly notify the Contracting Officer in writing if they plan to terminate a defined-benefit pension plan or recapture pension fund assets.
- Adjustment Calculation
- For CAS-covered contracts, adjustments must follow 48 CFR 9904.413-50(c)(12).
- For non-CAS-covered contracts, a modified calculation per 48 CFR 9904.413-50(c)(12) applies, focusing on contracts subject to FAR 31.2 or requiring certified cost or pricing data.
- Refund or Credit to Government
- If pension assets revert to the contractor, the government is entitled to an equitable share, either as a refund or credit, based on its participation in pension costs.
- Subcontract Flowdown
- Contractors must include this clause in all subcontracts that meet the applicability requirements of FAR 15.408(g).
Responsibilities
- Contracting Officers: Monitor contractor notifications and ensure proper adjustments and credits are made.
- Contractors: Notify the government, calculate and allocate adjustments correctly, provide refunds or credits, and flow down the clause to applicable subcontracts.
- Agencies: Oversee compliance and ensure equitable treatment of pension asset reversions.
Practical Implications
- This clause protects the government's financial interests in pension plans funded through federal contracts.
- Contractors must have robust processes for tracking pension plan changes and calculating government shares.
- Failure to comply can result in financial penalties or disallowed costs.
As prescribed in 15.408(g), insert the following clause:
Pension Adjustments and Asset Reversions (Oct 2010)
(a) The Contractor shall promptly notify the Contracting Officer in writing when it determines that it will terminate a defined-benefit pension plan or otherwise recapture such pension fund assets.
(b) For segment closings, pension plan terminations, or curtailment of benefits, the amount of the adjustment shall be-
(1) For contracts and subcontracts that are subject to full coverage under the Cost Accounting Standards (CAS) Board rules and regulations (48 CFR Chapter 99), the amount measured, assigned, and allocated in accordance with 48 CFR 9904.413-50(c)(12) ; and
(2) For contracts and subcontracts that are not subject to full coverage under the CAS, the amount measured, assigned, and allocated in accordance with 48 CFR 9904.413-50(c)(12) , except the numerator of the fraction at 48 CFR 9904.413-50(c)(12) (vi) shall be the sum of the pension plan costs allocated to all non-CAS covered contracts and subcontracts that are subject to Federal Acquisition Regulation (FAR) subpart 31.2 or for which certified cost or pricing data were submitted.
(c) For all other situations where assets revert to the Contractor, or such assets are constructively received by it for any reason, the Contractor shall, at the Government’s option, make a refund or give a credit to the Government for its equitable share of the gross amount withdrawn. The Government’s equitable share shall reflect the Government’s participation in pension costs through those contracts for which certified cost or pricing data were submitted or that are subject to FAR subpart 31.2.
(d) The Contractor shall include the substance of this clause in all subcontracts under this contract that meet the applicability requirement of FAR 15.408(g).
(End of clause)