The agreement reached to end the high-profile John Deere strike last week features some significant improvements to retirement benefits, including to the iconic green agricultural equipment manufacturer’s 401k and pension plans.
More than 10,000 striking Deere & Co. production and maintenance employees at 14 facilities across the U.S. that are United Auto Workers members voted Nov. 17 to ratify a new six-year collective bargaining agreement by a vote of 61% to 39%.
The Deere UAW members began their first strike in 35 years on Oct. 14. A tentative agreement was reached on Oct. 30, but 55% of the union membership rejected it. That agreement would have slightly increased pay and retirement benefits but would have ended the company’s pension program for new hires.
The ratified final agreement includes an $8,500 signing bonus; 20% increase in wages over the lifetime of the contract with 10% this year; return of cost-of-living adjustments; three 3% lump sum payments; enhanced options for retirement and enhanced CIPP performance benefits.
Specific to retirement plans, the agreement creates a new employer contribution of 5% of an employee’s annual wages, plus an increase of the company match contribution to 100% of employee contributions of up to 6% of wages for 2022, and afterward match between 70% and 100% of employee contributions of up to 6% of wages, depending on company profits. Prior to the agreement, the John Deere Tax Deferred Savings Plan for Wage Employees provided a 60% match for up to 6% of wages.
A summary of the retirement provisions from the second agreement (that did not change in the third and final agreement) said current employees hired after Oct. 1, 1997, and future employees will now have the choice of entering the Deere & Co. hybrid defined benefit/defined contribution plan or the newly enhanced 401k plan.
“Our members courageous willingness to strike in order to attain a better standard of living and a more secure retirement resulted in a groundbreaking contract and sets a new standard for workers not only within the UAW but throughout the country.”
UAW Vice President Chuck Browning
As was previously mentioned, Deere was going to cut the pension program for new hires under an earlier version of the contract, according to The Des Moines Register. And, compared to that initial agreement, the agreed-upon contract pays a higher rate for future retired workers. A 25-year employee would see an extra $150 a month.
The contract also promises lump sum payments to workers when they retire. Employees who stay with the company for 10 to 24 years will get $37,500. Workers who stay at least 25 years will get $50,000, the Register reported.
In addition, Deere agreed to put another five-figure sum in an account for workers when they retire. The Moline, Ill.-based company will give employees an extra $2,000 for each year they’ve worked at the company. A 25-year worker will see an extra $50,000.
“Our members courageous willingness to strike in order to attain a better standard of living and a more secure retirement resulted in a groundbreaking contract and sets a new standard for workers not only within the UAW but throughout the country,” UAW Vice President Chuck Browning said in a statement.
“I’m pleased our highly skilled employees are back to work building and supporting the industry-leading products which make our customers more profitable and sustainable,” said John C. May, Chairman and CEO for Deere, in a Nov. 17 statement. “John Deere’s success depends on the success of our people. Through our new collective bargaining agreements, we’re giving employees the opportunity to earn wages and benefits that are the best in our industries and are groundbreaking in many ways. We have faith that, in return, our employees will find new and better ways to improve our competitiveness and transform the way our customers do their work. Together, our future is bright.”
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