United Auto Workers members at GM, Ford and Stellantis didn’t get their pensions restored as part of the recent agreements to end strikes against the Big Three automakers, but they did get a significant boost to their 401(k) contributions.
Widely viewed as a longshot among its heady demands during the seven-week strike, the effort to restore defined contribution pension plans for workers who lost the benefit as part of negotiations years ago during the Great Recession ended up going nowhere, deemed a “non-starter” by the automakers.
But while pensions aren’t coming back, the deals with the Big Three did include notable improvements to retirement benefits.
According to Bloomberg Law, the union persuaded Ford to raise its contribution to 10% of an employee’s salary—three to four times what most employers offer—up from 6.4% in the current contract. That new 10% contribution rate was subsequently mirrored in the Stellantis and GM deals.
Many thought GM would never put more money on the table for their hundreds of thousands of retirees, an Oct. 30 UAW press release touting the GM deal said. “In this agreement, however, GM has agreed to make five payments of $500 to current retirees and surviving spouses, the first such payments in over 15 years.”
“Retirement insecurity is one of the greatest economic injustices facing our country and our membership.”
UAW Vice President Mike Booth
The agreement reinstates major benefits lost during the Great Recession, including Cost-of-Living Allowances and a three-year Wage Progression, as well as killing “divisive wage tiers” in the union. “It improves retirement for current retirees, those workers with pensions, and those who have 401(k) plans,” the release said.
“Retirement insecurity is one of the greatest economic injustices facing our country and our membership,” UAW Vice President Mike Booth said during a Facebook Live address to members Nov. 3 offering highlights of the union’s tentative agreement with GM.
“This historic tentative agreement rewards the autoworkers who have sacrificed so much with the record raises, more paid leave, greater retirement security, and more rights and respect at work,” President Biden said in a statement about the UAW-GM agreement.
In the Stellantis agreement, The Detroit News reports that the company agreed to increase contributions to retirement plans for current retirees, workers with pensions and employees with 401(k)s. The company also is offering a $50,000 retirement incentive package in 2024 as well as ’26.
“The agreement includes annual payments of $500 to current retirees and surviving spouses, what the union touted as the first bonus for current retirees in 17 years. Another contract provision will give an increase of $1,800 a year to future pensioners. And current in-progression employees will receive a 10% employer contribution, with no required employee contribution, to their 401(k)s,” per The Detroit News.
SEE ALSO:
• UAW Wants Pensions Back for Workers; Automakers Keen on 401(k)s
• $44 Million Pulled from DC Plans by Entertainment Workers During Prolonged Strike
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.