The United Auto Workers want something that most Americans don’t have: traditional pension plans.
It’s one of the union’s core demands that could help end the strikes at Ford, General Motors and Stellantis. But at a time when companies are trying to shed their financial liabilities for workers’ retirement security, some see it as a big ask.
UAW talks with those companies have reportedly negotiated wage increases broadly, but none of the big three U.S. automakers has budged on reinstating pension coverage to pre-2007 levels, according to coverage today by Reuters.
If UAW succeeded in getting pensions back, it would be a major victory, going entirely against a decades-long trend in U.S. retirement saving.
Not only do most private-sector companies no longer offer defined-benefit plans for new workers, but the majority are tempted to get existing pensions off the books. A recent survey by MetLife found that 89% of employers with pensions are planning to offload those liabilities to insurance companies in the form of group annuities. Over the past year, the rate of companies doing just that has accelerated at record pace as the funded status of their pensions has improved amid higher interest rates, making them eligible for pension-risk transfers.
“Overall, I seriously doubt that any modern firm would want to reinstitute DB plans, due to their high costs, including the high premiums that they would need to pay to the Pension Benefit Guaranty Corp (PBGC) for reinsurance. Moreover, DB plans skew their benefit payments toward long-term employees, penalizing anyone who leaves the firm early, needs to take time off for kids or other reasons, and who doesn’t work for the firm for a full career,” Olivia Mitchell, executive director
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