Workers picket outside the Boeing Co. manufacturing facility in Renton, Washington. Photographer: David Ryder/Bloomberg
Retirement plans are a major sticking point between Boeing and its union workers, now in the seventh week of a strike. The striking machinists want the world's largest aerospace manufacturer to bring back the traditional pension plan Boeing ditched a decade ago, as part of a deal with machinists to build its 777 jetliner in Washington.
Boeing, which replaced the pension with a 401(k) plan, has resisted attempts to restore the pension plan. "It does come down to potentially exploring other defined-benefit options, which we are willing to do," said International Association of Machinists and Aerospace Workers (IAM) President Joh Holden, at a press conference.
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Last week, the union of 600,000 members rejected a proposal that offered a 35 percent pay hike and increased contributions to the company's 401(k) plan. In the proposal, Boeing offered to make a one-time contributions of $5,000 to 401(k) plans and to match 100 percent of employee contributions—up from 75 percent—on the first 8 percent of a worker's pay.
Boeing also offered to increase pension payouts for the 42 percent of IAM members who are still part of the pension plan, allowing a worker with 20 years of employment to receive a pension payment of about $2,100 a month, up from $1,900.
"There is no scenario where the company reactivates a defined-benefit pension for this or any other population," Boeing said in a statement Thursday. "They're prohibitively expensive, and that's why virtually all private employers have transitioned away from them to defined-contribution plans."
Over the past few decades, pension plans have been replaced in most workplaces by 401(k) plans. Last year, IBM, a leader in the shift away from defined-benefit plans to defined-contribution plans since 1984, announced that it was suspending its 401(k) match and 1 percent automatic contribution—and instead making a monthly account credit toward a hybrid pension plan consisting partially of a defined-contribution plan and partially of a defined-benefit plan.
The IAM Union has been in communication with the Department of Labor "in an effort to spearhead getting back to the table," according to the union website.
From: BenefitsPRO
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
