Labor unions exist to provide skilled tradespeople with training, proper working conditions, and representation. One of the hard-fought benefits provided is reliable retirement plans for workers who have given a life of loyal service. Few Americans have enough to live on once they retire, and while this isn’t by design, it is partially due to the fact that many workers see retirement as a distant worry and choose to concentrate on present needs like day-to-day job security.
But collective bargaining has provided union workers with a number of advantages over nonunion workers, especially when it comes to retirement security and beyond. Here is a brief explanation of what a union member can expect and the different programs that are commonly available.
Where Social Security Falls Short
Social Security is intended to provide a modest retirement income for most Americans who have earned a wage; however, there is a misconception about how it should be used. Social Security is intended to provide only a third of the income retirees need, but the reality is it usually makes up half or more of their income after retiring.
What Is a Union Pension and How Is It Different From a 401(K)?
A key part of understanding retirement is knowing the difference between the plans organizations use to provide for their workers. Direct benefit pension plans are paid to all union members over the course of their career through tax-exempt donations made from each paycheck. This guarantees the pensioner a fixed income upon retirement. Retirement age is simple to define, since the longer a union member works, the more money that is available upon retirement. The issue is pensions are becoming fewer and far between, even for union members, as most employers opt to offer their employees a 401(k) plan instead.
A 401(k) is essentially an investment portfolio managed by a third party. The amount an employee contributes over the course of their career may be matched by the employer. This takes the burden of managing the funds off the employer, and 401(k) plans can be beneficial to the worker, but their rate of return is never guaranteed and the overall value of the plan is based on how well the market does.
What About Your Employer Plan Health Insurance?
Union members enjoy health insurance benefits that remain in place when they retire. Retiring workers also have the option of choosing from multiple benefit plans based on desired premiums and anticipated health needs of their retirement years that also extend to spouses and dependent children. This requires the employee to have a certain length of service as negotiated per their union contract, and these benefits do vary from one union to the other.
Do Unions Offer Life Insurance?
They certainly do have life insurance plans as well as survivor benefits. This is a common inclusion in most collective bargaining agreements. One of the further survivor benefits you can provide to your loved ones is the payout of your remaining pension funds if you die early. This is a defined benefit plan that comes with your union membership.
The Union Difference
Southwest Pipe Trades is a regional advocate for 13 local unions in New Mexico, Oklahoma, and Texas. We represent a highly skilled, trained workforce of journeymen and apprentices in a number of industries including plumbing, pipe fitting, welding, HVAC, and sprinkler fitting. Our mission is to protect the interests of these workers, and this includes their ability to retire comfortably after a lifetime of work.
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