UAW statement on retirees and 2011 Big Three negotiations

The UAW has a long history of fighting for and protecting its retirees, and through the years, we have been able to bargain good pensions, Christmas bonuses, pension increases, health care benefit improvements and other improvements for our retirees.  We accomplished all these gains for retirees even though many years ago a Republican majority on the U.S. Supreme Court ruled that we do not have the right to strike over retiree issues.  

In 2008, when the economy collapsed and General Motors and Chrysler were teetering on the edge of bankruptcy, many Republicans wanted to strip retirees of all health care benefits and throw our pensions to the Pension Benefit Guaranty Corp. (PBGC).  If they had succeeded, GM and Chrysler pensions would have been reduced to about 65 percent of the basic pension, and retirees would have been left without any health care.  The UAW fought for retirees in the congressional hearings, through lobbying, protesting and many other activities.  GM and Chrysler retirees’ pensions and health care were saved as a result.

In the current round of auto bargaining, we were faced with two insurmountable obstacles to winning the gains we wanted for our retirees.  First, in the past we were able to fund pension increases and Christmas bonuses out of the UAW Big Three pension funds because the pension funds were either fully funded or, in some years, even overfunded.  This year, we face the worst shortfall in our history of pension underfunding.  Because of Wall Street’s continuing problems, the GM, Ford and Chrysler hourly pension funds are all underfunded.  Obviously, because of this shortfall, we could not use the pension funds to pay for the Christmas bonuses or any other improvements.

The second insurmountable obstacle to winning Christmas bonuses for retirees is the current retiree to active member ratio.  The current active UAW membership at GM, for example, is 48,000 members to 405,000 UAW GM retirees, making it nearly a 10-to-1 ratio of retirees to current working members. During these negotiations, the UAW also explored the idea of paying for retiree Christmas bonuses by having each active member contribute to a fund to pay these bonuses. With the almost 10-to-1 ratio of retired to active workers in GM and similar ratios at Chrysler and Ford, funding a $600 retiree bonus for GM retirees would require nearly $6,000 contribution from each active UAW GM member.  The problem is similar at Ford and Chrysler. At Ford, the retiree to active ratio is about 3.5 retirees to each active, and at Chrysler, there are almost four retirees to every active member. Obviously, it is not possible in these economic times with these ratios to fund retiree lump sums out of active members’ earnings.
Finally, we were able to negotiate and ratify a 10 percent contribution from active members’ profit sharing that will be diverted to the Voluntary Employee Beneficiary Association (VEBA).  This diversion helps to make possible the modified dental and vision coverage that will be restored by the VEBA for our UAW Big Three retirees in January 2012.

Our hope is that all of the Big Three – with the continued dedication of our UAW members – will return to being a strong and viable company which will help the profitability and stock of these companies rebound, and that the economy and our pension funds will also rebound, making it possible to win yearly bonuses for our retirees in future negotiations.