Pension Gains for Current,
Future Retirees
Your UAW bargaining team resisted persistent proposals from Chrysler for radical changes in our pension plan and succeeded in negotiating significant improvements.
The corporation pursued numerous takeaways such as: freezing all credited service, imposing new restrictions on early retirements, and eliminating the Social Security age-creep patch which replaces the benefits lost due to the gradual increase in the Social Security normal retirement age.
Your bargaining team forged an agreement that provides significant benefit increases for current and future retirees.
Credited Service
The UAW has negotiated pension credited service increases covering periods when Chrysler workers lost service due to layoffs. During this round of bargaining, the union negotiated a significant improvement, so that a worker’s credited service as of Dec. 31, 1995 would never be less than the worker’s seniority at that date.
In other words, all time (up to 12 months per year) lost due to a temporary separation is filled, not just time due to layoffs, as was the practice in prior contracts. Further, for the first time, this fill period is granted regardless of your seniority. This will increase pension benefits for those eligible and bring these workers that much closer to retirement eligibility.
This negotiated pension credit pick-up will generate 43,762 months of pension credit adjustments for UAW Chrysler workers. This applies to both Chrysler and former AMC lost service time.
Retirements Under the New Contract
Basic Pension Rate
The basic pension rate is increased in each year of the proposed four-year agreement. These increases will total $2.65 per month per year of credited service by the final year of the agreement. The increases will be effective Oct. 1 of each year of the agreement.
Insurance Overpayments
Beginning Oct. 1, 2007, retirees who have an outstanding overpayment under the Life and Disability Benefits Program will have their basic benefit rate increases and lump sums reduced by 50 percent until their debt is repaid.
Temporary Benefit
The temporary benefit is paid to retirees who qualify for either a permanent
and
total disability retirement and are not eligible for a Social Security disability
income
benefit, or for a Special Early retirement, and in either case have not reached
their
Social Security 80 percent date. This benefit is paid until that date in addition
to the
basic pension described above, unreduced for early retirement. The proposed tem-
porary benefits are shown below:
30-and-Out Supplement
The 30-and-out benefits will be increased $150 for workers who retire before
their
Social Security 80 percent date during the term of the agreement. This will increase
the 30-and-out income from the current $3,020 to $3,170 per month in the fourth
year
of the agreement. The 30-and-out monthly
Interim Supplement
The interim supplement is paid to retirees who retire prior to their Social Security 80 percent date and who have fewer than 30 years of credited service. This benefit is paid until that date in addition to the basic pension described above, but is reduced for early retirement. The amount per month per year of credited service, under the current agreement, payable at retirement ages 60 and 61, is $47.30. The corresponding amounts negotiated under the proposed agreement are $48.25, effective Oct. 1, 2007; $48.45, effective Oct. 1, 2008; $48.65, effective Oct.1, 2009; and $48.85, effective Oct. 1, 2010. Reduced amounts will be paid for retirees at younger ages.
Current Retirees
Basic Pension and 30-and-Out Supplement
The UAW has once again remembered our retirees and surviving spouses who retired prior to Oct.1, 2007. In this proposed agreement, the basic pension rate has been increased by $2 per month per year of credited service. Those retirees receiving a 30-and-out supplement will receive a $120 increase in the total amount payable to them, inclusive of the basic pension rate increase. All increases are effective Oct. 1, 2007.
Temporary Benefit and Interim Supplement
Retirees receiving a temporary benefit will receive an increase of $1 per month per year of credited service, to a maximum of $30 per month. Retirees receiving an interim supplement will receive an increase of 95 cents per month per year of credited service, reduced if retirement was before age 60. These will be paid in addition to the increased basic pension.
Special Survivorship Option
Benefits under the special survivorship option will be increased to $14.10 per month per year of credited service, effective Oct.1, 2007.
Retiree Lump-Sum Bonus
UAW Chrysler retirees and surviving spouses, whose benefit started before Oct. 1, 2007, will receive four lump-sum payments during the proposed 2007-2011 agreement. The payment for December 2007 will be $700 for all retirees and $455 for all surviving spouses. The lump-sum payments to be made in December 2008, December 2009 and December 2010 will be $23.33 times years of credited service, with a minimum of $233.33 and a maximum of $700. Surviving spouses will receive 65 percent of the retiree amount. Examples are as follows:
Improving Participation and Performance in the Deferred Pay Plan (DPP)
As a result of recent federal legislation and in an effort to boost members’ retirement savings, a new automatic enrollment program will become effective July 1, 2008, or as soon as practicable thereafter. This program will apply to future hires and members who currently do not participate in the savings plan.
Under the auto-enrollment program, 3 percent of eligible weekly earnings will be deducted from pay and contributed into a default fund if a different investment choice is not selected. Members who do not want to participate in a Deferred Pay Plan (DPP) will be able to opt out of the program within the 90-day advance notice and election period.
The default funds are life-cycle funds, designed to be growth-oriented at younger ages and protective of assets at ages approaching retirement. Per current DPP rules, members in the program can change investment selections and contribution percentages at any time. Auto-enrollment programs have been successfully implemented at a number of companies and can enhance the DPP as a valued supplement to our pension plan.
Social Security “Age Creep” Patch
The Social Security “age creep” adjustment, first negotiated in 1999, is extended through this agreement. Current and future retirees younger than 63 will continue to receive supplements or temporary benefits to which they are entitled until they reach their so-called 80 percent date.
Phased Retirement Study
The Pension Protection Act of 2006 liberalized provisions relating to workers’ eligibility for phased retirement, an option whereby a worker can transition to retirement by gradually reducing work time and gradually increasing retirement time. The UAW and the corporation agreed to study the feasibility of offering a phased retirement program on a pilot basis.