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UAW members believe the foundation for a secure retirement rests on a three-legged stool: Social Security, a defined-benefit pension plan and personal savings.

Our goal is to provide all retirees and their families with a reasonable replacement of their working-career income so they can enjoy a productive retirement free from financial worry.

What is the pension received by a typical autoworker?

A typical UAW-represented worker at Chrysler, Ford or General Motors who has reached eligibility for receipt of an 80 percent Social Security benefit receives just over $18,000 per year from his or her employer.

Autoworkers who retire prior to Social Security eligibility are entitled to a supplement which increases annual income from their employer to about $36,000. When retirees reach the age for an 80 percent benefit (age 63) or retire after that, they receive only the basic benefit, and the employer no longer pays the supplement.

Source: United Auto Workers. Figures are for retirements effective on or after Oct. 1, 2003, for a UAW member with 30 years credited service at Chrysler, Ford or General Motors.

Why does the UAW view defined-benefit plans as better for employees than defined-contribution plans?

Defined-benefit plans are the most effective way to provide long-term income security for retired workers. Defined-benefit plans provide professionally managed investments, an ability to weather market fluctuations, protection against longevity risk and the backstop of the Pension Benefit Guaranty Corporation (PBGC).

A guaranteed monthly benefit from a former employer is essential for a secure retirement. 401(k) plans, which are being heavily marketed as more appropriate to today’s “flexible” economy, were created as a supplement to defined-benefit pensions to address the issue of lagging individual savings rates. They are not well-designed to function as a substitute for a monthly pension.

The problems with 401(k) plans have been well-documented: inadequate participation, especially among the young; low contribution levels; account leakage due to loans and other withdrawals during working years; fees and expenses; poor investment decisions, and market volatility, especially as retirement approaches. Other than their health, the biggest fear faced by most seniors is outliving their financial resources. Defined-contribution plans provide a shaky foundation on which to build retirement security.

Do UAW members also have access to 401(k) plans?

Yes. UAW members view 401(k) plans as an effective way to build the third leg of the retirement stool: personal savings as a supplement to defined-benefit pensions and Social Security. We have negotiated 401(k) plans with DaimlerChrysler, Ford, General Motors, funded entirely by worker contributions.

What is the status of the automakers’ pension plans?

As of the end of 2006 the U.S. pension plans for Chrysler and General Motors are fully funded and Ford is 99 percent funded.

Pension funds

Is it true that a large proportion of the UAW auto industry workforce is eligible to retire in the next few years?

Yes. Nearly half the 180,681 UAW members at the automakers will have the necessary
combination of age and years of service to retire within the next five years.

The proportion of those eligible to retire varies at each company, as follows:

Company % eligible to retire within 5 years Average age Average service
Chrysler 30.0 45.81 15.89
Ford 31.2 45.28 17.23
General Motors 63.5 49.78 22.94

Source: United Auto Workers, based on company data