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Union retirees take a hit

By Jennie L. Phipps · Bankrate.com
Tuesday, October 4, 2011
Posted: 4 pm ET

I've been wearing my reporter hat today, covering Ford Motor Co. and its labor agreement with the United Auto Workers, which was reached in the wee hours this morning.

For those of us who live in the Greater Detroit area, this second of three contract agreements -- General Motors Co. was first and Chrysler has yet to settle -- is a relief because it appears to stabilize the employment situation of thousands of workers and their families -- at least for the next four years. That also means that other people and businesses that rely on auto industry employees for their livelihood will continue to thrive.

In my Lake Erie neighborhood where many of the residents are former Ford employees living in retirement, the agreement is bittersweet because it takes away the traditional $700 Christmas bonus, adding some preventive dental and vision coverage instead. Many retirees feel this new contract doesn't give them a fair deal, but the union argued that it could no longer fund holiday bonuses because there are 10 retirees for every one union member -- and the money just doesn't go far enough.

Another retirement-related change in the Ford agreement is an offer to buy out older employees to make room for new, lower-paid workers. Longtime employees earn a $28 per hour base rate, while workers hired since 2007 earn $15.50 an hour. Under the new contract, the company is offering older production workers a $50,000 bonus if they retire early, and  they are holding out a $100,000 retirement bonus to people who work in the skilled trades. While $50,000 or $100,000 might be enough to get a small business off the ground, it isn't enough to live on for very long.

Another possible retirement planning revision down the road: Changes in current laws make it more attractive for companies to offer lump sum payouts to retirees.  Auto companies have wanted to offer these lump sums and get retirees off the books altogether. So far, it appears that the UAW has resisted this.

It's an increasingly tough time to be a retiree, but younger workers don't have it so good, either.

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2 Comments
Wolverine
October 05, 2011 at 10:32 am

I'm glad there was more to this than just a Christmas Bonus... because come on, millions of Americans don't have a job and they are complaining about christmas bonuses.

Still, time to retire, time to give the rest of us a chance at those cushy retirements we'll never get.

Ash
October 04, 2011 at 6:44 pm

Well, well, seems the Union figured out, and had to deal with, the same problem that our government refuses to confront: too many retirees, too little of other peoples' money to support them. Unlike the Union, our government will continue to coddle and pander to seniors instead of embracing the reform that Social Security desperately needs.