What kinds of retirement plans do union members have?
If you’re a union member, you may be offered a retirement plan that was agreed on through your union’s collective bargaining agreement (CBA). These plans, often called multiemployer or Taft-Hartley plans, can help you save for retirement, but they’re not all the same. We’ll help you get to know what kinds of Taft-Hartley retirement plans your union might offer.
What’s Taft-Hartley and what does it have to do with retirement plans?
As a union member, you could work for multiple employers. The Taft-Hartley Act of 1947 helped address this by allowing the formation of multiemployer plans to provide retirement benefits for union members. This just means that participating employers agreed, in your union’s CBA, to contribute on your behalf to the union retirement plan.
What kinds of retirement plans do union members have?
Union members can be offered two types of plans: defined benefit (DB) pension and defined contribution (DC) plans, both of which can offer certain tax advantages. Whether you’re offered a DB plan, a DC plan, or both, your union recognizes the importance that a plan can play in helping you achieve your retirement goals.
DB plans—also known as traditional pension plans
Many unions offer their members a DB plan, which is more commonly known as a traditional pension plan. While you’re working, your employers pay into the plan based on a number of factors that may include your years of service and hours worked toward a pension credit. When you retire, you’ll be notified of the vested benefit that you’ve earned.
DC plans—to supplement your retirement savings
You might also be offered a DC plan. They’re called defined contribution because you or your CBA decide how much you’ll contribute to the plan. The money in the plan is invested, which means the value may go up and down based on market conditions. While you’re working, you can review your balance from time to time to see how much you have in your account. Unlike with a traditional pension plan, a DC plan doesn’t guarantee you a set amount each month when you retire. Instead, it’s up to you to decide when to take the money out of your account and how much.
The three most common types of DC plans for union members are:
- Profit-sharing plans
- Money purchase plans
- 401(k) plans
How are union retirement plans governed?
The decision to offer a retirement plan—and what type to offer—is part of the CBA between the employers and the union. The plan is managed by a joint board of trustees that's made up of equal representation from the union and the employers. The board of trustees are also fiduciaries of the plan and must follow the rules of the Employee Retirement Income Security Act, also known as ERISA. Among other things, ERISA states that each fiduciary (in other words, each member of the board of trustees) has a duty to manage the plan with prudence and to invest the plan’s assets according to the best interests of the union members.
Make the most of the retirement plans your union offers you
Whether you have a traditional pension plan, a DC plan, or both, the plan is there to help you fund your retirement years. Retirement plans are valuable benefits your union provides you, and they often come with websites that can help you learn about your plan and how to manage your finances, both today and in retirement. If you’re not sure what type of plan you have or how to access it, reach out to your fund office.
Important disclosures
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.
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