Boeing has proposed closing its defined benefit pension plan to Puget Sound-based new hires beginning Jan. 1, 2013, much to the chagrin of the Society of Professional Engineering Employees in Aerospace (SPEEA), the union that represents engineers at the plane manufacturer's facilities across the country. Instead, it proposes offering an enhanced Voluntary Investment Plan, which would include a new automatic company contribution and a company match on employee contributions, according to the Boeing website.
Even though the company's DB plan is 100 percent funded, according to the site, moving new employees to a defined contribution model would save the company a lot of money in the long run.
In its proposal to SPEEA, it showed that people under age 40 would receive an automatic company contribution of 3 percent, a 6 percent company match on 8 percent employee contribution of pay for a total company contribution of 9 percent.
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For those ages 40 to 49, the automatic company contribution would be 4 percent, with a 6 percent match on employee contributions, for a total company contribution of 10 percent. For those ages 50 and older, the company would give employees an automatic company contribution of 5 percent and an additional 6 percent in company matches, for a total of 11 percent.
In a message to employees on Aug. 21, the Boeing negotiations team stated that the proposed changes to the company's retirement plan "offers a retirement benefit that will follow them throughout their careers due to its portability. We believe this feature will be especially attractive to employees who may not spend their entire career here. Current employees may see increases in their pension benefit over the life of a proposed contract as a result of normal salary movement or by a yet-to-be negotiated increase to the minimum benefit."
The proposed plan would save Boeing money in future retirement costs and would help in long-term business planning and protecting jobs, the letter added.
The enhanced Voluntary Investment Plan is the same plan SPEEA-represented engineers in Wichita agreed to beginning on Jan. 1, 2010.
In another statement, Boeing said that, "The ability to plan for the future is critical to a business like Boeing, which must continually innovate and execute on its programs. The change to an enhanced savings plan is in line with market trends and practices of peer companies, and allows Boeing to better manage retirement plan expenses and reduce financial risk.
"The proposed retirement benefit for SPEEA-represented new hires is a market leader compared to the plans offered by our aerospace competitors to their new hires and will give our new hires an opportunity to build significant savings for retirement."
The company is currently in negotiations with the union and is expected to hash out a new contract by the end of September. The current union contract at Boeing expires on Oct. 6.
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