Workers picket outside the Boeing Co. manufacturing facility in Renton, Washington. Photographer: David Ryder/Bloomberg
Retirement plans are a major sticking point between Boeing and its union workers, now in the seventh week of a strike. The striking machinists want the world's largest aerospace manufacturer to bring back the traditional pension plan Boeing ditched a decade ago, as part of a deal with machinists to build its 777 jetliner in Washington.
Boeing, which replaced the pension with a 401(k) plan, has resisted attempts to restore the pension plan. "It does come down to potentially exploring other defined-benefit options, which we are willing to do," said International Association of Machinists and Aerospace Workers (IAM) President Joh Holden, at a press conference.
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Last week, the union of 600,000 members rejected a proposal that offered a 35% pay hike and increased contributions to the company's 401(k) plan. In the proposal, Boeing offered to make a one-time contributions of $5,000 to 401(k) plans and to match 100% of employee contributions, up from 75%, on the first 8% of a worker's pay.
Boeing also offered to increase pension payouts for the 42% of IAM members who are still part of the pension plan, allowing a worker with 20 years of employment to receive a pension payment of about $2,100 a month, up from $1,900.
"There is no scenario where the company reactivates a defined-benefit pension for this or any other population," Boeing said in a statement Thursday. "They're prohibitively expensive, and that's why virtually all private employers have transitioned away from them to defined-contribution plans."
Over the last few decades, pension plans have been replaced in most workplaces by 401(k) plans. Last year, IBM, once a leader in the shift away from defined benefit plans to defined contribution plans since 1984, announced that it was suspend its 401(k) match and 1% automatic contribution and instead make a monthly account credit toward a hybrid pension plan – consisting partially of a DC plan and partially of a DB plan.
Related: 3M to freeze pension plans in 2028: Will other companies follow suit?
The IAM Union has been in communication with the Department of Labor "in an effort to spearhead getting back to the table," according to the union website.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
