Union retirements benefit retirees by ensuring that retirees do not run out of funds, says the Huffington Post. Typically, a union retirement involves a defined-benefit pension plan, which pays a set amount for a predetermined period. For example, a plan of this type might pay $2,500 each month for the remainder of a retiree's life.Continue Reading
In the private sector, defined-benefit pension plans have become far less common since the 1970s, according to the Social Security Administration. The concurrent drop in U.S union membership has likely influenced the decline of the defined-benefit pension plan, reports the Huffington Post. As of 2015, most employees with retirement benefits use plans based on the 401(k) model.
A governmental agency called the Pension Benefit Guaranty Corporation insures pension plans for union workers, according to CNN. In 2014 the U.S Congress gave ailing union pension funds the authority to cut pension benefits for current and prospective retirees. However, Congress exempted disabled retirees and retirees over 80 years old from these cuts. Though backers claimed the law change was necessary to save pension funds, the AARP and the Pension Rights Center condemned the change. This pension law change particularly affected union members in the trucking and construction industries.Learn more about Financial Planning