Wegmans and local Teamsters officials will resume contract negotiations on Friday, and retirement benefits will be at the center of those talks.
Last week, members of Teamsters Local 118, which represents approximately 900 Wegmans truck drivers and warehouse employees, rejected Wegmans’ final contract offer. Union leaders blasted the company’s proposal to move the union workers out of a statewide union pension fund and into the Wegmans Retirement Plan.
(Teamsters officials did not return calls for comment and Wegmans spokesperson Jo Natale wouldn’t comment beyond the materials the company has sent to the media.)
Wegmans plans to shift the employees into the company’s plan because the union fund has less money coming in than it is paying out. The company and the employees have been asked to contribute more to the fund, but it still isn’t turning around, says a brochure that Wegmans provided to workers and local media. And the fund has cut benefit levels twice in recent years, the brochure says.
But union members may have good reason for opposing the Wegmans plan. The union pension fund and the Wegmans Retirement Plan are fundamentally different retirement benefit approaches, says Jim Bertolone, president of the Rochester & Genesee Valley Area Labor Federation.
The pension fund will provide a lifetime benefit based on the numbers of years a worker contributed to it. But the Wegmans Retirement Plan is more like an IRA or 401(k), where the employee and employer contribute to an account, which the employee draws down in retirement.
Wegmans’ proposal could also have implications for the statewide Teamsters fund. Years of declines in union membership are part of the reason for the fund’s rough shape. In 1976, 23,204 active union members paid into the fund, which provided pensions for 3,657 retirees. Last year, 12,217 workers paid in to fund 16,327 retirees.
For union officials, keeping the fund viable will be increasingly difficult if they can’t add active union members or if companies like Wegmans and their union employees pull out.
This article appears in Oct 9-15, 2013.
Ask Kodak retirees how good a pension plan is. I’ll bet most of them wish they’d had more of their retirement money in a 401(k) or IRA type plan.
I support the organized workers of Wegmans for sticking to their guns on this one. Wegmans is trying to leverage local esteem for its brand in order to replace guaranteed lifetime pensions with a much weaker fund that could dry up – especially given the longer lifespans of the modern worker. If Wegmans refuses to respect the plan that has been in place ever since Local 118 began protecting their workers, the Teamsters should call a strike – and conscientious Rochesterians should shop at (unionized) Tops Friendly Markets until such time as Wegmans respects its workers. Danny Wegman cannot throw money at this problem and make it go away. And I certainly won’t be crossing the picket line if he thinks he can.
“guaranteed lifetime pensions”
guaranteed how? If you have more people drawing out then putting in where is the difference coming from? It isn’t explained in this article and that seems to be the crux of the matter. Can that teamster plan actually be guaranteed to pay out forever? A defined benefit plan vs. a defined contribution plan are much different plans.
Based on the very little information about the two plans in this article, it’s totally impossible to conclude which one is better or offers more security. If a neutral accountant with no ax to grind either way would scrutinize the details of each plan and give a conclusion as to which was better and more secure, I would believe that. Otherwise, who can know which is better?
The workers standing together under the Teamsters banner are admirable, and hopefully when they return to the drawing board on Friday, Wegmans can bring a reasonable offer to the table. I support our local laborers, not our local corporations.
For the person who asked if the pension is guaranteed, the answer is Yes. If the pension fund defaults, it’s federally insured by the government. If that happened, the government would take control of the fund and everyone would receive 50% of what they are supposed to get up to a certain amount.
Wegmans is totally in the wrong here; they need to make good-faith effort to maintain the guaranteed pension plan. This time, the union is dead-on right.