The Boeing Pension

At one time, there used to be a simple equation for workers in America: Work Hard = Retire Comfortably.

The truth is that while statistics show people are living longer, the ability to enjoy a fulfilling retirement is becoming less and less likely.

The ability to retire comfortably is important. The average age at Boeing is nearly 50. After a lifetime of work, a financially independent retirement is something you deserve.

Yet retirees today are faced with ever-increasing costs. The average Boeing pension benefit only covers a small portion of your current income (and that is only IF you have 30 years of service and do not take a survivor spouse option).

It isn't enough, is it? IAM members identified pension as one of the top issues and feel they deserve a pension that provides a secure retirement. So how did Boeing respond?

Boeing lead negotiator Doug Kight outlined a proposal to reporters which would eliminate the traditional pension plan for new hires and instead offer a 401(K) style plan. It is obviously a divide and conquer strategy to pit the more senior workers against the new hires or the next generation of workers. It didn't work for Boeing in 2005, and it won't work in 2008.

If Boeing truly wants just a 401(k) style plan, they can try it out on their executives. But if you look at Boeing's proxy statement, the top executives at Boeing all have two defined-benefit pension plans. If that's good enough for them, it's good enough for our members.

With Boeing posting record profits (up 828 percent in the last five years), it's time to improve our pension benefits! Demand they reward our years of hard work and dedication. Young or old, active or retired -- It's Our Time, This Time!

FACT: The Company did not contribute one cent into the plan from 1997 through 2002. Again in 2006, Boeing did not contribute one penny into the BCERP plan which covers IAM, SPEEA and some salaried employees.

FACT: If Boeing had made steady contributions all along, they would not have had to make huge payments in some years.

FACT: Pension benefits are part of the total compensation package, just like wages.¬Ý When the Union negotiates a pension increase, it means there is less money for other areas of the contract.

FACT: In late October 2007, the Boeing Board announced it would repurchase up to $7 billion of Boeing stock. A better choice would be to invest in better pension benefits for employees who have made this Company great!

FACT: The Boeing Board provided $22 million in supplemental retirement benefits when CEO James McNerney was hired in 2005. If Boeing has $22 million for supplemental retirement benefits for just one person, they can provide a substantial pension increase for Machinists Union members.

Click here to view the history of the Boeing Pension

Click here to view recent Boeing Pension contributions

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IAM National Pension Plan

In the recent survey for the upcoming contract with Boeing, many of you indicated interest in learning more about the I.A.M. National Pension Fund's National Pension Plan as an alternative or an addition to the Boeing Company Plan. Following are some facts to consider.

Numbers tell a Good Story

The National Pension Plan began in 1960 with a small number of employers and has grown to over 1,750 employers and $9 billion in assets today. The National Pension Plan has over 113,000 active employees currently accruing benefits and pays over 71,000 retirees and beneficiaries monthly. The Plan is 113% funded under the Pension Protection Act of 2006 (PPA).

Multi-employer vs. Single Employer Plan

Both the National Pension Plan and the Boeing Company Plan are "Defined Benefit Plans" (DB Plans) meaning you know what your benefit will be at retirement and benefits are paid monthly for your lifetime. There are some key differences between a multi-employer plan, like the National Pension Plan and a single employer plan, like Boeing's, however. Following are some key differences:

View chart comparing Multi-employer vs Single Employer Plan

Recent Changes in Law "Pension Protection Act of 2006" - Something to Consider

The Pension Protection Act (PPA) was adopted in 2006 partly in response to a long history of single employer pension plan terminations, like United Airlines and many others. In these cases companies did not fund their plans adequately and ended up terminating their plans and turning them over to the Pension Benefit Guaranty Corporation which pays a portion of promised benefits in many cases. The new law imposes strict new funding and disclosure requirements for both single and multiple employer plans alike.

Under the PPA, for single employer plans, employers have less control. The volatility of their assets and liabilities increases as well as their funding requirements. Although new funding requirements under the PPA also apply to multi-employer plans, the way a multi-employer plan is designed requires consistent funding and the assets are pooled to benefit the participants only, making multi-employer plans more secure and less volatile. And unfortunately, although the new law is intended to protect DB Plans, for single employer plans the unintended backlash is more companies want to get rid of their DB Plans and offer a Defined Contribution Plan (DC Plan) like a 401(k) Plan as employees' only retirement option.

Defined Benefit (DB) vs. Defined Contribution (DC) Plan

A Defined Contribution Plan, like a 401(k) plan, is a great supplemental savings plan and should be a part of your retirement portfolio. But they don't make a great stand alone retirement plan for the following reasons:

- You probably aren't deferring enough -- if you defer at all

- You can cash-out between jobs instead of rolling your money over

- You can take a withdrawal or loan

- The amount that will be there for you at retirement is unknown and subject to market swings making it difficult to plan

- You bear all the investment risks

With a DB Plan, you don't have any of these problems. The investment risk is shouldered by the plan and does not impact your benefit amount. Market fluctuations are factored in over the long haul. You know what your benefit will be and you cannot access it until retirement.

For employers, getting rid of their DB Plan and switching to a DC Plan switches the burden to the employee. Also, and rightfully so, the employer can now focus on their business rather than the business of running a pension plan.

Comparing the Benefits: Boeing vs. National Pension Plan

Although the Boeing Plan is fundamentally a good one, and is currently well-funded, the National Pension Plan offers several improvements, as follows:

- Less Hours of Service required under the National Pension Plan

- Unreduced benefit at any age with 30 years of Credited Service*

- Lower age reduction for early vested deferred pension (if you leave Boeing but retire later)

- No age requirement for disability pension -- no requirement for disability under Social Security definition -- must be unable to perform your job in collective bargaining agreement

- Lifetime benefit with 60 certain guaranteed payment period for single participants

- Preretirement Death benefits for single employees (in addition to married participants)

- Lump Sum Preretirement Death benefits

The Basic Benefit offered in the Boeing Plan is $70 per month per year of service. For an employee with 30 years of Credited Service, this provides a normal pension benefit of $2,100.00 per month. According to the 5500 Forms filed with the IRS by the company for the 2005 and 2006 Plan years, the company contributed $9.19 per hour, per employee for the 2005 Plan year and nothing for the 2006 Plan year. (The company contributed $4.95 per hour, per employee for the 2003 Plan year; the Form for 2004 was not available at this writing.) If you average the company's cost over the three known years, the company paid an average of $4.71 per hour, per employee. A contribution rate of $4.70 per hour provides a benefit value of $169.19 per month, per year of Credited Service in the National Pension Plan. Or, conversely, the Company's cost to continue the current multiplier would be $1.60 per hour (provides $70.09 per month per year of Service). However, please note that groups of over 10,000 employees must be actuarially studied to determine if the standard benefit levels apply.

Best of Both Worlds

For an employer, a multi-employer plan, like the National Pension Plan, offers the ease of contributing to a 401(k) without the administrative burden. For employees, a multiemployer plan like the National Pension Plan offers increased security. As the anticipated effects of the PPA come into focus this year, well-funded multi-employer plans like the National Pension Plan are more than ever the best option for providing reliable pension benefits.

*The National Pension Plan will recognize time under the Boeing Pension Plan to qualify you for these benefits, however, the amount of your benefit would be based on time in the National Pension Plan.

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Existing Retirees

Existing Retirees Need an Increase

Could you live on your current income if it were frozen until the year 2035? Our retired members are asked to do just that. District 751 has hundreds of members who have been retired since the early 1970's and 1980's - yet they have seen virtually no change in their pension since the day they left Boeing.

Since 1989, Boeing has refused to offer any increases to current retirees. COLA for retirees is a priority issue in this round of negotiations - for both active and currently retired members.

Perhaps the most telling way to illustrate the importance of a good pension is to hear from a few of our retirees.

Art Edwards worked 40 years at Boeing before retiring in 1986. He felt fortunate to have worked his Boeing career without a layoff or break in service, which ensured every year counted toward his pension. Even with 40 years, he has to live on $814.60 per month. He has watched his buying power deteriorate over the 21 years since he retired and hopes Boeing will use some of their tremendous profits to enhance pensions for those who built the Company.

Art noted, "With Social Security and my Boeing pension, there is not a whole lot left to live on. Some years my Social Security increase is smaller than the increase to my insurance premiums -- which means I actually have less to live on. It’Äôs time Boeing increased pensions for existing retirees."

Perry Sherman hired into Boeing at 19 years old and worked for 43 years until he retired in 1983. His monthly pension is $960 per month because he doesn’Äôt get the Medicare supplement.

Leroy Miller put in 33 years at Boeing before retiring on September 1, 1988. He received a one-time increase in 1989 and ever since has had to live on $913 per month in return for his 33 years of hard work and dedication. From that $913 a month, he purchases a Medicare supplement for $170.45, and another $25.50 for prescription coverage (not including the co-pay for his prescriptions). His wife Helen, worked 11 years at Boeing in salary, and collects $179 per month, which barely covers her Medicare supplement of $170.45 plus $25.50 for prescription coverage.

Al Menke had 31 years with Boeing when he retired in 1987 at age 60. His pension is $912 per month. However, he pays $400 per month for him and his wife to have a Medicare supplement. That $400 each month for Medicare takes a huge bite out of their pension.

"The Medicare supplement is $4,800 for us -- and that is each year. That's a lot of money when you are retired," Al noted.

District 751 President Tom Wroblewski and Benefits Chair Susan Palmer have been working closely with retirees to explore strategies to pressure Boeing into doing the right thing for the retirees who made the Company successful. Certainly getting members on the shop floor to talk about increases for existing retirees will help raise awareness.

District President Tom Wroblewski has been working with the retirees to coordinate their efforts and is also working on changing the law. Tom noted, "By law, we cannot force the Company to bargain for current retirees. It is an issue we have been trying to change in Washington, DC. Since it is unlikely to get the law changed by the negotiations, we must find new ways to pressure Boeing into doing the right thing and allowing the retirees to share in the Company's prosperity -- rather than be struggling to get by. Boeing should be embarrassed by the way many of their retirees are forced to live."

Click here to view pension increases for those already retired

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