We are trying to negotiate a new union contract and the Co. wants to freeze our defined benefit pension so they can get it off the books and they want to switch us to a 401K . Some people will loose large sums of money with this switch . Is there a alternative to this ?

All Answers To Questions

Only your own savings. Welcome to the modern era.

Roth I.R.A. You can add to this for your savings up to 5000+ a year. You should call a specialist about this maybe Fidelity Investments. I heard they are great in helping. Good Luck

yes, it's called WELFARE.

First, no one will lose any money directly due to the switch. What you may lose is FUTURE earned money. In a retirement plan, what you have already earned as a contribution/benefit can't be taken from you unless the plan terminates and the plan provides a higher level of benefit than the PBGC (govt entity that runs terminated plans) allows. Hate to say this but this is typically a union negotiated plan belonging to a company that went belly up. Unions are famous for negotiating rich pension plans for their membership...this is one of the unintended consequences. Next, is there an alternative plan? There are things called cash balance plans that provide for an annual contribution by the employer (based on compensation and years of service) that earns a specified amount of money per year. Instead of being back loaded like a pension it's more front loaded like a 401k but it's entirely employer paid. It doesn't pay out based on age either....so employees hired close to retirement don't get any more money than someone who is hired at 20. You didn't ask but if I was on the negotiating team I'd hold out for the pension first and foremost...if that means a give-back on something else that's what I would do. If that's a non-negotiable item for the company then I'd work on the cash-balance plan option next. Item of last resort would be the 401k. They are trying to put the responsibility of your retirement entirely on the employees. There's nothing wrong with that if your membership is young. But if they've been around for awhile they are relying on that pension to retire on. If you do give up the pension then make sure you ask for larger wage increase to compensate for it. Responsible members will take that wage increase and dump it in the 401k's. Lastly, don't let them fool you with talk of a lucrative match...one thing about matches is that they can EASILY be taken away from year to year. Look up recent news articles and see how many matches are being frozen next year.