By David Brandolph
Chalk up a victory for a traditional defined benefit pension plan and its members. About 10,000 striking John Deere Co. workers are returning to work under a new contract that, among other provisions, removes language from an initial tentative bargaining agreement that would have prevented new employees from joining the company’s pension plan.
When 90 percent of the workers, represented by the United Autoworkers of America, rejected the initial agreement on October 10, they sent a strong message to the Illinois-headquartered machinery manufacturer that they placed a high value on the long-term integrity and strength of their pensions.
John Deere was already operating under a two-tiered structure, providing full pensions to workers hired before 1997 and a reduced pension for those hired later. When the company proposed a three-tier structure that would have given only a 401(k) plan to employees hired after November 1, 2021, the employees overwhelmingly said no. Their actions ensured that all bargaining unit members would have guaranteed lifetime benefits they could count on.
As the John Deere workers demonstrated, defined benefit plan pensions are worth fighting for. The guaranteed lifetime income provided by these plans, on top of Social Security, gives workers the best chance of achieving a financially secure retirement. Workers who must rely solely on 401(k)-type defined contribution plans bear all the risk of potential investment crashes. Those who have defined benefit plans can sleep much easier at night knowing that their company is required to make good on its pension promise.