What did retirees get in this agreement?
Retirees gained important commitments to keep their pension fund solvent, a $1000 car voucher which is transferrable (i.e., can be sold) and access to legal benefits.
Without question, retirees have paved the path for many of the strong gains made in the decades of bargaining that have gone into our collective bargaining agreements. In fact, the UAW is one of the few Unions that recognize their retirees and have a specific department dedicated to the issues of retired members. However, there are real restrictions of what the UAW can gain for retirees. The US Supreme Court ruled in 1968 that unions cannot strike over retiree benefits. This means that bargaining over issues for retirees falls under “permissive subjects of bargaining.” The UAW can ask companies to discuss issues that are permissive, but the company has no requirement to bargain.
The last time the UAW was able to get companies to agree to pension rate increases for retirees was in 2007 (the UAW has always asked for pension rate increases in lieu of COLA). Annual lump sum payments (commonly known as the Christmas Bonus) ended in 2011. The bonus is funded by the pension funds which were hit very hard by market forces in the last decade. In an attempt to protect the base pension and subsidy payment (for those who retired before age 62), it was necessary to stop these type of payments from the fund. The cost of funding the bonus outside the pension funds to all 481,400 Big 3 retirees over the four years of the agreement would come to almost $2 billion.