Yes, we know your plan is to retire when you are ready, but what kind of retirement savings plan do you have for retirement? Not all plans are the same. Your plan is likely very different from your neighbor’s, from your cousin’s, or from your accountant’s.
Local 26 members have TWO retirement savings plans—a Pension Plan and an Individual Account Plan—that provide a secure retirement based on all of your years of hard work. Our Pension Plan is a defined benefit plan while the Individual Account Plan is a defined contribution plan. Having two plans, especially a defined benefit pension plan, is extremely unique in the world of retirement plans, and makes our members very fortunate. Both types of plans offer advantages so having both plans for our members provides you with the most robust retirement savings possible. Our trustees created and oversee these plans to complement Social Security.
Defined benefit plans, in particular, have become increasingly rare these days because employers would rather individual investors bear the risks of growing their money rather than ensuring a specified amount to an individual’s retirement 20, 30, 40, 50 years in the future. It takes a lot of careful planning to ensure that a defined benefit plan is funded and managed properly to provide promised benefits to retirees when they round home base into their retirement. So, go on and brag to your friends and family that you know you will be living well in retirement with your union retirement plans!
There are some key differences between a defined benefit plan and a defined contribution plan.
| Defined Benefit Plans: | Defined Contribution Plans: |
|---|---|
| Upon retirement, provide a guaranteed benefit each month or distribution as the plan is designed | Are funded by a specific regular contribution but do not guarantee a specific benefit each month or distribution period upon retirement |
| Enable recipients to know exactly how much they will receive in retirement | Pay a benefit that is based on the performance of the investment markets |
| Are overseen by a team of financial advisors and do not allow for participants to make investment decisions | Allow participants to choose from a selection of investment funds in which to invest, or defer to a default fund carefully selected by an investment team |