America needs skilled workers. But a new report finds that the nation isn’t doing enough to keep up with demand.
One solution that is growing throughout the work world is Phased Retirement.
Phased retirementis a workforce option where a person works part-time (instead of fully retiring) and can begin drawing retirement benefits while still employed. It is meant to provide a smoother transition for both employees and employers, and is often used to keep experienced knowledge while helping someone move gradually into full retirement.
Over a year ago I posted PTWO: Is This the Retirement Plan for Tier 2/In Progression Members? PTWO is an option for members hired since 2007 when the pension and retirement health care programs were eliminated. It’ s been twenty years. Twenty years of labor on the factory floor with all the health complications that come with long hours on concrete floors, excessive repetitive motion, and demanding schedules without accruing any pension credits. This leaves many members with no pension and a need to cut back on their work hours.
PTWO (Part Time on the Way Out) would allow members to maintain their wages and health insurance benefits while working a reduced schedule. This option helps the company maintain skilled workers that they can count on while the members can transition into retirement on their own terms.
Tier 2 vs Traditional Wages 2008 – 2015
Year
T2 Wage
Yr. Wage
Trad. Wage
Yr. Wage
Wage Difference
2008
$14.50
$30,160.00
$28.00
$58,240.00
$28,080.00
2009
$14.50
$30,160.00
$28.00
$58,240.00
$28,080.00
2010
$14.50
$30,160.00
$28.00
$58,240.00
$28,080.00
2011
$14.50
$30,160.00
$28.00
$58,240.00
$28,080.00
Total Wage Difference
$112,320.00
2012
$15.78
$32,822.40
$28.00
$58,240.00
$25,417.60
2013
$16.66
$34,652.80
$28.00
$58,240.00
$23,587.20
2014
$17.53
$36,462.40
$28.00
$58,240.00
$21,777.60
2015
$18.41
$38,292.80
$28.00
$58,240.00
$19,947.20
Total Wage Difference
$90,729.60
Total Wage Difference 2008-2015
$203,049.60
These are approximate figures. Many factors make exact analysis difficult without the members records. In particular, the 52 weeks worked to qualify for the next pay raise makes each situation different. This also highlights the difference between actual earnings and projections.
The chart shows the difference in wages for the period between 2008 and 2015. A Tier 2 member starting work at $14.50 compared to a member at full scale during this time earned over $200,000 less. During this time the 401k contribution was only 4%. Adding the total T2 income from this period gives us a total of $262,870.40. 4% of 262,870.40 is $10,514.81! This leaves Tier 2 members with an extended period of substandard wages with substandard 401k contributions. The damage from this needs to be addressed.
This program would work even if a pension and retirement health care are bargained in the 2028 negotiations. PTWO is an optional program. Phased retirement is a growing and important trend in today’s world of high costs and increasing expenses. There are several details that need to be negotiated but PTWO could be a valuable benefit for those members that need it.
