American Journal of Nursing
- December, 2002 - Volume 102, Issue 12
Solidifying the Future
United American Nurses (UAN)/AFL-CIO, the labor arm of the ANA, fights for secure retirement for nurses.
By Edmund Bronder
Retirement security is almost an oxymoron these days. For RNs, the prospect of retirement raises unsettling questions. What will my retirement be like? Will I have enough money to live securely and with dignity? Will I run out of money before I die? How many more years must I work to be able to retire?
Nurses are not the only ones concerned. A 2002 study by the global consulting firm Watson Wyatt Worldwide (Retiree Health Benefits: Time to Resuscitate?) found that 80% of Americans over age 55 report that their anticipated standard of living in retirement is tied to pension income and retiree health coverage. This suggests that without such benefits many people would be forced to delay retirement or accept a reduced standard of living in retirement.
Women especially have reason for concern. Only 18% of women age 65 and older receive a pension, according to a Heinz Foundation report (What Smart Women Need to Know about Pensions). Since pension benefits and Social Security are calculated on life earnings, many women have insufficient retirement income. RNs traditionally have not enjoyed strong annual earnings, and many who have changed jobs frequently may not have a secure pension
UAN Strategy: Educate and Negotiate
As the union of RNs for RNs, the United American Nurses (UAN), AFL-CIO, the labor arm of the ANA, is committed to educating its members about retirement issues and negotiating benefits on their behalf.
"Helping nurses understand the complexities of pensions and other retirement benefits is a top UAN priority," says Cheryl Johnson,RN, chair of the UAN. "Education is essential, particularly as the nurse workforce ages." Through union-sponsored workshops, continuing education seminars, Web sites, and newsletters, nurses learn how their retirement plans work and what benefits to expect.
UAN and other unionized registered nurses have long enjoyed higher levels of compensation than their nonunion colleagues.
According to U.S. Bureau of the Census data, RNs covered by a collective bargaining agreement in 2001 earned 15%
more in weekly wage than nonunion nurses. The union premium extends to retirement benefits as well. In a study prepared for the UAN, data from the Current Population Survey for 1994-2001 show that 82% of unionized RNs were covered by a pension plan, compared to 66% of nonunion nurses
Moreover, among unionized employees who have employer-provided pensions, the AFL-CIO found that those pensions are likely to be defined benefit plans (70%, compared to 16% of nonunion workers). When combined with defined benefit pension programs, higher wages can translate into greater retirement benefits.
UAN education programs assist nurses in understanding the important differences between defined benefit and defined contribution plans. Traditional defined benefit (DB) pension plans assure a guaranteed level of benefits upon retirement. Typically, DB plans are funded entirely by the employer who bears the risk associated with providing the specific (that is, defined) benefit. The guaranteed benefit usually is calculated by averaging the annual earnings of the final years of employment--the RN's peak earnings years--plus years of service. Private-sector DB plans are insured by the Pension Benefit Guaranty Corporation, a federal agency.
In a defined contribution (DC) plan, employers generally make periodic contributions to accounts set up for individual employees. The most common DC plan is the 401(k). DC plans provide for either employer contributions only, employee contributes only, or both. The current contribution is guaranteed; but the level of benefit at retirement is not. The benefit payable at retirement is based on the money accumulated in each employee's account and reflects the total of employer contributions, employee contributions, and investment gains or losses. DC plans are not insured against loss.
The Employee Benefit Research Institute, a nonprofit Washington, DC-based organization that analyzes employee benefit programs, recently reported that DB plans have been steadily losing ground to DC plans as the preferred plan type. As employers nationwide switch from offering DB to DC plans, a move sometimes couched in the rhetoric of "giving employees more choice," nurses need to recognize that the switch shifts responsibility (i.e., risk) for managing pension assets from employers to employees and represents an erosion of pension quality. "More choice" for employees means less risk for employers but also a greater burden on nurses to handle their retirement accounts wisely. This can be a challenge in the best of circumstances but potentially disastrous in a volatile equities market.
Furthermore, for RNs with longer job tenure, there can be a substantial difference in the retirement values accumulated under these two types of plans. DB plans favor more senior workers because the value of their benefit accruals as a percentage of compensation increases as they approach retirement. In addition, more senior nurses can receive past service credit by being grandfathered into DB plans at their inception. Ideally, DC plans should serve as a supplement to, not a substitute for, traditional DB plans.
UAN Negotiating Priorities
UAN members have set good retirement benefits as a negotiating priority, and two of them lead the way.
The New York State Nurses Association (NYSNA) is a recognized national leader in RN retirement benefits. Nearly two-thirds of NYSNA collective bargaining agreements provide for defined benefit pensions. NYSNA also is the only
state nurses' association in the nation with its own
pension plan. Begun in 1972, the plan is a multi-employer, defined benefit pension plan and covers thousands of working and retired RNs in the New York metropolitan area. The plan is funded entirely
by participating employers and is jointly administered by a labor-management board of trustees.
Under the plan, nurses working in bargaining unit jobs earn credit toward their pensions based on earnings and length of service. NYSNA has also negotiated with participating employers to provide past service credit (credit accrued by working in a covered position prior to the employer joining the plan). The NYSNA plan offers several retirement options, all of which require five years of credited service. Nurses in the plan may choose to retire with full benefits at age 65, elect standard early retirement with reduced benefits (following age 55 or age 60, depending on when the nurse's active covered employment began), or early unreduced retirement (60 years of age with at least 20 years of credited service under the plan). A disability pension benefit is also available under certain criteria. "NYSNA is second to none in bargaining the best retirement benefits in the industry,"
says Ed Goldberg, a veteran NYSNA nurse.
Another UAN member, the Minnesota Nurses Association (MNA), has one of the oldest multi-employer, portable, non-contributory defined benefit pension plans in the country. Begun in 1962, the plan is jointly administered by MNA and participating Twin Cities hospitals. Like the NYSNA plan, the MNA plan includes a portable service credit that allows a registered nurse working at a participating Twin Cities hospital to continue building her pension even if she changes employment from one participating hospital to another
Under the "Rule of 85," MNA nurses in the plan can exercise early unreduced pension benefits if their age plus vesting years equals 85. Once the RN is vested in the plan, her benefits are guaranteed for life
. The MNA negotiates a minimum monthly benefit for the plan and regularly bargains for increases in the plan.
"Forty years ago the Minnesota Nurses Association pioneered retirement benefits for RNs in the state," says Karen Patek, RN, MNA labor relations specialist. "They achieved what they were told couldn't be done. MNA and other UAN members continue to build retirement benefits programs that reflect the dignity of professional nurses. Our nurses deserve nothing less."
Retiree Health Benefits
The UAN is also fighting employer efforts to reduce or eliminate retiree health benefits. As the Watson Wyatt Worldwide report indicated, employers are using various cost- cutting strategies such as dropping retiree health coverage for new hires, cutting premium contributions, tying premium contributions to employees' length of service, and imposing tougher minimum service requirements for future retirees. While large employers today pay more than 50% of total retiree medical expenses, the Watson study projects that by 2031 they will pay less than 10% as a result of changes the companies have already made to retiree health benefits packages.
In the face of these trends, UAN members continue to negotiate significant benefits. For example, NYSNA-represented nurses at several New York facilities who retire after age 60 but before 65 receive tax-free
cash supplements of up to $3,000 per year that they can use toward the purchase of health insurance coverage.
Nurses represented by other UAN members--such as Michigan, Minnesota, Ohio, Oregon, and Washington-- enjoy contract provisions that provide pharmacy discount cards, cashable unused sick leave, expanded retirement medical coverage, life insurance and post-retirement medical spending accounts. Also being pursued are negotiations to reduce vesting time and length of service requirements for full benefits and self-funded retiree health insurance programs. On top of these efforts, UAN members routinely bargain increases in base wages, cost-of-living and experience differentials, which all result in greater pension benefits.
UAN unions continuously work with, and when needed, pressure employers to realize that good pensions and other retirement benefits are proven retention and recruitment strategies
that keep them economically competitive in a tight RN labor market.
Preparing for the Future
The UAN remains focused on maintaining and enhancing the retirement benefits of registered nurses. "Nurses spend their professional careers looking out for others," Johnson says. "It is reassuring to know that their union looks out for them when it comes to retirement security." For RNs who enjoy the union advantage, education and negotiated benefits are proven methods of ensuring a dignified and financially sound retirement.
Thinking About Retirement: A Starter List of Resources and Information
There are many resources to assist nurses in retirement planning. Besides professional guidance from financial experts, nurses might want to consult their own state nurses associations as well as online resources for additional information. The short list of Web sites below is intended only as a starting point for further research.
This Web site provides usable information on the American Federation of Labor-Congress of Industrial Organizations. It also links to affiliated unions and numerous workplace topics such as pay equity, pension reform and Social Security. Check the sections entitled "Retirement Security," "Working Women," and "Working Families Agenda" as well as "Links of Interest to Working Women" for more information. Also, see the Alliance for Retired Americans.
Created in 1996 by the Heinz Family Philanthropies, the Women's Institute for a Secure Retirement (WISER) works to expand retirement planning education and improve the opportunities for women to secure retirement benefits. Through its POWERCenter program, a cooperative project with the National Center on Women and Aging, WISER serves as a clearinghouse of information and training programs available to women, employers, and community organizations on retirement issues.
Founded in 1978, the Employee Benefit Research Institute (EBRI) is a private, nonprofit, nonpartisan organization whose goal is to expand public policy research and education on economic security and employee benefits issues. Each month EBRI publishes "Issue Briefs," which offer analyses of employee benefit issues and trends.
The American Savings Education Council (ASEC), a coalition of private and public sector institutions, promotes public awareness about what is needed to ensure long-term personal financial independence. Its Web site includes a "Ballpark Estimate" worksheet to identify approximately how much money a person needs for a comfortable retirement.
AARP, formerly known as the American Association of Retired Persons, is a nonprofit education and advocacy organization that focuses on health and wellness, economic security and work, long-term care and independent living, and personal enrichment. Founded in 1961, AARP today represents more than 35 million members, about half of whom are still in the workforce.
The Pension and Welfare Benefits Administration (PWBA) is responsible for administering and enforcing the fiduciary, reporting, and disclosure provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (ERISA). Administered by the U.S. Department of Labor (DOL), PWBA provides information about and access to employee benefit plan documents filed with the DOL.
Edmund Bronder is senior policy fellow at United American Nurses, AFL-CIO, the labor arm of the ANA