What Is a Union Pension Annuity?
Unions can provide pensions as a retirement plan for their members. These plans have several tax benefits that workers can take advantage of by participating.
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Definition
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Union pensions are a defined-benefit plan, which means that workers will receive a fixed pay amount once they reach certain eligibility rules. These pensions are similar to annuities as they grow tax deferred and are paid out during a specific time period, which is the worker’s retirement years.
Fun Fact
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According to the U.S. Department of Labor, 87 percent of union workers are more likely to have a pension plan compared to 51 percent of non-union employees in 2009.
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Considerations
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Most union pensions have minimum age and years of service requirements for workers to meet in order to become eligible.
Funding
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Union pensions are funded through worker contributions, which are tax-deductible.
Warning
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Union pension benefits cannot be paid out before retirement age unless the worker retires early or is disabled. If the worker retires early, his benefits may be decreased.
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References
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