THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Saturday, February 22, 1997 TAG: 9702220305
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: 64 lines
When 50 Tarmac America Inc. ready-mix drivers sat down last month to negotiate their union contract, they asked for a benefit already offered to the Norfolk company's nonunion workers - a 401(k) retirement savings plan.
Tarmac refused. The popular savings plan is available only to nonunion workers, the company said.
Increasingly, the Teamsters and other unions are pushing to be included in the popular 401(k) plans. And some companies suggest there's a good way to get in on their savings plans: Get out of the union.
``The nonunion people have it and they are just going to hold it over our heads like a carrot and stick,'' said David Vinson, president of Teamsters Local 822, which represents Tarmac drivers.
The retirement savings plans have become more popular with union members as companies have trimmed their pension benefits and the stock market has continued to climb.
The plans allow workers to contribute a percentage of their pre-tax earnings to mutual funds run by professional managers. Some companies match employee contributions up to a certain amount.
And the popularity of 401(k) plans feeds itself. Participants in the plans have climbed from 10 million in 1985 to about 22 million by the end of 1995, according to Access Research Inc. in Windsor, Conn. Union workers who hear their nonunion colleagues talking about how some mutual fund is performing want in on the action, union leaders say.
Twenty workers at a Georgia Pacific distribution center off Witchduck Road recently negotiated a contract that lets them participate in a 401(k) plan sponsored by the Teamsters. Workers at Gwaltney of Smithfield will soon vote on a contract that lets them join the same plan.
Teamsters International last April joined with State Street Global Advisors to form a 401(k) investment plan. Employers that are too small or just don't have a plan can offer that 401(k) to their Teamsters-represented workers.
Of course, there are drawbacks as well as advantages to relying on the tax-deferred plans for retirement. Ray Davenport, business manager with the International Union of Operating Engineers Local 147, points out that the plans emphasize each person's diligence toward saving money.
Ford Motor Co., for instance, has had its ``tax-efficient savings plan'' since it was negotiated by the United Auto Workers in 1984. Hourly workers can contribute up to 20 percent of their pre-tax earnings. About 42 percent of Ford's hourly workers participate in the plan.
In Ford's case, those workers still have a pension to fall back on. But many companies have used their 401(k) plans to replace or drastically reduce pension plans.
That frees companies from providing guaranteed retirement benefits, Davenport said.
On the other hand, a pension - or defined benefit plan - will be there when a person retires regardless of how the person manages his income.
And what if a worker gets hurt? A pension plan, if the worker is vested, would pay the injured worker benefits.
``I have yet to see a 401(k) plan that has disability provisions,'' Davenport said. ``I prefer to see them as a supplement to a defined benefit pension plan.'' ILLUSTRATION: 401(k) Participants
GRAPHIC
[For a copy of the chart, see microfilm for this date.]
SOURCE: Access Research, Inc.