When large companies have a greater number of hourly workers rather than salaried workers, and those workers are unionized, the possible early retirement incentive for hourly workers has to be acceptable to the union.
For instance recently a large automobile company offered what they considered a very attractive plan, an early retirement incentive, to their hourly workers in order to reduce costs. The union accepted it, and the workers, about 12 percent of their specific factory work force, accepted the incentives. 12 percent by the way is a very successful response.
The particular incentives broke down thusly; the workers would be given $20,000 in cash for retiring and also they would receive a voucher worth $25,000 to buy a new vehicle. Another early retirement incentive for hourly workers is that the company will fill current job openings with current employees where employees are needed in other automobile manufacturing plants. Meanwhile, new employees will be hired at the entry-level wage and benefit structure.
What this allows the company to do is to rehire new workers at a much lower wage, as well as to insure the company's long term viability and future success because they will now be given the Federal aid promised to them in the Barack Obama plan to save the automotive industry from total collapse.
Another type of early retirement incentive for hourly workers has centered on health insurance. Many workers who are near age 65 or have a few years left to reach the age of 65 may be very reticent to accept financial incentives but would be very happy to accept instead incentives that include a health insurance plan coverage until they can move to Medicare coverage part A and B. Often in determining this particular incentive companies will base it on the length of time that the employee will need this particular incentive and make their offers accordingly, possibly reducing the amount of cash involved in some buyouts or early retirement. Also, some companies have been known to work out a strategy where they swap equity in the company for cash payments into a union-approved and union-run trust that then takes over the retiree health care costs.
Of course, it should be mentioned in passing that Federal law requires that any employer who is sincerely considering the offering of any early retirement incentive for hourly workers needs to inform their employees who ask about such benefits. Also, buyouts or the early retirement of hourly employees often not only prevents a company from having to declare bankruptcy but also sometimes it is used to avoid strikes that could lead the company down the financial drain as well. Buyouts or early retirement will sometimes allow a company to offer lower benefits to new employees as well as bringing in new employees at a substantially lower wage.
It is interesting to note too that the early retirement incentive for hourly workers always contains pretax incentives, and thus may present a substantial tax problem to those choosing that early retirement incentive of cash or paid health insurance. Prior to anyone accepting any kind of package of either early retirement or a buyout package, they must weigh their alternatives very carefully.
The story is provided by www.retirement-planning-pages.com.
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