Nurses win on one big contract issue -- their pension planby Jessica Mador, Minnesota Public Radio
St. Paul, Minn. — Along with staffing, pension contributions and benefits were at the heart of the stalled labor negotiations between 14 Twin Cities hospitals and more than 12,000 nurses.
While the nurses gave ground on wage increases, and didn't get the fixed staffing levels they wanted -- the tentative contract agreement announced last week preserved the nurses' pension plan as is.
When she heard that news, cardiac nurse Laurie Kilfoy was relieved.
"I'm happy that we were able to retain our full benefits, as far as the pension was concerned," she said.
Kilfoy has been a nurse for 23 years. She's nowhere near retirement, but says the pension offers her a sense of security about the prospect.
"The issues for me as a nurse were the pension, the health care plan and safe staffing," said Kilfoy.
She says the defined benefit pension plan was a major factor in her decision to work at St. John's Hospital.
Along with wages and nurse-patient ratios, the pension was a big sticking point in the months-long negotiations.
The hospitals had proposed reducing their pension contributions by one-third. That would have been a big hit to a plan that guarantees a set income to nurses after they retire.
The union nurses have a "defined benefit" plan. Even if the stock market drops, the hospitals are still on the hook for the nurses' future pension payments.
In a 401k or 403b plan, employees invest their own money in the markets, and carry all the risk associated with it.
If the nurses approve this contract, they walk away with their pension intact, at least for now. Nurses also won on every other hospital proposal to reduce their benefits -- they won't be required to switch to a cheaper health care plan, and they preserved their seniority agreement.
Hospitals spokeswoman Maureen Schriner says the nurses' pension was a major issue in the talks, because pension costs are projected to rise dramatically over the next few years.
"It went from 6 percent to 12 percent of our payroll cost, so it essentially doubled, and it is an expensive plan, without any doubt," said Schriner.
The hospitals aren't alone in trying to change these plans. Nationally, defined benefit plans are on their way out, as many employers shift the burden of retirement investments to employees.
The numbers bear this out.
Twelve years ago, 90 percent of Fortune 100 companies offered defined benefit pension plans. But now, less than half of those large companies offer them to their newly hired salary employees, according to health industry consultant Dave Delahanty.
The reason is simple: Wall Street and today's bad economy.
"The companies had a tough time managing all that volatility because the markets would go up and the markets would go down and they were at risk for all of that," said Delahanty. "So they have, in effect, shifted some of that risk to their employees. So they have more stability in their balance sheets and profits and losses every year."
Delahanty says the health care industry, like most others, is trying to cut costs. He says he expects the percentage of defined benefit pension plans to continue to drop going forward.
Given the recession, nurse union negotiator Nellie Munn says she wasn't surprised the hospitals tried to make cuts to the pension.
"When the stocks are performing better it's a much less expensive plan, and then when they are performing worse it appears to be more expensive," said Munn. "If you have at least some basic guaranteed benefit -- that through all of those changes in time, through the course of a career -- that in the end you would come away with a modest pension benefit."
If the nurses approve the new contract, they'll keep their pension plan in place for at least another three years.
- All Things Considered, 07/06/2010, 5:24 p.m.