Implementation of Pension System Term Paper
- Length: 7 pages
- Subject: Economics
- Type: Term Paper
- Paper: #88066580
Excerpt from Term Paper :
It is expected that by 2025, nearly fifteen percent of the world population will likely to be over sixty years of age. With increasing life expectancy the population of developing countries is aging much faster than that of industrial countries. It is expected that in 2030, approximately eighty percent of the total elderly population will reside in developing countries. A more relevant measure of the sustainability of old-age support systems is the dependency ratio, which calculates the elderly (normally those above 65) as a percentage of the working age population (between 15 and 64 years old). The International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the "International") has two pension plans, the Teamster Affiliates Pension Plan (the "Affiliates Plan") and the International Brotherhood of Teamsters Retirement and Family Protection Plan (the "Family Plan").
Pension plan is a retirement plan that is paid by the employers for the employees with the contribution of the employees, and it varies from schemes to schemes. The pension provides members with a monthly income for life when he/she will stop working in addition to his/her Social Security benefits. The Pension Benefit Guaranty Corporation (PBGC) insures certain benefits provided by the plan. "PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to insure and protect pension benefits in private traditional pension plans known as defined benefit plans. If your plan ends without sufficient money to pay all benefits, PBGC's insurance program will pay you a benefit." (pbgc 2000).
The International Brotherhood of Teamsters (IBT) is an affiliate itself or any Teamster organization chartered by the IBT, including local unions, conferences and joint councils but excluding retiree clubs or chapters. Publicly held corporations hold shareholder meetings once a year, at which the critical decisions shaping each company, are decided. The Teamsters General Pension Fund and the Teamster Affiliates Pension Plan launched several shareholder resolutions that dealt with such issues as executive pay to how boards of directors are elected. Two types of pension plans generally cover teamsters: defined benefit and defined contribution
Any Qualified Plan, which is not a Defined Contribution Plan, is Defined Benefit Plan. Contributions to a Defined Benefit Plan are based on a computation of what is required to provide determinable benefits to each plan participant. Actuarial assumptions and computations are required to calculate these contributions. In addition to employer contributions, participants may make non-deductible voluntary contributions to their Plans. Even though the contributions are not deductible, the earnings on them are tax-free until distributed in later years. The limits of these contributions are 10% each year and are subject to rules and limits.
Based on a formula set by the Plan, Defined Benefit Plans provide you with a guaranteed payout, after your retirement. Thus, you have no investment risk or responsibility. This type of pension is related to Social Security, the people working pay for the people, who are retired. With a defined benefit plan, your retirement benefit is a guaranteed amount, linked to your age and/or the number of years for which your employer has made contributions to the pension fund on your behalf (known as years of contributory credit). For example, Central States fund participants get $2,500 per month with 25 years of contributory credit at age 57. In the West, benefits are based on a PEER system, where you become eligible once your age and years of contributory credit combine to a certain number, currently 80. Many plans now also offer retirement benefits linked solely to years of contributory credit, like the 25-and-out benefit in the Central States.
The Defined Contribution Plan is called the Self-Managed Plan. Your retirement benefit is based on the amount of money that has been contributed to the plan and the earnings on that money, over time. Defined Contribution Plans provide an individual account for each participant. Your employer contributions are held in an account with a defined contribution plan and invested by the fund on your behalf until you retire. Your benefit depends on how much money has accumulated in your account. Depending on how your money has been invested and what the economy is like, when you retire, your benefit level can vary quite substantially. Unlike the Defined Benefit Plans, there is no guaranteed payment at retirement. You can choose how to invest your contributions and earnings, using one or more of the investment funds the plan offers (TIAA-CREF, Aetna or ICMA). If your investments do well, your account will flourish. If your investments do poorly, your account will lessen. In other words, you accept all the investment risk. Benefits largely depend on the amount contributed; however, expenses, income, losses and gains also affect them. Annual contributions (excluding earnings) to defined contribution plans may not exceed the smaller of $40,000 or 100% of a participant's compensation opening in 2002. However, this individual percent limit is usually not attainable because the employer's deduction limit may not exceed 25% of eligible compensation.
As the employers pass the risk for your retirement on to you, they usually prefer defined contribution plans. If the stock market dips a few months before your retirement or if the plan administrators mismanage the fund (as in the case of the Central Pennsylvania fund) your employer is not responsible for making up for the shortfall. The rise of North America is working families into the middle class. The empowerment of workers through collective bargaining. The protections of health, safety and retirement security as well as the establishment of dignity in the workplace. How did these remarkable gains take place in the short historical space of 100 years? All answers point in one unmistakable direction: the International Brotherhood of Teamsters.
The International Brotherhood of Teamsters is one of the largest labor unions in the United States. IBT has so much power that it could almost shutdown nation's economy. A teamster was originally a person who drives a horse-drawn wagon, and such laborers made up the original core of the union at the start of the 20th century. Teamsters Union, U.S. labor union formed in 1903 by the amalgamation of the Team Drivers International Union and the Teamsters National Union. Its full name is the International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America (IBT); the majority of its members are truck drivers. So, the IBT was officially formed in 1903 in Niagara Falls, New York, as the merger of several different groups representing teamsters. The group expanded to include truck-drivers in the 1920s, and grew during the hard times of the Great Depression and World War II. By 1949, its membership had topped one million. At the 1957 IBT convention held in Miami Beach, Florida, Jimmy Hoffa was elected president of the union, which then had 1.5 million members. In the next two decades, Hoffa's legal troubles and union ties to organized crime signaled a long period of descent. Like most American unions, the IBT has seen a decline in membership over the past 20 years.
Serving the Members
The International Brotherhood of Teamsters, with 1.4 million members, is one of the largest labor unions in the world. It is also the most diverse union in the U.S. Today, it would be hard to identify a Teamster on the streets because we are everywhere. The union represents everyone from A to Z - from airline pilots to zookeepers. One out of every ten union members is a Teamster.
Team Drivers Industry ? The work of team drivers and cartmen was difficult, with long hours and poor wages and working conditions. The team drivers began to band together and form local union groups to try and improve their situation.
AFL Ties? In 1898 Samuel Gompers, President of the American Federation of Labor (A.F.L.), helped to organize local team drivers' unions into the Team Drivers International Union (TDIU). George Innis, who at the time was President of one of the local unions, became the President of the TDIU.
Creation of IBT
Two opposing factions developed in the TDIU. The "owner faction" believed it was acceptable to have members who owned five or less teams of horses. The "employee faction" believed that only drivers, not owners, should be allowed membership in the union.
In 1902 the "owner faction" broke away from the TDIU and formed the Teamsters National Union (TNU) under the leadership of Albert Young.
The "employee faction" remained the TDIU under Innis.
However, it was not long before the downfall of the TNU began. Albert Young, the TNU leader, had close ties with a ward politician named Driscoll, known for many questionable schemes. This caused dissension in the ranks. Many locals opted to leave the TNU and re-join the TDIU.
Samuel Gompers again became involved, and by 1903 had convinced the two factions to meet and discuss terms for amalgamation in a joint TDIU and TNU Convention at Niagara Falls, NY, in 1903.
The resulting union became the International Brotherhood of Teamsters, with Innis maintaining the leadership role.…