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Many companies have eliminated their defined-benefit (guaranteed) pension plans and others have reduced them and shifted to providing retirement benefits through 401(k) savings plans or other defined-contribution plans. In these plans, the employer only contributes a fixed amount to the plan each year. Plans like 401(k)s shift the investment risk and responsibility to individual workers and typically reduce corporate costs.

When unions negotiate contracts, they generally include defined-benefit pension plans, which guarantee retirees a fixed monthly income. These plans are usually funded entirely by employers through tax-exempt contributions and automatically cover all qualified employees.

Union workers have a “union advantage” in benefits and are much more likely to have pensions—and good pensions—than nonunion workers. In 2011, 88 percent of union workers participated in pension plans versus 49 percent of nonunion workers. Seventy-eight percent of union workers participated in defined-benefit pension plans in 2010, compared with 19 percent of nonunion workers.

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