Posted:
May 10, 2011
By Tom Bethel
National President
In my last report here, I predicted confidently that the new American Maritime Officers Defined Contribution Plan would enhance retirement security for all AMO members and appeal to potential new AMO employers as a sound, practical alternative to traditional but unsustainable defined benefit pension plans. Events since then suggest that a growing number within our union's ranks and several merchant vessel operators outside the AMO fold see it the same way.
Some AMO members I talked with recently in the deep-sea, Great Lakes and inland waters fleets have applied the appropriate factors - age, wage rates and vacation benefits, employer contribution levels, valid assumptions about career advancement, increased income, compound interest and reliable long-term market performance projections - to calculate what their individual AMO Defined Contribution Plan accounts will be worth when they are ready to end their working time at sea.
These AMO members had been skeptical about the AMO Defined Contribution Plan, particularly as an eventual replacement for the defined benefit AMO Pension Plan. But now they were pleased with and impressed by their estimated account balances. AMO members vested in the AMO Pension Plan were even more comfortable with the prospect of retirement when they factored in their estimated monthly benefits, the option of rolling the lump sum values of these benefits into their AMO Defined Contribution Plan accounts, and the estimated amount of cash they will accumulate separately through their AMO 401(k) Plan and AMO Pension Plan Money Purchase Benefit accounts.
In addition, reports filtered back to me that cadets at the U.S. Merchant Marine Academy and at the six state-operated maritime academies were enthused about the possibility of working at sea under AMO contract and earning retirement savings under the AMO Defined Contribution Plan, the AMO 401(k) Plan and the AMO Pension Plan Money Purchase Benefit. Like all young men and women planning their careers, these cadets neither anticipate nor expect participation in a defined benefit retirement plan.
In another significant development, executives with several merchant vessel operating and management companies approached me to discuss the mechanics and the merits of the AMO Defined Contribution Plan. These executives represented companies large and small, companies serving diverse domestic and international markets. Most were U.S.-flagged shipping companies or had U.S. and foreign-flagged vessels in their fleets, but some operated foreign-flagged ships exclusively and were considering employing U.S. merchant marine officers for specific reasons in specific markets.
All of these companies want highly skilled and motivated officers aboard their vessels, and they understand that the rewards of difficult and demanding licensed work at sea must include retirement that makes these jobs worthwhile. But they fear the cost and the consequence of the vanishing defined benefit pension plan, which is prone to relentless risk and unrestrained, unmanageable cost.
These companies see the AMO Defined Contribution Plan as an innovation, a way out of a dilemma - how to provide for the legitimate needs of their seagoing officers without compromising the companies' competitive positions.
I expect additional contacts that could lead to serious discussion and negotiation. The result for American Maritime Officers could be an even larger, stronger employment base and the greater security that goes with it. Jobs mean additional opportunities for everyone in our union and, just as importantly, steady and sustained employer contributions to all of the AMO benefit funds, which serve all deep-sea, Great Lakes and inland waters AMO families.
As always, I welcome your comments and questions. Please call me on my cell at (202) 251-0349.
Understanding the real and potential benefits of the new AMO Defined Contribution Plan
By Tom Bethel
National President
In my last report here, I predicted confidently that the new American Maritime Officers Defined Contribution Plan would enhance retirement security for all AMO members and appeal to potential new AMO employers as a sound, practical alternative to traditional but unsustainable defined benefit pension plans. Events since then suggest that a growing number within our union's ranks and several merchant vessel operators outside the AMO fold see it the same way.
Some AMO members I talked with recently in the deep-sea, Great Lakes and inland waters fleets have applied the appropriate factors - age, wage rates and vacation benefits, employer contribution levels, valid assumptions about career advancement, increased income, compound interest and reliable long-term market performance projections - to calculate what their individual AMO Defined Contribution Plan accounts will be worth when they are ready to end their working time at sea.
These AMO members had been skeptical about the AMO Defined Contribution Plan, particularly as an eventual replacement for the defined benefit AMO Pension Plan. But now they were pleased with and impressed by their estimated account balances. AMO members vested in the AMO Pension Plan were even more comfortable with the prospect of retirement when they factored in their estimated monthly benefits, the option of rolling the lump sum values of these benefits into their AMO Defined Contribution Plan accounts, and the estimated amount of cash they will accumulate separately through their AMO 401(k) Plan and AMO Pension Plan Money Purchase Benefit accounts.
In addition, reports filtered back to me that cadets at the U.S. Merchant Marine Academy and at the six state-operated maritime academies were enthused about the possibility of working at sea under AMO contract and earning retirement savings under the AMO Defined Contribution Plan, the AMO 401(k) Plan and the AMO Pension Plan Money Purchase Benefit. Like all young men and women planning their careers, these cadets neither anticipate nor expect participation in a defined benefit retirement plan.
In another significant development, executives with several merchant vessel operating and management companies approached me to discuss the mechanics and the merits of the AMO Defined Contribution Plan. These executives represented companies large and small, companies serving diverse domestic and international markets. Most were U.S.-flagged shipping companies or had U.S. and foreign-flagged vessels in their fleets, but some operated foreign-flagged ships exclusively and were considering employing U.S. merchant marine officers for specific reasons in specific markets.
All of these companies want highly skilled and motivated officers aboard their vessels, and they understand that the rewards of difficult and demanding licensed work at sea must include retirement that makes these jobs worthwhile. But they fear the cost and the consequence of the vanishing defined benefit pension plan, which is prone to relentless risk and unrestrained, unmanageable cost.
These companies see the AMO Defined Contribution Plan as an innovation, a way out of a dilemma - how to provide for the legitimate needs of their seagoing officers without compromising the companies' competitive positions.
I expect additional contacts that could lead to serious discussion and negotiation. The result for American Maritime Officers could be an even larger, stronger employment base and the greater security that goes with it. Jobs mean additional opportunities for everyone in our union and, just as importantly, steady and sustained employer contributions to all of the AMO benefit funds, which serve all deep-sea, Great Lakes and inland waters AMO families.
As always, I welcome your comments and questions. Please call me on my cell at (202) 251-0349.