Analysts say the surprisingly strong deal the UAW secured in those talks from U.S. automakers for member 401(k) accounts could elevate the prominence of DC-related demands in future collective bargaining talks.

The centerpiece of those retirement gains was a “huge” boost of more than 70% in the annual contributions Ford, GM and Stellantis make to workers’ 401(k) accounts by the end of the new contract, to 10% of salaries from 6.4% at present, UAW Vice President Chuck Browning said in a presentation on the union’s website detailing the outcome of the talks. The contributions are automatically made and do not require an employee match.

The agreements reached over the final week of October — first with Ford, then Stellantis and finally GM — still need to be approved by UAW members at each company.

For UAW members working at Ford, the agreement will catapult the contribution the storied auto company makes to the accounts of workers making a top hourly wage set to rise by 2028 to more than $40 to $11,000 from $6,300 at present, Browning said.

Analysts said they were impressed by the size of that contribution hike after decades where unions struggled to deliver for their members.

Boosting company 401(k) contributions to 10% is both “huge … and amazing” — a great win for unions, said Hannah Schriner, a managing principal with Meketa Investment Group and head of the consulting firm’s defined contribution practice group. She noted, however, that it remains to be seen just how many UAW members will be in line to enjoy those benefits.

A 25% wage increase the UAW secured for members in the latest round of talks, set to be staggered over the coming five years, will lift the top hourly wage members can earn to more than $42 an hour from roughly $32 an hour at present, confirmed a UAW spokesman. He couldn’t immediately say what proportion of the union’s membership earns that top rate.

Meanwhile, workers who don’t opt out of their DC auto-escalation programs will see their pretax contributions rise eventually to 10% of their salaries under the latest agreement, with that sharp increase from the current 6% ceiling lifting total contributions to their 401(k) accounts to more than $20,000 a year before market-related gains or losses are taken into account.

“We are boosting the hell out of these 401(k)s and doing everything we can to secure our retirements,” Mr. Browning said.

Analysts said for the latest round of talks the union appeared to be much more focused on retirement-related benefits and defined contribution in particular.

“Their eyes were on retirement,” noted Alicia Munnell, director and founder of the Center for Retirement Research at Boston College. “Their request was to go back to a DB plan, which I think was just not on (the table), but instead they made significant increases in the contribution rate” for participants’ 401(k) plans, she said.

And DC could increasingly be a focus of collective bargaining talks in the U.S. going forward, industry analysts say.

Amid growing scrutiny around whether the U.S. Social Security system can be sustained, it should come as no surprise that additional compensation for workers will come through benefits packages, reflecting “the need for us to really step it up when it comes to the retirement space,” said Meketa’s Schriner.

And with more and more baby boomers retiring now, often with inadequate retirement savings, “DC is going to become much more of a focus,” she predicted.

Still, Munnell warned, while the UAW success in bolstering its members’ 401(k) accounts is “definitely a positive development for retirement security,” for many it won’t be a panacea. “It’s making up for a lot of years when wages and retirement benefits were not very high,” she said.

Meanwhile, for DC plans to successfully deliver adequate retirement savings will require decades of steady employment to ensure adequate compounding, and too many workers in the bottom third of the U.S. workforce by income are employed too intermittently to make that formula work, Munnell said.

Schriner echoed those concerns but said she still holds out hope that the UAW success in strengthening its members’ DC accounts could prove a “game changer,” providing momentum for a broader push to strengthen retirement outcomes for U.S. workers.

An estimate by Pensions & Investments, assuming a jump in combined contributions from auto companies and UAW members to roughly $22,000 a year from $12,600, and an annualized investment return of 6%, shows 401(k) retirement savings for union members earning the top wage rate compounding to more than $2.5 million over a 35-year career, roughly $1 million more than with the 6.4% company contribution and 6% auto-escalation ceiling.

UAW President Shawn Fain, speaking alongside Browning, called his union’s success a “call to action to workers everywhere to organize and fight for a better life.”