As part of offering a Total Rewards package that is both competitive for employees and sustainable for the organization, Butler is proposing that new employees hired after 12/31/2025 be enrolled in a 403(b) retirement plan with a 6% company match in lieu of participation in the current Butler pension plan. The proposed change would not affect current employees. This document separates the fact from fiction about retirement plans.
Fiction: Butler is trying to take the pension away from all employees.
Fact: There will be no changes to the pension for current employees. Current employees who are already in the plan will continue to accrue benefits under the same rules and formulas. The freeze applies only to future hires.
Fiction: Freezing new entrants to the pension will jeopardize the security of the pension fund for current retirees and participants.
Fact: Freezing new entrants to the pension does not reduce the value or security of current participants’ benefits. Unlike older pension models, Butler’s pension funding model is not dependent on new employee contributions to remain solvent. In fact, freezing new entrants helps protect long-term funding by limiting future liabilities and keeping current obligations stable.
Fiction: The Butler pension fund is in financial trouble and is not well-funded.
Fact: The pension plan is currently 90% funded, which is considered a healthy and stable status by industry standards. This strong funding means the plan is well-positioned to meet its obligations to current participants and retirees.
Fiction: Future Butler employees will struggle to save for retirement with the new plan.
Fact: Employees hired in the future will be able to take advantage of a 403(b) plan with a 6% company match that puts them in control. Employees increasingly prefer the flexibility, portability, and personalization consistent with modern defined contribution retirement plans. They have a shorter vesting schedule than pension plans, allow them to take their retirement savings with them if they change employers, enable them to designate beneficiaries for their entire account balance, and better customize their investments to align with their financial goals.
Many hospitals and health system employers have transitioned new hires to defined contribution plans (like 403(b)s) while preserving pensions for current employees. This keeps organizations competitive and financially sustainable while honoring existing commitments to their employees.
