(Reuters) — Teamsters unions representing 16,000 workers of Costco Wholesale Corp. on Tuesday recommended their members approve a new contract offer from the retailer that they said would secure larger pension contributions throughout an employee's career.

The new offer came after the union members, which represent about 8% of the retailer's global workforce, rejected an earlier proposal that would not have extended coverage in the defined benefit pension plan to non-participating employees.

The new agreement allows those employees — about 4,000 on the East Coast on a 401(k) plan — to join the other roughly 12,000 in California in their defined benefit plan, the International Brotherhood of Teamsters said on Tuesday.

The breakthrough comes as a tight U.S. labor market prompts retailers to improve pay and benefits. Reuters reported on Monday that Target Corp. was lifting its minimum hourly pay by $1 to $10, its second hike in a year and following a similar bump by Wal-Mart Stores Inc.

Without disclosing details, the Teamsters said that language and economic changes allowed it to reverse position and recommend the offer. Ratification would conclude a 12-year push to make the pension change, the head negotiator said.

The new plan “means more money being contributed especially throughout an employee's career,” Rome Aloise told Reuters. “The way the Costco plan works is the longer you are there the more you get, which is what they believe in: That you get rewarded for your longevity.”

Costco did not immediately respond to a request for comment.

Costco has a reputation as a good employer with relatively high wages, standing out in a retail industry that faces criticism from labor activists for not paying workers enough to make ends meet.

But Costco had characterized the initial, rejected proposal as its “last, best and final offer,” the union said last month.

When asked why Costco changed its mind even though the new agreement could increase costs, Mr. Aloise said he believed the company came to understand how important the pension was to the workers. “Costco is a rare company,” he said.

West Coast union members will likely vote on the contract in early May and East Coast members in June, Mr. Aloise said.

In its latest annual report, Costco said it had 205,000 employees globally, all nonunion with the exception of those represented by the Teamsters. It said it considered its employee relations to be very good.