May 24, 2013: UPS will save billions in lower pension costs during the life of the new contract as the company reaps the financial rewards of pension deals in the Central and Southern Regions and New England.
For the next five years, UPS will pay very substandard contributions in two of the largest pension plans covering more than 50,000 UPS Teamsters.
Under the new contract, UPS will actually reduce its pension contributions in New England by $2.30 an hour. UPS will contribute just $6.20 an hour into the New England Pension Plan and contributions will be frozen at that rate for ten years.
By comparison, UPS will contribute $9.90 an hour into the Western Conference Pension Fund for full-timers and part-timers starting Aug. 1, and that figure will go up 50 cents every August—unless money is diverted away from members' pensions to maintain their health benefits under the new healthcare deal.
By the end of the year, UPS will be paying just under $12 per hour for Teamster pensions in the West and just $6.20 an hour for Teamster pensions in New England.
The company's savings are even more extreme in the IBT-UPS Pension Plan that covers 44,000 UPS full-timers in the Carolinas and Central and Southern Regions. UPS contributes less than $4 an hour into that fund.
Together, the two pension deals will save UPS more than $4 billion during the next contract alone.
It's true that UPS had to pay $6.1 billion to pull out of the Central States Pension Fund. But the company will make all that money back, and more, by the end of this contract.
UPS also had to pay another $43 million a year in withdrawal liability under the New England pension deal. UPS will save millions more than that in reduced pension contributions in New England.
The Bottom Line
Most Teamsters don't think much about our pensions beyond how much our monthly check will be.
The pension accrual for UPS Teamsters in New England is guaranteed for the next ten years.
The 30-and-out pension for UPSers in the Central, South and Carolinas will go up to $3,200 a month.
The annual accrual rate is frozen for another four years and then goes up only $5 in the fifth year which will keep benefits in the largest pension plan covering UPS Teamsters the lowest in the country.
The company takes the long view on pensions.
By the end of the contract, UPS will have made back the $6.1 billion in withdrawal liability it paid to Central States and will continue to save billions in reduced pension costs into the future.
"UPS has a long term plan on pensions; Hoffa and Hall don't," said Dan Kane, a retired member of Los Angeles Local 63. "It's only a matter of time until UPS comes after our pension plan. Why would UPS want to keep paying $12 an hour for pensions in the West when they're paying half or a third of that in Boston, Louisville and Atlanta? Members need to take back this union to defend our pensions."