January 10, 2008: A study of major Teamster pension plans reveals a growing “Benefit Divide,” with the new UPS Pension Plan paying the worst benefits in the country.
By the end of the contract in 2013, the Benefit Divide will grow much worse, with tens of thousands of UPS Teamsters receiving 25- or 30-and-out benefits of $5,000 per month while the UPS Plan pays just $3,000.
Some Teamster funds are also falling behind as the Benefit Divide grows—but none as far as the new UPS plan, which covers 44,000 Teamsters in the Carolinas and the Central and Southern Regions—nearly half of the company’s full-time workforce.
The Pension Comparison Chart compiled by TDU shows the range and variation of benefits of the great majority of pension plans covering UPS Teamsters. Click here to view the chart.
While this information pertains to UPS Teamsters, almost all of these funds cover other Teamsters as well. In most of these plans, freight and carhaul Teamsters and members covered by other Teamster contracts get the same or similar benefits.
Key findings of our preliminary Pension Comparison study include:
- The UPS Pension Plan pays the lowest level of benefits and will save the company billions in reduced benefit costs. There is not a single plan, large or small, covering UPS Teamsters that is worse. Almost all provide a better pension, and some provide a far superior pension. Many provide a larger pension at 25 years than the UPS Plan pays for 30 years service.
- The Benefit Divide will grow wider over the life of the new master contracts. By the end of the new UPS agreement contract in 2013, tens of thousands of Teamsters in the Western Region will retire with a $5,000 pension, with less than 30 years service. So will UPS Teamsters in Washington, D.C. In some other areas UPS Teamsters will retire with $4,000 for 30-and-out.
- While the new UPS Plan is at the bottom of the Benefit Divide, other major Teamster plans are also falling behind.
What Caused the Divide?
A critical factor behind the growing Benefit Divide is the wide range in pension accruals, the amount you earn (or “accrue”) each year to your monthly pension benefit upon retirement.
Many Teamsters are used to benefit structures like “$3,500 for 30-and-out.” As you look over the Pension Comparison chart, many of the benchmark benefits look like that.
But many Teamster pension funds have shifted their benefit structure to one based on an annual accrual, or multiplier. Under this system, you earn (or “accrue”) money toward your monthly pension benefit each year you work.
Within five years, most Teamsters will be getting a pension based on the accrual method, because those benefits are quickly surpassing the existing 25-and-out and 30-and-out benefits.
For example, the Western Pennsylvania plan currently has a $3,500 30-and-out benefit. But it also has an accrual system that will rapidly overtake that benefit. That’s why by the end of the current UPS contract, members will be able to retire with about $4,300 there. Some pension plans will be paying more, some less, but most will be in that range.
But the accrual in the UPS Plan is set artificially low and set to rise slowly. And it cannot be improved for five and a half years, because it is locked down by the contract.
While the accrual rate will be $400 in some funds and $300 in a number of funds, the accrual in the UPS Pension Plan will be only get to $158 by the end of the contract. This is even lower than the Central States Pension Fund, where the accrual will reach $200 by 2013.
The comparison chart reveals the wide range and variation of benefits for UPS Teamsters—and many other Teamsters earning top pension benefits as well. Our union needs a comprehensive plan to bring all benefits up to the highest levels and to upgrade all Teamster contracts so that Teamsters getting inferior benefits can achieve quality pensions.
Click here to view the TDU Pension Comparison Chart.