Will Hoffa Let UPS Split Up the Central States Pension Fund?

May 9, 2007: Management has put a proposal on the table to pull UPS Teamsters out of the Central States Pension Plan – the plan that covers 42,000 full-timers in 25 states.

UPS wants to create new pension plan to be run jointly by trustees from UPS and the Teamsters—similar to the Local 804 plan where the company recently forced through a 30 percent pension cut over the opposition of Teamster trustees.

Management knows what they want and they’ll throw money at us to get it. To pull out of Central States, UPS would be legally required to pay some $4 billion to the fund in withdrawal liability. The company sees this is as an investment in weakening our union, dividing UPSers from other Teamsters, and busting up Teamster pension plans.

According to the CEO of ABF, another company that wants to break out of Teamster pension plans, the withdrawal penalty can easily be made up over time in company savings on future benefit costs.

The Hoffa administration is considering accepting the proposal, calling it “a serious proposal that must be seriously evaluated.” Many Teamsters believe it is a done deal.

Pension Improvement?

UPS’s pension grab would hurt our union in the long run—in exchange for not much benefit in the short run.

Under the company’s proposal, the UPS-only fund would pay a 25-and-out benefit of $2,500, a 30-and-out benefit of $3000, and a 35-and-out benefit of $3,500. Benefits would be capped at a maximum of $3,500 a month no matter how many years you work.

At $100 per year of service, the proposed UPS pension would actually pay less than Central States which pays $123 per year of service. The main improvement is that the UPS-only plan would restore early retirement by eliminating the 6 percent per year penalty for retiring before 62.

Of course, UPS can sweeten the pot and improve their initial offer. We fully expect that to happen, and we understand that many UPS Teamsters may be open to company proposals that restore cut benefits.

UPS Teamsters shouldn’t have to be pulled out of Central States in a company scheme to get the benefits they deserve. It’s our union’s job to win full 25 and 30-and-out benefit at any age and affordable retiree healthcare in a Central States plan.

In 1997 when UPS management tried a similar pension grab, Ron Carey backed UPS off and won enough benefit contributions to increase our Teamster pensions. That’s a positive example to follow.

Long Term Problems

Employers often sweeten their offer in an effort to weaken our union. That’s what’s happening here. The implications for our pension funds and the future of our union are huge.

If UPS is allowed to bust out of Central States, which fund is next? Other employers will want to follow. ABF’s CEO says busting out of the Teamster pension plans in the NMFA bargaining is his top goal.

The Central States Fund would lose its largest and youngest group of participants. We should be building our pension plans, not managing their decline or demise. That’s not union leadership.

Our union needs to organize. The multi-employer pension plans are a key selling point to bringing in members and building our union for the future.

Our union needs to think long term. Not just this year or this contract. A UPS worker who is 35 right now could well be drawing a pension 50 years from now. Sure, UPS is the big dog today. Will it be 30 to 40 years down the road?

Think 30-40 years ago about General Motors, United Airlines, or IBM. Who knew then they would shrink and slash pensions and possibly go into bankruptcy. That’s why the multi-employer plans are so much safer for the long run.

What do you think?

What do you think of the company’s proposal? We want to hear from you. Post a comment online for other Teamsters to read. Or send us your opinion confidentially.

UPS’s proposal will affect all Teamsters. Have your say.