May 11, 2007: by John Gallagher in Traffic World Online --Arkansas Best Corp. President and Chief Executive Officer Robert Davidson said he's willing to take the financial hit necessary to negotiate with labor an end to its multiemployer pension fund contributions.
"We can provide the same benefits that we're providing now directly to our employees at significantly less cost than we're now paying," Davidson told Wall Street analysts at a conference sponsored by Bear Stearns in New York May 8. "That money would allow us to amortize the withdrawal liability that we would pay to the funds, and would lower our operating ratio to allow us to be even more competitive in the marketplace."
According to SEC filings, ABF estimates it would cost the company $600 to $650 million in "contingent liabilities" to withdraw from the plan, payable over a 10 to 15 year period.
Such a move, however, is likely to be a major sticking point with the International Brotherhood of Teamsters. The National Master Freight Agreement expires in March 2008, and both sides are gearing up for the latest round of talks.
It could also prove a sticking point with YRC Worldwide, which is also part of the NMFA.
"We probably have a little bit of difference" with YRC when it comes to the pension issue, Davidson said. "We have the capital structure to allow us to do it, so the plan is to pursue that aggressively, and hope Yellow and Roadway are on board with us for it."
YRC President Bill Zollars, who was on the same panel with Davidson, said he considers the pension issue "an investment like any other investment, and what the return on that might be. It all depends on how much we put in and what we get back for it."
Satish Jindel, a principal with SJ Consulting Group, said if the Teamsters are willing to negotiate a pension fund withdrawal as part of the contract, ABF and other union carriers would be in a better position to compete with non-union carriers.
But he pointed out that the last attempt by union carriers to seek changes in pension plans with union workers was in 1997 by UPS - which resulted in a 14-day strike.
"Ten years later, if the union is realizing they need to show flexibility to give companies the opportunity to grow and create more jobs, that would be great news. But I'm not sure what leverage (management) has other than (warning labor about) the possibility of losing more jobs to non-union carriers."Click here to see the full article in Traffic World Online.
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.
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.
May 9, 2007: Ken Hall has promised that the UPS contract will improve pensions and send a message to all employers that our union won’t stand for pension and benefit cuts.
“Pensions are the number one issue for our members. We’re going to focus on improving their pension. Because after all, it’s the members that drive these negotiations, it’s their issues and that’s what we’re going to be guided by.”
- Ken Hall, IBT Parcel Director
“Once we’re finished with these negotiations, the message to other employers where our members are represented should be, ‘If you mess with our members’ pension and benefits, you’re going to get the shit kicked out of you by the Teamsters.’”
Ken Hall, IBT Parcel Director
Is it real, or is it just talk?
Members are hoping for the best. But we’ve heard big talk before. In 2002, we were promised that the UPS and freight contracts would protect our benefits. Then we were hit with the worst cuts in Teamster history. We were lied to.
It’s Up to Us
It’s up to Teamster members to make sure we don’t settle short again.
At the recent Teamster “Unity Conference” in Las Vegas, Hall announced that our union will reach an agreement with UPS “soon.”
Management wants an early agreement, to reassure shippers and stockholders. Will our union use this bargaining leverage to win the pension and benefit improvements we’ve been promised?
Hoffa has promised that this UPS contract will be the richest one ever—and that’s one promise he will keep. The company’s record profits and new pension rules mean UPS will set a new record for benefit contributions.
But what will these record contributions mean to working Teamsters? What cuts will be restored and what improvements will be won?
May 9, 2007: Teamsters in the Central States were told that the 2002 “Best Contract Ever” would protect our benefits for the life of the contract. Instead that agreement gutted early retirement in the Central States by slashing the pension accrual rate in half and raising the cost of retiree healthcare to as high as $1,200 a month.
If we’re going to give UPS an early deal, we need to restore benefits that we’ve lost.
A new rule set by the fund requires that all new contracts must contain at least an eight percent increase in pension contributions every year. This means at least $2.40 an hour will go into the pension fund over the next contract, probably a good bit more. Contributions to the Central States Pension Fund will reach $8 per hour during the next contract.
The question is what benefits will be restored?
In Central States, the easiest benefit to restore is affordable retiree healthcare. These benefits were slashed because of one fact: money designated for our health benefits was diverted for three years in a row to the pension fund.
As a result, Teamster members are being prevented from retiring at 25 and 30 and out.
The next contract has to undo the damage that was done by the Best Contract Ever.
We need to substantially increase contributions to our Health and Welfare Fund so that our health benefits are protected and affordable retiree healthcare is restored.
If our negotiators do their job, UPS Teamsters in the Central States can have retiree health benefits for $50 a month, just like we had prior to the cuts.
Pension Accrual and Early Retirement
Our pension accrual has been cut in half, and our early retirement plans cut out. Teamsters need a written agreement—not a worthless promise—that our pension benefits will be phased back in as increased contributions build up in our fund.
In 1997, UPS Teamsters got a statement from Central States—before we voted on the contract—telling us in writing what our benefits would be if we ratified the contract.
After the broken promises of 2002, we need to demand it in writing this time.
We need to restore retiree healthcare in full, and a specific timeline for restoring our pension benefits.
Without these gains, why would we vote to approve an early deal? We can hold out and bargain for more.
May 9, 2007: Hundreds of thousands of Teamsters covered by the Western Plan are still facing a nearly 40 percent pension cut even though the fund is 100 percent funded.
The Western Fund will be even more flush after the UPS agreement. UPS will be required to increase its contributions by at least eight percent a year in Central States, and the West will get the same. By the end of the agreement, UPS will be putting $8 an hour into the pension fund.
What will this mean to UPS Teamsters in the West? The “Best Contract Ever” and the pension cuts that followed reduced the monthly pension benefit by $500.
Will record contributions in the West fully restore the pension multiplier to the historic minimum of 2.2 and 2.65 for all Teamsters with twenty or more years? Will the multiplier go higher or will the fund increase benefits by bringing back bonus years?
Keep in mind that more money bargained into pensions will likely mean a lower wage increase.
April 2, 2007: Since 2003, our Teamster benefits have been under attack. But the coming year gives our union the opportunity to take the offensive.
Our pension funds’ assets are already way up due to recent strong investment returns.
This opens the door to benefit gains if our union can win sufficient increases in benefit contributions in the 2008 UPS and freight contracts.
These contracts are sure to set records for benefit contributions, in part because new regulations in the Central States Pension Fund require all employers to increase their benefit contributions by a minimum of eight percent every year just to stay in the fund.
That means minimum increases of $2.40 over the next five years. —nearly 40 percent more than last time. Benefit contributions are negotiated nationally, so other funds will likely get at least this amount.
More will be needed to increase benefits in the Central States and many other funds as well. The question is, how much more and what is our union’s plan to win what’s needed?
Teamster members deserve answers to these questions. If we’re going to effectively unite to win our bargaining goals, we need to know what we’re fighting for.
Market Rebound Sends Teamsters Benefit Funds to All-Time Highs
The stock market recovery of the past few years helped send our pension funds to record highs. Central States is up to $21 billion, and the Western Conference fund is 100 percent funded.
2008 Contracts Will Set Records for Benefit Contributions
UPS’s record profits and new pension fund rules mean the company will pay record contributions in the next contract. The same holds true for the 2008 Freight Agreement.
Negotiations Can Add 100,000 New Participants to Our Benefit Plans
Union bargaining demands to win Teamster pensions for all UPS part-timers and UPS Freight employees would win better pensions and stronger benefit funds for all.
Funds Have Told Teamster Leaders What We Need to Bargain to Raise Benefits
Top Teamster officials have been given reports on what contract money is needed to guarantee and restore benefits. It’s time to tell the rank and file and unite around a plan to win.
Read More Pension Coverage:
April 2, 2007: UPS’s $4 billion profits and new pension fund rules mean the company will pay record contributions toward our benefits in the 2008 contract.
But our union has other bargaining demands that are just as critical if we’re going to beat the pension cuts and win better benefits.
Include All UPS Part-Timers in Teamster Pension Funds
Part-timers are already included in Teamster plans, including two of our strongest funds, the West and Upstate New York. Now our negotiating committee is demanding that ALL part-timers be included in Teamster funds.
This will put tens of thousands of younger Teamsters into our pension plans and add hundreds of millions of dollars in contributions every year. Contributions made for part-timers who leave before they are vested will go to help other Teamsters, not to fatten the company’s bottom line.
This change would also mean higher benefits for part-timers who stay on at UPS and go full time because their part time years will be worth much more—instead of the low reciprocal benefit they currently get.
Put UPS Freight Employees in Teamster Pension Plans
UPS employs around 15,000 nonunion drivers and dock workers at UPS Freight.
Unionizing these workers nationwide and bringing them into Teamster benefit plans would add some $180 million in pension contributions to our funds every year.
15,000 Full-Time Jobs
Every full-time job at UPS means more contributions and stronger pension funds. We need to create 3,000 full-time jobs a year in this contract, to strengthen our pension plans and bring full time opportunities to all UPSers.
April 2, 2007: The Central States Pension Fund ended 2006 with a $1.4 billion gain in assets, reaching $20.7 billion—up from just $15 billion a few years ago. The fund projects that by the end of 2007, assets will be up to $21.2 billion, with expected investment returns. With better returns, the Fund projects that they will surpass $22 billion.
These figures are in the fund’s Financial and Analytical Reports obtained by TDU in February 2007.
This big gain in assets at Central States shows the impact of benefit accrual cuts imposed on members, and diversion of money from health and welfare to the pension fund for the third year in a row.
In addition, 2006 was a good year for investors, with the Fund’s investments earning 14.5 percent.
What Will it Take To Restore Benefits?
Last fall, UPS chief negotiator Ken Hall met with representatives from the Central States and other Teamster funds to get briefed on what it will take to protect and improve our benefits over the life of the UPS contract. The same figures will apply to the 2008 National Master Freight Agreement.
To date, that information has been kept secret from the members.
In December, the fund informed all Locals that all new contracts negotiated must contain eight percent annual increases in pension contributions, or those members will be kicked out of fund participation.
This mean that in the UPS contract there must be pension contributions of at least 40¢ per hour the first year, then 50¢, and then 60¢ by the fifth year if the contract is that long. These are minimums required to stay in the fund, not to restore benefit cuts.
Members Launch Petition for Retirement Security
The new rule means that UPS and freight employers will pay record contributions in the 2008 contracts. But so far only top officials at the IBT and Central States (and management) know how much we need to bargain to improve our benefits.
Some Central States Teamsters at UPS have started a petition drive to demand this information and to stand up for our benefits.
The “United to Win Strong Pensions” petition states, “UPSers work hard and we deserve strong pensions, not cuts. We will not vote to approve any contract unless it delivers the retirement security we were promised in 2002.”
The petition puts forward a program that Central States Teamsters can unite around:
- Immediately restore affordable retiree healthcare
- Give Central States Teamsters a timetable for full restoration of the 2003 pension cuts
- Inform members in writing what our benefits will be before we vote on any contract
- Include part-timers in our pension fund to improve benefits for full and part-timers alike
- Reasonable reemployment rules adopted by the Central States Pension Fund
April 2, 2007: Assets at the Western Conference of Teamsters (WCT) Pension Trust now top $29 billion and the trust is 100 percent fully funded. But hundreds of thousands of Teamsters covered by the plan are still facing a nearly 40 percent cut in their pension multiplier. Why? And when will our pensions be fully restored?
The already-flush WCT Pension Trust is headed for another major influx of cash. In the next UPS contract, the company will very likely increase its pension contributions by a minimum of $2.40 an hour, assuming a five-year agreement.
That minimum figure is the result of a new Central States Pension Fund regulation that requires an eight percent increase in pension contributions every year just to stay in the fund.
Teamsters Losing $500/Month and Counting
Benefit contributions are negotiated nationally, so the Western Fund will likely get at least this amount also. That means contribution increases starting at a minimum of 40¢ per hour the first year and reaching at least 60¢ by the fifth year if the contract. That’s compared to just 35¢ an hour increases in the last contract.
In 2003, Teamster trustees, including General Executive Board members Randy Cammack, Al Hobart, Chuck Mack and Jim Santangelo, voted with employers to drastically slash the pension multiplier by more than half, to 1.2 percent, down from 2.65 percent.
These cuts have already reduced the pension check of UPS and Freight Teamsters by $500 a month for the rest of their retirement.
Trustees to the Western Fund voted to slightly raise the multiplier to 1.65 percent last October. But this rate still represents a 38 percent cut over the historic minimum rate of 2.2 percent.
The typical Western Teamster will lose another $100 per month off of their monthly pension check for every year the current cut remains in place.
Now Is the Time
The bad news for our pensions is good news for the employers. Our fund’s website features an announcement to participating employers that 100 percent funding means that they can withdraw their companies from the pension plan without having to pay any liability.
Working Teamsters get continued pension cuts. But a company that wants to bust out of our union’s largest pension plan can do so without paying a dime. What is wrong with this picture?
When the trustees slashed the pensions in 2003, they claimed it was because the stock market dip had caused the funding level to drop. The WCT pension trust was never less than 80 percent funded and thousands of Teamsters signed petitions saying the cuts were unnecessary.
Now there is nothing to debate. With the trust 100 percent funded and more cash on the way, the money is there to fully restore pensions in the West before working Teamsters lose another dime.
This issue affects the pocket-book of every Teamster. As long as employers can maintain pension cuts in the WCT Pension Trust, then Teamster members will find it that much harder to win pension increases in other benefit funds.
April 2, 2007: Commercial movers from Teamster Local 814 in New York City have been hit with healthcare cuts—following a concessionary contract that diverted millions of dollars in contributions from their health and welfare fund into their pension plan.
Under the terms of the 2005 contract, the $3.96 per hour contribution that was supposed to go into members’ health and welfare fund went into the Pension Fund instead.
“We said at the time that we were robbing Peter to pay Paul and that if we did not defeat these concessions we were going to be hit with healthcare cuts,” said Local 814 Teamster Eddie Freyta. “Unfortunately, we were right.”
Teamsters everywhere need to be on the lookout for this false fix to pension problems. It’s a poison pill,” Freyta said.
The cuts hiked members’ annual deductible and increased co-pays by more than double. Members will also be charged $100 for every emergency room visit
Employers have reportedly agreed to increase their contributions to the Health and Welfare Fund by $1.04 and hour. But Local 814 officials were unable to tell members if that increase was temporary or permanent.
For years, New York City moving companies shortchanged the Local 814 pension fund. They created tiers of casuals without benefits. They ignored contract language that required them to hire a certain ratio of casual employees (“industry men”) who receive contributions. They opened up nonunion operations.
Local 814 officials failed to crack down on these schemes. The employers profited by not paying pension contributions. After the stock market fell following September 11th, the pension fund faced a shortfall of tens of millions of dollars.
That’s when employers and Local 814 officials negotiated a deal to divert members’ health and welfare and annuity contributions into the pension fund to make up for the shortfall.
Members initially voted down the deal after a campaign by a rank-and-file committee Members for a Strong Contract. But the givebacks were ultimately ratified after a twenty day strike in which officials offered no plan to win.
“It was incredibly reckless what they did—and now members are paying the price,” said Walter Taylor, one of the movers who led the rank-and-file campaign to reject the contract. “We need to rebuild our local’s power—start to enforce our contracts, stand up to the employers, and organize the nonunion competition. Otherwise the cycle of givebacks is just going to continue.”