October 17, 2007: The proposed tentative agreement would pull 44,000 full-timers out of the Central States Pension Plan and put them into a new UPS Plan.
That was the company’s number one goal in bargaining.
If this agreement is approved, how will it affect the benefits of UPS Teamsters in the Central States Fund, now and in the future?
The new plan would begin in January 2008. Under the new plan, Normal Retirement Age would be 65, with a six percent reduction for each year under 65 at retirement.
The benefits for unreduced 25-and-out are $2,000 per month; 25 years and age 57, $2,500 per month; 30-and-out, $3,000 per month; 35-and-out, $3,500 per month. These are the same as the pre-2004 Central States benefit levels. We won those benefits in 1997, and they would still be the same 16 years later in 2013 under this plan.
The company agreed to fund the plan only “as required by applicable law.” This means the company is not obligated to meet any specific contribution rate, but only to fund the plan to provide the benefit levels outlined above.
This is what the company is looking for. This provision will enable the company to save billions in reduced pension contributions and to keep a lid on future increases in benefits.
Pluses and Minuses
On the plus side, Teamsters can earn an unreduced 25- and 30-and out pension at any age. For a young retiree with 30 years who wants out now, it’s a plus.
On the minus side, a Teamster who retires at an older age loses a lot. The accrual rate is lower than Central States will be in the coming years. The accrual is the amount you can add to your monthly pension each year you work.
And a Teamster who retires several years from now, when pension accruals in Central States will be at $200 or more per month, will lose big.
There are also unknowns. For example, why is there no reciprocal agreement with other Teamster plans? If you change jobs, you cannot use your pension credits.
UPS management is not stupid. They are putting up $6.1 billion to buy their way out of Central States now because they will save a lot more than that by paying lower contributions, holding down pension increases, and weakening our union.
Teamster members need to think about the future too. Early negotiations were supposed to be about improving our pensions and benefits now and for the future. This proposal offers limited improvements for the short-term at the cost of long-term retirement security and union power.