Teamster pension funds are paying the price for full-time job elimination.
September 25, 2014: More ground deliveries should mean more full-time jobs—and more participants in Teamster pension funds. But a review of pension data shows what’s happening is just the opposite. As ground volume has grown in recent years, the number of full-time jobs has fallen.
The IBT-UPS Pension Fund covers 45,000 UPS Teamsters in the Central Region and South. It’s the largest Pension Fund in the country that covers only UPS full-timers—making it a good barometer of full-time job growth. From 2009 to 2012, the number of Teamsters in the IBT-UPS Fund fell by 2,887—a six percent drop.
Over the exact same period, ground volume grew by six percent. More packages—but fewer full-time jobs.
The story is even worse in the New Jersey Local 177 Pension Fund—the next largest fund that exclusively covers UPS full-timers.
From 2007 to 2012, the number of Teamsters in the Local 177 Fund fell by almost 11 percent—a loss of 421 full-time jobs in one local.
UPS saved money on payroll and on pension contributions—and the Local 177 pension plan paid the price. Contribution hours dropped from 7.8 million a year to just 6.9 million, costing the Pension Fund millions of dollars in lost contributions.
The pension fund's actuaries issued repeated warnings, that “There have been very few new hires” and warned of the negative impact on the fund’s health.
The problem wasn’t the stock market. For the last decade, the Local 177 Pension Fund has earned an average rate of return on investments of 5.22%. Pretty good, considering that like every pension plan, Local 177 took a big hit when the housing bubble burst in 2008.
But even solid stock market returns can’t make up for a shrinking jobs base. The real problem is UPS not replacing Teamsters who retired.
In 2001, for every 59 retirees collecting a pension in Local 177, UPS was paying pension contributions for 100 Teamsters who were working full-time. By 2012, there were 100 retirees for every 100 working Teamsters.
Pension Changes
As part of the new contract, Local 177 members voted to divert 30¢ of their wage increase into the pension fund.
As a result of the wage diversion, the Pension Fund was able to increase pension benefits by $400 a month. But these increases are being paid for by Local 177 members, not UPS.
The Local 177 Pension Fund has also changed the rules so that members have to work 2080 hours to get a full pension credit.
Local 177 officials said this change was needed because growing numbers of members were skipping work and shorting the fund needed pension contributions.
But that explanation doesn’t jibe with the Pensions Fund’s own records which show that the average worker is actually getting more pension hours contributed on their behalf every year—not less.
In 2001, members averaged just 1,791 hours of contributions; today that number is 1,981.
The result of the new 2,080 rule is that the average Local 177 member will have to work longer to retire. At the current rate, the average Local 177 UPSer will have to work 26 years to be able to retire with 25 years of pension credit: a whole extra year at Big Brown.
UPS workers have paid a steep price for the declining number of full-time jobs—and so have our pension funds.
Do you like this post?