Potential Pension Threat in the Future

December 5, 2007: The removal of 44,000 UPS full-time Teamsters from Central States opens the door to lower pensions for all Teamsters down the road—not just in the Central States.

UPS is set to save billions of dollars with the deal.

TDU pension attorney Ann Curry Thompson answers questions during a pension rights workshop.Whatever your pension plan, members need to understand why UPS wanted this deal and what it means for you.

Lowest Pension in the U.S.

The new UPS plan that replaces Central States will pay members a lower pension than every other Teamster plan for UPSers—with current benefits of $3,000 a month for 30 and out.

That means nearly half of UPS’s full-time workforce will be getting a substandard pension.

Teamsters in the West, in Chicago Local 705, in Local 710 (Illinois and Indiana), in New England, Washington, D.C., New York, New Jersey, Baltimore, Virginia and every other plan all get a better pension.

That alone tells you why management is so happy with the new contract.

But UPS got more than low pension benefits out of this deal. They also got a tool for capping pensions in other plans in the future.

No Set Contributions

The new UPS pension fund will save UPS billions on future pension contributions because the contract no longer requires the company to make specific hourly payments to this pension fund.

This is unlike every other pension plan for UPS Teamsters.

In every other pension fund, UPS will pay pension contributions of more than $10 per hour by the end of the contract. That’s $21,000 each year per employee into every other Teamster pension plan.

In the new UPS pension plan, UPS has no such obligation. Instead of making UPS pay an hourly contribution, the new contract only says that UPS must fund its plan as required by law, no more.

The law only requires that the company keep enough money in the fund to pay for the current benefit level. This means, over time, the company will pay far less for pensions in the new plan covering the Central and South—the lower the benefit, the greater the savings to the corporation.

Dragging Down Pensions

By the next contract in 2013, the benefit level in the new UPS plan will be the lowest in the country and have been frozen for 16 years—and the pressure will be on to raise pensions in the Central and South.

UPS may offer Central and Southern members a higher pension while putting the squeeze on every other fund. The new contract gives them a tool to do just that. Article 34 of the master agreements defines exactly what the benefit level is in the new UPS pension plan. Because that benefit level is not tied to any hourly contribution, UPS would be able to offer to raise the pension in the Central and South without increasing its hourly contributions in other areas by a dime.

In the new contract, UPS increased its pension contributions by $3.25 an hour. Expect them to offer less next time.

Without higher hourly pension contributions, Teamsters in every other pension fund cannot protect and increase their benefits.

Defending Our Pensions

UPS is already thinking about the next bargaining round and how they can control benefit costs by keeping a lid on hourly pension contributions.

We cannot allow that to happen.

Lower pension contributions would not just affect UPS Teamsters.

UPS sets the pattern for the benefits of hundreds of thousands of other Teamsters. It is highly likely that the freight contract covering 80,000 Teamsters will mirror the pension contribution just negotiated at UPS.

Our entire union suffered a loss when the International caved in to UPS’s pension grab in the Central States.

We now need to adjust to the new situation, and make sure the problem does not spread to other funds, or undermine our good Teamster pension benefits.

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