January 30, 2008: UPS reported a quarterly loss on Wednesday due to its $6.1 billion one-time payment to the Central States Pension fund.
Brown reported a fourth-quarter net loss of $2.58 billion, or $2.46 a share, compared with a net profit of $1.13 billion, or $1.04 a share, a year earlier.
But the picture is rosier than it sounds—for UPS stockholders at least.
Excluding the payment to Central States, UPS earned $1.13 per share—an increase over the previous quarter. Reuters reports that revenue rose to $13.4 billion from $12.6 billion, topping analysts' expectations of $13.23 billion.
UPS’s $6.1 billion payoff to Central States was required under the law to let UPS break out of the Central States Pension Fund. It will pave the way to for UPS to save billions through lower benefit costs under its new pension plan covering Teamsters in the Carolinas and the Central and Southern Regions.
The 44,000 Teamsters covered by the new UPS pension plan will receive the lowest pension benefits of any UPS Teamsters.
By the end of the contract many UPS Teamsters will get 30 & Out pensions of $4,000 and $5,000 or more per month. Teamsters under the UPS plan will be locked into a $3,000 a month benefit for 30 and out.
UPS’s fourth quarter loss will be paid for—and then some—by UPS Teamsters who will be getting lower pensions.
No wonder UPS shares rose 55 cents—after the loss was announced—to $71.47 at midday on the New York Stock Exchange.
Click here to read more about the Pension Divide at UPS.
Click here to read about how UPS will reduce benefit costs and save billions.
Click here to download the Pension Comparison Chart.
January 22, 2008: As of January 1, Teamsters in pension plans have new, expanded rights to obtain information from their pension fund.
The Pension Protection Act requires that participants have the right to obtain any periodic actuary report, any quarterly, semi-annual or annual financial report, and other documents.
Teamsters for a Democratic Union and the Pension Rights Center led the lobbying effort that won members these rights. These rights apply to both active and retired pension fund participants.
Teamsters who want to exercise their rights to get this information can contact TDU to obtain a model letter to send to your fund.
Because the law is new, it may take some time to sort out how these rights are implemented. TDU will work with Teamsters to ensure that they can get the information that they are entitled to.
Click here to send TDU a pension question.
Click here to request a model letter to send to your fund requesting financial information.
January 10, 2008: A study of major Teamster pension plans reveals a growing “Benefit Divide,” with the new UPS Pension Plan paying the worst benefits in the country.
By the end of the contract in 2013, the Benefit Divide will grow much worse, with tens of thousands of UPS Teamsters receiving 25- or 30-and-out benefits of $5,000 per month while the UPS Plan pays just $3,000.
Some Teamster funds are also falling behind as the Benefit Divide grows—but none as far as the new UPS plan, which covers 44,000 Teamsters in the Carolinas and the Central and Southern Regions—nearly half of the company’s full-time workforce.
The Pension Comparison Chart compiled by TDU shows the range and variation of benefits of the great majority of pension plans covering UPS Teamsters. Click here to view the chart.
While this information pertains to UPS Teamsters, almost all of these funds cover other Teamsters as well. In most of these plans, freight and carhaul Teamsters and members covered by other Teamster contracts get the same or similar benefits.
Key findings of our preliminary Pension Comparison study include:
- The UPS Pension Plan pays the lowest level of benefits and will save the company billions in reduced benefit costs. There is not a single plan, large or small, covering UPS Teamsters that is worse. Almost all provide a better pension, and some provide a far superior pension. Many provide a larger pension at 25 years than the UPS Plan pays for 30 years service.
- The Benefit Divide will grow wider over the life of the new master contracts. By the end of the new UPS agreement contract in 2013, tens of thousands of Teamsters in the Western Region will retire with a $5,000 pension, with less than 30 years service. So will UPS Teamsters in Washington, D.C. In some other areas UPS Teamsters will retire with $4,000 for 30-and-out.
- While the new UPS Plan is at the bottom of the Benefit Divide, other major Teamster plans are also falling behind.
What Caused the Divide?
A critical factor behind the growing Benefit Divide is the wide range in pension accruals, the amount you earn (or “accrue”) each year to your monthly pension benefit upon retirement.
Many Teamsters are used to benefit structures like “$3,500 for 30-and-out.” As you look over the Pension Comparison chart, many of the benchmark benefits look like that.
But many Teamster pension funds have shifted their benefit structure to one based on an annual accrual, or multiplier. Under this system, you earn (or “accrue”) money toward your monthly pension benefit each year you work.
Within five years, most Teamsters will be getting a pension based on the accrual method, because those benefits are quickly surpassing the existing 25-and-out and 30-and-out benefits.
For example, the Western Pennsylvania plan currently has a $3,500 30-and-out benefit. But it also has an accrual system that will rapidly overtake that benefit. That’s why by the end of the current UPS contract, members will be able to retire with about $4,300 there. Some pension plans will be paying more, some less, but most will be in that range.
But the accrual in the UPS Plan is set artificially low and set to rise slowly. And it cannot be improved for five and a half years, because it is locked down by the contract.
While the accrual rate will be $400 in some funds and $300 in a number of funds, the accrual in the UPS Pension Plan will be only get to $158 by the end of the contract. This is even lower than the Central States Pension Fund, where the accrual will reach $200 by 2013.
The comparison chart reveals the wide range and variation of benefits for UPS Teamsters—and many other Teamsters earning top pension benefits as well. Our union needs a comprehensive plan to bring all benefits up to the highest levels and to upgrade all Teamster contracts so that Teamsters getting inferior benefits can achieve quality pensions.
Click here to view the TDU Pension Comparison Chart.
January 10, 2008: The Director of the Central States Pension Fund, Thomas Nyhan, told over 100 local union officers in December that he did not want UPS to split off from the Fund, but could not stop it because the International Union and management cut the deal. “We didn’t want to lose our biggest contributor,” Nyhan stated.
Nyhan also stated that
- Because of the UPS pullout, the ratio of retirees to active workers will eventually reach 3 to 1. (It was 1.4 to 1 in 2007)
- The fund is 63 percent funded, but will now rise to 75 percent with the $6.1 billion withdrawal payment from UPS. The funded ratio is growing due to pension cuts and increased employer contributions.
- The fund has made its cuts and implemented its recovery plan. No further cuts will be made.
- The rule that requires employers to increase contributions by eight percent a year should stay in place five years; then it can come down to six percent and then four percent.
- The Central States Health & Welfare Fund has been making in more money than it spends on benefits, and has 12.7 months of reserve funds.
- The average retirement age has increased in just five years from 59.5 to 61.5.
The last point shows the negative impact of jacking up the cost of retiree healthcare on our members and families. Many Teamsters just cannot afford to retire, and on average, Teamsters have to work two extra years, compared to just five years ago.
January 10, 2008: Many Teamster pension funds have shifted their benefit structure to one based on an annual accrual, or multiplier. Under this system, you earn (or “accrue”) a monthly pension amount each year you work. And if you earn a full pension, you will get the sum of all those annual accruals as your pension amount. The higher the accrual, the higher your pension.
Many Teamsters are used to a different benefit structure, such as “$3,500 for 30-and-out.” But within five years, most Teamsters will be getting a pension based on the accrual method, because as plans phase those benefits in, they will quickly surpass the existing 25-and-out and 30-and-out benefits.
Some plans state the accrual as a dollar amount, while others use a percentage of what is contributed during the year by the employer on your behalf. For example, if the employer contributes $14,000 and the accrual rate is two percent, that would add $280 to your monthly pension this year. Since the employer contribution goes up each year, the accrual will also.
For example, the Western Pennsylvania plan currently has a $3,500 30-and-out benefit. But it also has an accrual system that will rapidly overtake that benefit. By the end of the current contract, members will be able to retire with about $4,300 there.
Some pension plans will be paying more, some less, but most will be in that range. So understanding the accrual for your pension plan is very important.
UPS management knows this well. That’s why they have tied the new UPS Pension benefit to a small accrual, one that will be far below the other plans by 2012.
December 26, 2007: The trucking industry association is bragging about new concessions in the tentative deal at Yellow/Roadway.
The proposed deal would give YRC more “flexibility,” according to Transport Topics, a publication of the American Trucking Associations.
The magazine also reports that ABF will soon release a proposal to withdraw from all Teamster multi-employer pension plans.
“The second act of the LTL talks could offer more fireworks,” according to the magazine.
Click here to read the full article at Freight2008.org.
Click here to download a new freight bulletin with information on the tentative deal with YRC.
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.
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.
December 5, 2007: The Western Conference of Teamsters Pension Fund, which covers most Teamsters in the Western Region, is ending cuts in pension accruals that were imposed in July 2003.
The accrual rates will increase to the historic base figure of 2 percent of contributions for Teamsters with less than 20 years credit, and 2.65 percent for those with more than 20 years.
This means a Teamster’s monthly pension amount will increase by 2 percent (or 2.65 percent) of the amount the employer contributes that year.
The restoration of the pension levels was announced just in time to help sell the UPS contract.
In the Teamster election campaign of 2006, Tom Leedham repeatedly pointed out that the cuts should have never been cut so drastically, and should have long ago been restored. But the trustees refused to restore the cut long after its own website was reporting that the fund was 100 percent funded.
Members retiring in 2007 lost about $500 per month for life due to those cuts.
Bryant, a retired Local 391 member and TDU leader in North Carolina, is profiled on the website of the Pension Rights Center, a pension rights advocacy organization based in Washington, D.C.
Click here to read the profile.
October 17, 2007: The Freight Division is taking two very different strategies from others in the Hoffa administration. First, Freight Director Tyson Johnson has said that the union will not allow any carrier to split from any Teamster pension plan. This is the opposite of what Hoffa and Ken Hall are trying to do at UPS, where they gave in to the company’s demand to pull out of the Central States Pension Fund in return for a card check agreement.
Second, the Freight Division intends to bargain with TMI first, then hold ABF to mirror the same contract. This is the opposite of what Hoffa and Brad Slawson are doing at DHL. The 27 locals with DHL units under the NMFA have been pulled out of the Freight Division, and only an organized rank and file is holding back Slawson from giving the company whatever it wants, including part-timers.
Preserving national master contracts, and preserving our pension plans: both of these are key to maintaining Teamster power.
We should resist any move to break up master contracts or pension plans. We need to turn that around and bring more companies into master contracts, and more into our pension plans.