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?

Benefit Levels

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.

The Future

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.

October 17, 2007: Management and some union officials are selling the UPS Pension Plan in the Central States areas on the basis that it offers unreduced 25- and 30-and-out benefits of $2,000 and $3,000 respectively. That’s true, but also a very short term gain.

Looking into the future, this pension will pay less than Central States will pay, and far less than the Western Conference will pay. These are the two largest Teamster plans and cover most of the USA.

We won $3,000 30-and-out in the 1997 strike. Now UPS is offering the same thing in 2013, 16 years later.

By 2013, other Teamster pensions are going to be well beyond that figure and heading upward.  

Look at this chart of pension accruals, the amount you can add to your monthly pension for a year of service.

Notice that by August 2012, the Western Conference Pension Fund, covering all UPSers in the West, will be paying an accrual of $464 for a year for  UPSer with 20 years service. Payable at early retirement, in full.

Compare that to the $158.50 the UPS plan would offer! Even Central States will be well ahead of that with an accrual of $196. Central States will reduce that accrual by six percent for each year under age 62, but the UPS Plan would reduce it six percent for each year under age 65!

Do the math. You will see why UPS would pay $6.1 billion ($3.9 billion after a $2.2 billion tax write-off) to stick us in the plan. They will save billions in the long run, at the expense of your pension.

Why get into a plan that’s going to be paying a third rate pension to you, compared to the Teamster plans?

October 17, 2007: By late November, we will know if UPS has succeeded in breaking out of the Teamster Central States Pension Plan.

Big Brown’s pension grab affects hundreds of thousands of Teamsters at UPS and in at other Teamster employers, in the Central States and beyond.

If UPS succeeds, 44,000 UPSers will be pulled out of the Central States and the historic union plan will be down to just 100,000 remaining active Teamsters, and over 200,000 retirees.

UPS’s actions are part of a broad corporate attack on union pension plans. In the Teamsters, UPS is leading this charge, but they are not alone.

The big freight carrier ABF has announced it wants to break out of all Teamster plans. PepsiCo (Pepsi and FritoLay) has been doing it for years.

Increasingly, local unions face corporations that want to get out of Teamster benefit funds

Companies want to set up their own, cheaper plans. Or even worse, they want to just have a 401(k), and no real pension plan at all. The goal is to reduce costs, save money on benefit contributions, and undermine our union’s power.

UPS is willing to pay the $6.1 billion withdrawal liability to Central States that is required by law because they know they will save that many times over if they can bust our pension plan and lower their pension costs.

Vote in November

The split-off of 44,000 UPS Teamsters from Central States will be put to a contract vote in early November—but affected UPS Teamsters are not the only ones getting a ballot.

The Hoffa administration is allowing all 230,000 UPS Teamsters to vote on this deal, including those in other pension plans and part timers, most of whom are in a company plan.

Many more Teamsters directly affected by this vote will not get ballot—namely the 100,000 Teamsters in the Central States fund who work for other employers and will see their pension fund lose over $600 million a year in pension contributions if UPS succeeds in pulling out.

Why Hoffa Gave In

For years, Teamster leaders and members have said No to UPS’s attempts to get control over our pensions. This time Hoffa and chief negotiator Ken Hall gave in—and agreed to many more historic concessions as well. Why?

The answer is that UPS has made a deal. If the tentative UPS contract with this pension split is approved, they will give “card check” organizing rights to our union at UPS Freight. This means that our local unions can sign up a majority of UPS Freight workers at one terminal, and get the right to bargain.

We definitely need to organize UPS Freight. But many Teamsters believe we can achieve this goal without these monumental givebacks.

UPS’s stockholders want an early agreement. This gives our union leverage. Why not use it by telling UPS they get no early settlement unless they give us the right to organize at UPS Freight—while keeping the corporation’s hands off members’ pensions?

October 17, 2007: Rumors are flying about the Pension Protection Act, the pension legislation that starts to take effect on Jan. 1.

Does the UPS contract have to be settled by Jan. 1 to head off benefit cuts and win pension improvements? Is a new round of pension cuts on the way? The answer is NO.

TDU consulted with actuaries, attorneys and fund managers to cut through the rumors and provide members with the facts.

January 1: A Kickoff, Not a Deadline

Some provisions of the Pension Protection Act go into effect on Jan. 1. This date is the kickoff of a long-term timeline for strengthening funds over 10 to 15 years.

It is not a deadline by which the UPS contract needs to be ratified for UPS Teamsters to avoid pension cuts or win pension improvements. It also is not a date on which Teamster pension funds will change their benefits.

What Happens on January 1?

On Jan. 1, 2008, the funding portions of the Pension Protection Act go into effect.
As a result, Teamster pension funds will have to certify their funding levels (Green Zone, Yellow Zone or Red Zone) and inform participants and the government of their status. This process does not occur immediately on Jan. 1, but can take up to 90 days.

On April 1, 2008, fund actuaries have to certify the status of the plan. If a plan is under-funded, then it must notify participants, the union, the company, and the government by May 1, 2008—120 days after Jan. 1.

Yellow Zone and Red Zone

If a pension plan is under-funded, it will be certified by the fund actuary as in the “Yellow Zone” or the “Red Zone.”

The Yellow Zone means the fund is less than 80 percent funded.

The Red Zone means that the fund is seriously under-funded and also has a short-term credit balance deficiency (a technical calculation that indicates a more short-term problem than the funding level). Being under 65 percent funded will not automatically place a pension plan in the Red Zone.

Few, if any, Teamster plans will fall in the Red Zone. But some major Teamster funds, including the Central States Fund and the New England Fund, are expected to be in the Yellow Zone.

December 31, 2008: Deadline for Plans

If a plan is in the Yellow Zone or Red Zone, the plan’s actuary will then come up with at least two options to get the funding level up toward 80 percent over the next ten or 15 years.

These options include increasing employer contributions, and/or decreasing future pension accruals.

For any plan under 80 percent funded, the trustees will adopt a Funding Improvement Plan, based on the options prepared by their actuaries, to present to the union and the company. If the trustees deadlock (company vs. union trustees), the matter goes to expedited arbitration.

By Dec. 1, 2008 a pension plan must announce their improvement plan, unless there is an impasse.

That plan must go into effect by December 2009, two years from now.
The Central States Fund has already adopted its plan. They require contracts signed this year to have pension contributions go up at least eight percent a year. And they cut back benefits, by eliminating unreduced 25- and 30-and-out pension accruals.

Under the law, Teamster pension funds must adjust their funding plans based on any new pension money that is negotiated in contract bargaining. A new contract does not have to be ratified by Jan. 1.

When major contracts are settled, fund actuaries and trustees will adjust their Funding Improvement Plans based on the new money projected in the contract.

The Bottom Line

The goal of the Pension Protection Act is to get multi-employer plans to move their funding levels up to 80 percent over the next ten to fifteen years.

It is a long-term process. No plan needs to be adopted until Dec. 1, 2008, over a year from now, and none needs to be put into effect until a year after that.

Any contract improvements that are won—at any time—will be taken into account. The UPS contract does not need to be settled by Jan. 1 for us to prevent cuts or win pension improvements.

UPS and some Teamster officials are spreading rumors about new pension legislation and our contract. Get the bulletin at MakeUPSDeliver.org.

Click here to read the full story at MakeUPSDeliver.org.

October 5, 2007: From the BNA Daily Labor Report: Officers and members of a local Teamsters union must arbitrate with United Parcel Service of America Inc. (UPS) on the issue of whether UPS must contribute on union members' behalf to two UPS-sponsored and administered health and welfare plans at rates set out in bargaining agreements, the U.S. District Court for the District of New Jersey ruled Oct. 2 in an unpublished decision (Palumbo v. United Parcel Service of America Inc., D.N.J., No. 06-CV-5331 (DMC), unpublished 10/2/07).

 

According to the court, UPS employs approximately 235,000 workers in the United States who are represented by the Teamsters. Most Teamsters-represented UPS employees also are members of a Teamsters local. UPS has a collective bargaining agreement with the national Teamsters union as well as local supplemental bargaining agreements which apply to employees in particular geographic areas and/or local unions.

 

Unlike most full-time Teamsters-represented employees at UPS who receive health and welfare benefits under jointly-trusteed plans, full-time employees of UPS who are represented by Teamsters Local 177 are provided health and welfare benefits from two plans that are funded, administered, and controlled solely by UPS. These two UPS-sponsored plans are funded through a voluntary employees' beneficiary association, according to the court.

Victor Palumbo, as the President and Secretary Treasury of Teamsters Local 177, along with seven Local 177 members filed a lawsuit against UPS in November 2006 contending that UPS had breached its fiduciary duties under the Employee Retirement Income Security Act by failing to make contributions to the UPS plans at rates specified in UPS's master labor agreement with the national Teamsters union. According to the court, the plaintiffs based their claim on a provision in the master agreement that dealt with UPS's obligation to make contributions to jointly-trusteed benefit plans.

Judge Dennis M. Cavanaugh granted UPS's motion to stay the plaintiffs' lawsuit for their failure to first initiate arbitration, as required under the master labor agreement. According to the court, although the plaintiffs framed their arguments as ERISA claims, their claims could not be resolved under ERISA but instead required resolution under Section 301 of the Labor Management Relations Act.

"Although the Complaint does not expressly reference the LMRA, Plaintiffs' claims--whether for breach of fiduciary duty or violation of ERISA's prohibited transaction provisions--turn on a threshold contractual determination, namely whether UPS owes contributions at a specified rate under the CBA. The LMRA requires that this threshold determination be resolved pursuant to the grievance and arbitration procedures contained in the CBA," the court said.

The plaintiffs were represented by Robert A. Fagella of Zazzali, Fagella, Nowak, Kleinbaum & Friedman, Newark, N.J. Jody S. Riger of Proskauer Rose, Newark, N.J., represented UPS.

The full text of the opinion is at https://d3n8a8pro7vhmx.cloudfront.net/teamstersforademocraticunion/pages/6158/attachments/original/1434125644/06cv5331.pdf?1434125644.

October 1, 2007: United Parcel Service Inc.'s five-year tentative contract agreement with the Teamsters will allow it to pay $6.1 billion to gain greater control of some pensions and will provide pay and benefit increases for workers.

Click here to read the full story at Bloomberg News.

September 29, 2007: United Parcel Service Inc. and the Teamsters union are closing in on a labor agreement that would restructure and possibly lower the company's pension obligations.

The two sides are trying this weekend to finish hammering out a deal in which the Atlanta package-delivery giant would pull out of the Central States Pension Fund, the largest multiemployer program in the trucking industry.

Read more in the Wall Street Journal

September 27, 2007: As October 1 approaches, the National Negotiating Committee is preparing to cave in to the company's demand to break out of the Central States Pension Fund. Instead of Central States, the company wants to establish a new UPS-Teamster fund where the company would control half of the votes.

The record shows that UPS will use its greater control to keep a lid on benefits and push for pension cuts. That's just what UPS has done in two major Teamster pension funds consisting only of UPS Teamsters: New Jersey Local 177 and New York Local 804.

• In New York, UPS's trustees pushed through a 30 percent pension cut at the start of negotiations over the opposition of every Teamster trustee. (UPS won the vote by swinging over a union trustee, a machinist official who represents UPS mechanics.) As a result, the accrual rate in Local 804 was indefinitely dropped to $100.80. That's lower than Central States, where the accrual rate is $132!
• In Jersey, UPS used its control of half the trustees to force its proposal for pension cuts before an arbitrator. If the company gets its way, the pension accrual rate will be slashed by 30 percent to approximately $104, also lower than Central States.

The accrual rate is the amount of monthly pension benefit that you earn or "accrue" for a year of service.

Both the Local 804 and 177 funds are UPS-Teamster funds. They're run out of Atlanta. At each fund, the company names half of the trustees-and then those trustees vote in a bloc to cut Teamster benefits. This is the same structure that is being proposed to "help" Teamsters in the Central States.

Will UPS's Offer Raise Benefits?

To try to win membership approval of their Central States pension grab, UPS will offer a pension increase in their new Central States plan. Before taking the bait, members should look at the company's record and ask what it will mean for the long-term to give UPS half the votes over our pensions.

In the Central States, the accrual rate is guaranteed to go up by a minimum of 8 percent each year. Next year, the Central States accrual rate will be at $143-and in four years, it will be a minimum of $180.

What will happen in the funds where UPS controls half the trustees right now? Will UPS's contract offer provide for guaranteed annual increases in the New York and New Jersey funds? Don't count on it.

UPS has used its voting power in these funds to freeze the accrual rate, push for cuts, and keep a lid on Teamster benefits. That's why UPS is willing to shell out billions to withdraw from Central States: they plan to get it back and more in the future.

It's no surprise that UPS trustees vote in a bloc to save the company money. Knowing that, why would our union give the company more control over our pensions?

Benefits in the Central States need to be improved. There's no doubt about that. The company wants an early agreement. We need to use our leverage to win record contributions that will 1) immediately restore retiree healthcare and 2) provide a roadmap for increasing pension benefits and eliminating penalties for retiring before age 62-without giving in to the company's pension grab.

That's the way to make UPS deliver.

August 31, 2007: Chief negotiators James Hoffa and Ken Hall announced today they will let UPS break out of the Central States Pension Fund in an early deal to be inked by October.

Then the issue will be in the hands of working Teamsters at UPS.

This is an issue that will affect every Teamster-not just UPSers. Every Teamster who is concerned about the future of our union's power and our benefit funds needs to make their voice heard and to call on local officers to take a stand to defend our union.

You can help make that happen by distributing this information to Teamsters where you work and at union meetings.

A hard-core sales job, by both the company and the union, is on the way. UPS Teamsters need to be prepared to evaluate any early settlement carefully and scrutinize the impact it would have on both Teamster benefits and working conditions.

Click here if you can help us alert other Teamsters and to send us your thoughts on this issue.

Click here to download the latest bulletin from Make UPS Deliver.

Click here to download the latest Central States Pension Update from TDU.

Working Conditions at Stake

One danger is that the pension issue will overshadow the many contract issues affecting UPSers' daily working conditions.

In surveys and contract meetings, working Teamsters at UPS made it clear that UPS should not get an early agreement unless it includes:

• Real protection from excessive overtime
• Strong language to ensure compliance with 8-hour requests
• Higher wages-especially for part-timers and combo workers
• Fairness for combo workers-including stronger bidding and seniority rights.
• Increased penalties for supervisors working
• Protection from unfair discipline based on new UPS spying technology
• A minimum of 10,000 new full-time jobs

UPS is prepared to spend billions to push through its pension grab and distract members from the critical language issues that determine the quality of our work lives.

The pressure is on the company, not us, to settle early. We need to win the improvements that we deserve or we will suffer the consequences for another five years.

Central States Pension Grab

UPS has been gunning for more control over our pensions for years. This year, they are taking a more incremental approach by focusing on Central States. If they get their foot in the door at Central States, the company will target other Teamster funds in the future.

We can expect plenty of bait to get Central States Teamsters to swallow the hook, including:

• Higher pension benefits than what Central States currently offers
• Real 30 & Out benefits (no 6 percent annual penalty for retiring before age 62)
• More affordable retiree healthcare
  

That's what UPS will dangle to get working Teamsters to take the bait. The hook will come later when UPS caps future pension increases going forward. UPS stands to save billions of dollars over the long-term by reducing future benefit costs. That's what the company's move against Central States is all about.

That's why UPS management will offer approximately a $6 billion payment to withdraw from Central States. UPS management knows they will make up these billions and more by paying working Teamsters lower benefits in the future.

A drug dealer is always willing to sell you your first score on the cheap. They know they'll make it up many times over once you're hooked.

We can win improved benefits and affordable retiree health care without letting UPS split the pension fund. Our union took that united position in 1997 and we won record pension increases.

Hoffa and Hall Shill the Company Plan

It's obvious why the company wants to destroy Central States, but why are Hoffa and Hall are cynically promoting this short-sighted deal?

They claim that actuaries hired by the union say that breaking up the Central States Fund is the "only option." Are these the same actuaries who promised that the "Best Contract Ever" would protect our benefits for the life of the agreement?

These actuarial studies are paid for by members' dues-so why isn't this information made available to Teamster members so it can be independently verified? Instead, UPS Teamsters are kept in the dark and told to take Hoffa word for it. That's what we did with the "Best Contract Ever" promises.

In 2002, Hoffa and Hall gave away the 30 & Out benefits that we fought for decades to win-and secured in our 1997 strike victory.. Now they are poised to give away the rest of our strike victory by giving up the Central States Pension Fund.

Concerned Teamsters Need to Act Now

An early deal is on the way and so is the biggest sales job ever. We need to prepare our fellow UPS Teamsters to carefully scrutinize any early settlement-and consider its long-term consequences, not just the short-term improvements.

Leading up to the settlement, TDU and the Make UPS Deliver campaign will be producing informational bulletins. When a tentative deal is reached, we will publish a detailed analysis so UPS Teamsters can make an informed decision.

You can help make that happen by distributing this information to Teamsters where you work and at union meetings.

This is an issue that will affect every Teamster-not just UPSers. Every Teamster who is concerned about the future of our union's power and our benefit funds needs to make their voice heard and to call on local officers to take a stand to defend our union.

Remember, the 'Best Contract Ever' sounded good in the short term too. Hundreds of thousands of Teamsters paid the price through benefit cuts and diminished member confidence in our union.

We can't afford to let history repeat itself.

Click here if you can help us alert other Teamsters and to send us your thoughts on this issue.

Click here to download the latest bulletin from Make UPS Deliver.

Click here to download the latest Central States Pension Update from TDU.

Click here to download the statement from James Hoffa and Ken Hall.