June 8, 2007: UPS management has put a dangerous proposal on the table: to pull UPS Teamsters out of the Central States Pension Fund, the plan that covers 42,000 full-timers in 25 states.
Under the law, UPS would have to pay $4 billion in withdrawal liability to the Central States to break out of the fund—a penalty management is happy to pay because they can make it up over time by reducing future benefit costs.
Our union has always opposed pension grabs by UPS in the past because the company’s goal is to weaken our union and our benefits. In 1997 we defeated the company on the issue and won major benefit improvements.
But this time, the Hoffa administration may go along the company’s plan, calling it “a serious proposal that must be seriously evaluated.” The entire contents of the last Teamster UPSDate was dedicated to talking about management’s proposal—without a single word on what the union’s proposal is.
UPS’s pension grab would hurt our union in the long run—in exchange for not much benefit in the short run.
Under the company’s initial proposal, the UPS-only fund would pay a 25-and-out benefit of $2,500, a 30-and-out benefit of $3,000, and a 35-and-out benefit of $3,500. Benefits would be capped at a maximum of $3,500 a month no matter how many years you work.
At $100 per year of service, the proposed UPS pension would actually pay less than Central States, which pays $123 per year of service. And that number will go up at least eight percent a year, so Central States will pay about $175 per year by the end of the next contract. The main improvement is that the UPS-only plan would restore early retirement by eliminating the six percent per year penalty for retiring before 62.
Of course, UPS can sweeten the pot and improve their initial offer. We fully expect that to happen.
But UPS Teamsters shouldn’t have to be pulled out of Central States to get the benefits they deserve. It’s our union’s job to win full 25 and 30-and-out benefits at any age and affordable retiree healthcare in a Central States plan.
The reason is simple: breaking apart the Central States Fund will weaken our union and put members’ benefits at risk.
Long Term Problems
UPS’s proposal would establish a UPS Pension Plan, with management officials and Hoffa administration Teamster officials as trustees. A Teamster vested in the Central States Plan would in the future draw two separate checks, which would add together to make up a pension.
Central States would not give up funds that have been contributed over the years. They would stay there and provide a partial pension, while the UPS Plan would pay the rest of the pension. Healthcare and retiree healthcare would continue to be provided by Central States.
By breaking up and weakening the Central States Fund, management’s proposal would put UPS members’ future pensions at risk. UPS currently contributes $500 million per year to Central States. That income, which grows each year, would be gone forever.
If the big freight companies follow UPS’s example and pull out, the Central States Fund would be even worse off. The CEO of ABF now says busting out of the Teamster pension plans is his top bargaining goal.
UPS Teamsters would still depend on the fund for a large part of our pension. It would not be smart to weaken the fund by supporting a pullout when we will still need the fund to support our retirement.
Real Problem; Wrong Answer
UPS’s proposal for a UPS-Teamster plan covering the Central States has been tried elsewhere. Let’s look at the results.
Local 804 in New York is a UPS-Teamster plan just like the one being proposed for the Central States. Over the last ten years, that fund’s investments have performed worse than Central States. At the beginning of this year, UPS’s trustees forced through a 30 percent pension cut.
Now UPS is trying to push through a pension cut in New Jersey Local 177—another UPS-Teamster fund. That decision is before an arbitrator.
Both of these plans are based in Atlanta, at UPS headquarters, with all employer trustees being UPS management. They show that a UPS-Teamster pension plan would not be a magic bullet.
Early bargaining gives us leverage. We need to use it to win benefit improvements for UPS Teamsters in the Central States Fund and all Teamster pension plans, including:
Affordable retiree healthcare. Cuts in retiree healthcare are the number one obstacle to members retiring at 25-and-out 30-and-out—and the easiest benefit cut to restore. We need to substantially increase contributions to Teamster Health and Welfare funds so that our health benefits are protected and affordable retiree healthcare is immediately restored.
A timetable for improvements in all pension plans in writing at the time of ratification so that Teamsters in all funds will know that our pension benefits will be restored and increased as increased contributions build up in our funds. In 1997, UPS Teamsters got a document from Central States—before we voted on the contract—telling us in writing what our benefits would be if the contract was ratified.
Include UPS part-timers in all Teamster pension funds. Part-timers are already covered by Teamster plans in the West, New England and Upstate New York. As a result, part-timers in these areas receive superior pension benefits and the contributions for part-timers who do not vest are used to strengthen Teamster pensions, not to line the company’s pockets.
These are achievable goals. There’s no reason to give UPS an early deal unless it delivers the benefit improvements that Teamster members need today—and the stronger benefit funds that Teamster members will need tomorrow.
June 8, 2007: UPS management has been trying to win control over our pensions for years. After Teamsters defeated UPS’s pension grab in 1997 and won major improvements in our benefits, it looked like management’s dreams were finished.
Then the 2002 “Best Contract Ever” and the pension cuts of 2003 breathed new life into management’s old ambitions to get control over our pensions.
UPS Teamsters are angry over the cuts and they’re looking for answers. Management is trying to play off our anger to revive their efforts to take over our pensions. The company wants to convince Central States Teamsters that they will look out for our pensions.
When it comes to big promises, actions speak louder than words. The fact is management hasn’t been looking out for our retirement; they’ve been leading the attack on our benefits. Just look at the UPS record:
- UPS management’s representative to the Central States Pension Fund voted to cut our pensions and opposed a motion by our union trustees to increase employer contributions.
- UPS management’s representative to the Western Conference of Teamsters Pension Fund voted for benefit cuts, even though that fund is 100 percent funded.
- There are two UPS-Teamster plans like the one being proposed for the Central States and management has pushed for pension cuts at both. UPS’s trustees forced through a 30 percent pension cut in New York Local 804, and they are trying to cut benefits in New Jersey Local 177, where the issue is deadlocked to an arbitrator.
- UPS management refused to pay millions of dollars owed to two pension funds, in Virginia and New York. In Virginia, management stopped making required pension contributions when members were on vacation.
- UPS has been the number one supporter of legislation that would make it easier to cut our benefits.
UPS’s record shows that the company can’t be trusted with our benefits. But many UPS Teamsters will say Hoffa can’t be trusted either. After all, Hoffa promised that the “Best Contract Ever” would protect our benefits.
True enough. But we’re not going to get even with Hoffa by jumping for a bad proposal from management. Remember, management’s plan to break up the Central States Fund will only go to a vote if Hoffa is backing it.
Hoffa and UPS sold us a bill of goods in 2002. The answer isn’t to fall for a bigger bill of goods now. UPS is under pressure from stockholders and shippers to reach an early agreement. This gives us leverage. Let’s use it.
UPS Teamsters should not ratify any early agreement unless we have it in writing that the contract will restore affordable retiree health coverage and gives us a written timetable for restoring our pensions.
We can win these improvements without letting UPS break apart the Central States fund and weaken our retirement security over the long run.
June 8, 2007: As negotiators for UPS and our union square off over the pension issue, members in the Eastern Region’s two largest UPS locals want to know whether early bargaining will deliver a real pension increase—or a freeze that keeps benefits at pre-pension cut levels.
New York Local 804 and New Jersey Local 177 were the first Teamster locals in the nation to win 25-and-out and 30- and-out pensions. UPS management controls all of the employer trustee positions at both of these funds—and has used its authority to push for pension cuts.
UPS trustees pushed through a 30 percent cut in the pension multiplier at Local 804 effective Jan. 1 this year—over the opposition of Local 804’s trustees to the fund. In Local 177, Teamster trustees have blocked UPS’s demands for pension cuts so far, but the issue is in arbitration.
Local 804 members circulated petitions calling on the union to let members know what needs to be won in bargaining in order to reverse the cuts and increase benefits. The International requested this information from all of the benefit funds that cover UPS Teamsters, including Local 804 and Local 177. But this information has never been shared with the members.
“It seems like the plan is to restore what we lost and sell it to us like we gained something,” said Jorge Diaz, a package car driver from Local 804. “But to me, that’s not gaining anything. That’s a pension freeze.”
“We’re not being told anything, In 1997, we knew what the company was proposing and what the union was fighting for. We won higher pensions. We shouldn’t settle for a freeze this time.”
“That fund is not 100 percent funded. When that fund gets to 100 percent based on their rules, they’ll do the right thing.”
Tom Keegel, IBT Candidates Forum, Aug. 25, 2007
“The Plan’s vested benefit liabilities are 100 percent funded.”
Memorandum to Local Union Officers from Western Conference of Teamsters Pension Trust
More than nine months ago, the Hoffa administration promised Teamsters that the Western Conference of Teamsters Pension Trust would end the pension cuts when the fund was 100 percent funded. But the cuts continue even though the plan is 100 percent funded.
The Hoffa administration’s promise “to do the right thing” was always an empty one. Before General Secretary Treasurer Tom Keegel even made it, the WCT Pension Trust had already issued a memo to local union officers in the West that, “The Plan’s vested benefit liabilities are 100 percent funded.”
The fund issued another letter on Nov. 13, this one from employer chair Bernard T. Eilerts—reaffirming that the fund was 100 percent fully funded.
Three days later, the fund announced a change in the multiplier. But instead of restoring members’ benefits as promised, the fund raised the multiplier only slightly. The new rate was only 1.65 percent, nearly 40 percent lower than the historic minimum rate of 2.65 percent.
IBT Vice President and union trustee Randy Cammack announced at a recent Local 63 meeting that the multiplier will be increased. That’s long overdue. As a result of the cuts, the annual pension of UPS, freight and many warehousing Teamsters in the West has been reduced by more than $6,000 a year.
The UPS contract will set a new record for pension contributions into the fund. That money must be used to restore the benefits that Western Teamsters have lost and restore the multiplier.
UPS has been the number one player behind the scenes pushing Teamster pension plans to lower benefits. Before they vote on any early deal, UPS Teamsters deserve to know how much of their pension benefits will be restored and what the pension multiplier will be going forward.
UPS has put an offer on the bargaining table to take 42,000 UPS Teamsters out of the Central States Fund. The CEO of ABF just announced he wants to pull out of all Teamster benefit plans.
The Hoffa administration is also considering a deal to keep all UPS Freight Teamsters out of our traditional Teamster pension plans as part of a contract that would be substandard to the NMFA.
Together, these proposals would put Freight Teamsters in jeopardy. They would undercut our bargaining power before the 2008 NMFA talks and they would put our future benefits at risk.
Freight Teamsters won’t have a vote on the UPS contract or the UPS Freight deal in Indianapolis—but we do have a voice and it’s time to use it.
We need to call on our leaders in the Freight Division to stand up for Freight Teamsters: no deals with UPS or UPS Freight that would undercut our contract or our pensions.
Call 202-624-6800 or fax 202-624-8722.
May 16, 2007: Jim Hoffa and Ken Hall promised that early negotiations would send a message to every Teamster employer not to mess with our pension funds.
With UPS and other employers trying to break out of the Central States, what message will we send now? See Ken Hall’s pledge to the Teamster Convention.
May 11, 2007: “We believe there is an opportunity in this negotiating cycle to withdraw from some or all of these [Teamster pension plans] and provide benefits directly to our employees, and we’re prepared to negotiate that with the Teamsters in the coming negotiations.”
“We view the multiemployer [Teamster pension] withdrawal opportunity to be the most significant thing facing us.”
-- Robert Davidson, CEO of ABF, Interviewed on May 8, 2007 by transportation stock analysts
There you have it. The CEO is telling you that ABF would love to bust our pension plans, and take over employee pensions, in the coming round of negotiations.
There is no reason for this demand to be considered by our union or our members. We should push that off the table right from the start, and let the carriers know that we are bargaining to improve health care and pensions, not turn control over to the employers.
The best way to start would be setting a precedent in the UPS and UPS Freight negotiations: bring more brothers and sisters into our Teamster pension plans, and not split them up.
May 11, 2007: by John Gallagher in Traffic World Online --Arkansas Best Corp. President and Chief Executive Officer Robert Davidson said he's willing to take the financial hit necessary to negotiate with labor an end to its multiemployer pension fund contributions.
"We can provide the same benefits that we're providing now directly to our employees at significantly less cost than we're now paying," Davidson told Wall Street analysts at a conference sponsored by Bear Stearns in New York May 8. "That money would allow us to amortize the withdrawal liability that we would pay to the funds, and would lower our operating ratio to allow us to be even more competitive in the marketplace."
According to SEC filings, ABF estimates it would cost the company $600 to $650 million in "contingent liabilities" to withdraw from the plan, payable over a 10 to 15 year period.
Such a move, however, is likely to be a major sticking point with the International Brotherhood of Teamsters. The National Master Freight Agreement expires in March 2008, and both sides are gearing up for the latest round of talks.
It could also prove a sticking point with YRC Worldwide, which is also part of the NMFA.
"We probably have a little bit of difference" with YRC when it comes to the pension issue, Davidson said. "We have the capital structure to allow us to do it, so the plan is to pursue that aggressively, and hope Yellow and Roadway are on board with us for it."
YRC President Bill Zollars, who was on the same panel with Davidson, said he considers the pension issue "an investment like any other investment, and what the return on that might be. It all depends on how much we put in and what we get back for it."
Satish Jindel, a principal with SJ Consulting Group, said if the Teamsters are willing to negotiate a pension fund withdrawal as part of the contract, ABF and other union carriers would be in a better position to compete with non-union carriers.
But he pointed out that the last attempt by union carriers to seek changes in pension plans with union workers was in 1997 by UPS - which resulted in a 14-day strike.
"Ten years later, if the union is realizing they need to show flexibility to give companies the opportunity to grow and create more jobs, that would be great news. But I'm not sure what leverage (management) has other than (warning labor about) the possibility of losing more jobs to non-union carriers."Click here to see the full article in Traffic World Online.
May 9, 2007: Management has put a proposal on the table to pull UPS Teamsters out of the Central States Pension Plan – the plan that covers 42,000 full-timers in 25 states.
UPS wants to create new pension plan to be run jointly by trustees from UPS and the Teamsters—similar to the Local 804 plan where the company recently forced through a 30 percent pension cut over the opposition of Teamster trustees.
Management knows what they want and they’ll throw money at us to get it. To pull out of Central States, UPS would be legally required to pay some $4 billion to the fund in withdrawal liability. The company sees this is as an investment in weakening our union, dividing UPSers from other Teamsters, and busting up Teamster pension plans.
According to the CEO of ABF, another company that wants to break out of Teamster pension plans, the withdrawal penalty can easily be made up over time in company savings on future benefit costs.
The Hoffa administration is considering accepting the proposal, calling it “a serious proposal that must be seriously evaluated.” Many Teamsters believe it is a done deal.
UPS’s pension grab would hurt our union in the long run—in exchange for not much benefit in the short run.
Under the company’s proposal, the UPS-only fund would pay a 25-and-out benefit of $2,500, a 30-and-out benefit of $3000, and a 35-and-out benefit of $3,500. Benefits would be capped at a maximum of $3,500 a month no matter how many years you work.
At $100 per year of service, the proposed UPS pension would actually pay less than Central States which pays $123 per year of service. The main improvement is that the UPS-only plan would restore early retirement by eliminating the 6 percent per year penalty for retiring before 62.
Of course, UPS can sweeten the pot and improve their initial offer. We fully expect that to happen, and we understand that many UPS Teamsters may be open to company proposals that restore cut benefits.
UPS Teamsters shouldn’t have to be pulled out of Central States in a company scheme to get the benefits they deserve. It’s our union’s job to win full 25 and 30-and-out benefit at any age and affordable retiree healthcare in a Central States plan.
In 1997 when UPS management tried a similar pension grab, Ron Carey backed UPS off and won enough benefit contributions to increase our Teamster pensions. That’s a positive example to follow.
Long Term Problems
Employers often sweeten their offer in an effort to weaken our union. That’s what’s happening here. The implications for our pension funds and the future of our union are huge.
If UPS is allowed to bust out of Central States, which fund is next? Other employers will want to follow. ABF’s CEO says busting out of the Teamster pension plans in the NMFA bargaining is his top goal.
The Central States Fund would lose its largest and youngest group of participants. We should be building our pension plans, not managing their decline or demise. That’s not union leadership.
Our union needs to organize. The multi-employer pension plans are a key selling point to bringing in members and building our union for the future.
Our union needs to think long term. Not just this year or this contract. A UPS worker who is 35 right now could well be drawing a pension 50 years from now. Sure, UPS is the big dog today. Will it be 30 to 40 years down the road?
Think 30-40 years ago about General Motors, United Airlines, or IBM. Who knew then they would shrink and slash pensions and possibly go into bankruptcy. That’s why the multi-employer plans are so much safer for the long run.
What do you think?
What do you think of the company’s proposal? We want to hear from you. Post a comment online for other Teamsters to read. Or send us your opinion confidentially.
UPS’s proposal will affect all Teamsters. Have your say.