Bargaining Stronger Benefits
January 26, 2007: These contract improvements would restore and strengthen our pensions:
- Higher Contributions. UPS is making record profits (more than $4 billion in after-tax profits last year alone). More of that money needs to go to financing a secure retirement for the Teamsters who make this company run.
- Include UPS Part-Timers in All Teamster Pension Funds. Part-timers are not included in Teamster pension plans in the Central States and in much of the East. But in the West, New England and Upstate New York, they are. Why not everywhere? That would put tens of thousands of younger Teamsters into our pension plans and add hundreds of millions of dollars in contributions every year. For most part-timers who stay on at UPS and go full time their part time years count only as a reciprocal benefit when they retire—a very low benefit. However, if they were in the same pension plan as full-timers the part time years would be worth much more allowing a better retirement benefit.
- Include UPS Freight Employees in Teamster Pension Plans. UPS employs 15,000 nonunion drivers and dock workers at UPS Freight. We need to use our bargaining power to unionize these workers and bring them into Teamster benefit plans. That would add some $180 million in pension contributions to our funds every year. If we let management keep this growing sector out of our union pension plan, we're undermining our future.
- 15,000 Full-Time Jobs. Every full-time job at UPS means more contributions and stronger pension funds. We need to create more than another 10,000 full-time jobs in this contract, to strengthen our pension plans and bring full time opportunities to all UPS’ers.
- Strong Subcontracting Language That’s Enforced: When management subcontracts out feeder work, they are robbing our pension funds of contributions. We need stiffer penalties and stronger contract enforcement to stop subcontracting.
- Organize other UPS Subsidiaries. UPS owns and operates many other subsidiaries including Supply Change Solutions (UPS Logistics) UPS SonicAir, and others.
UPS Plan Would Weaken Our Pensions
January 26, 2007: First UPS demanded benefit cuts in out major Teamster pension plans.Now, management is trying to convince us that they have the solution to our pension problems.With our pension and retiree health benefits at stake, it's ciritical that working Teamsters get the facts.
UPS’s Plan Would Mean a Smaller Pension
UPS management wants us to believe that the company would deliver better retirement benefits. In fact, management’s own figures show that UPS would provide a smaller pension. How small? Try $2,811 a month for a Teamster retiring today after 30 years. That’s less than any Teamster pension plan.
Testifying before the Congressional Subcommittee on Employer-Employee Relations on March 18, 2004, UPS Senior Vice President John McDevitt testified that the company could earn 7.5 percent growth per year on pension fund assets. That’s a realistic number. It’s the same figure used by most pension funds.
You can calculate exactly how much the company would pool for your retirement by using the pension contributions our union has won over the last 30 years and appreciating it 7.5 percent every year. For example, if you started full-time UPS work 30 years ago, at age 28, and worked every single week, with no illnesses or injuries, the total funds in your retirement account would be $395,600.
That sounds like a lot of money, but remember it has to last you for your entire retirement. In the example above, you are 58 years old and could live another 25 or 30 years. In his Congressional testimony, McDevitt gave a conversion factor to turn that lump-sum into a monthly pay-out. According to management’s own formula, your monthly pension would be $2,811 per month for life.
This is less than any Teamster 30-and-out pension pays! And it gets even worse. When we checked with independent brokers, they reported that management’s conversion factor was inflated and that no one would give that high a monthly pay-out based on that lump sum.
Why does a UPS fund come up short of a Teamster plan—even using management’s own figures? Because in a Teamster pension, you don’t just collect on contributions made on yourself. You also collect on the contributions from Teamsters who didn’t work long enough to “vest” and earn a pension. In a union plan, that uncollected money is used to boost the pensions of Teamster retirees. In a company plan, that uncollected pension money goes to management.
If you want a copy of McDevitt’s testimony on behalf of UPS, and a spreadsheet showing the contributions and their worth for each year at management’s own 7.5 percent formula, contact TDU.
UPS Has Fought to Cut Our Pension
Management is spinning a lot of PR to try to convince us that they will look out for our pension. But actions speak louder than words.
Here is UPS management’s record when it comes to our pensions:
u UPS management’s representative to the Central States Pension Fund voted to cut our pensions and opposed a motion 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.
- UPS management has 50 percent of the trustees on the Local 804 and Local 177 pension funds that cover New York City and most of New Jersey. UPS’s trustees demanded cuts and got them in New York, and are trying to get them in New Jersey, where they are now 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.
Management hasn’t been looking out for our retirement; they’re leading the attack on our benefits. Management’s goal is to gain control of our pensions, with the ultimate goal of breaking our union altogether.
Other Teamster employers are pursuing exactly the same strategy. At Pepsi, management has succeeded in getting some local groups of Pepsi and Frito-Lay Teamsters out of union pension plans. In every case, this was followed by an attempt to bust the union.
No union means no bargaining means they pay what they want for wages, health care and pensions.
Teamster Solidarity Increases Our Benefits
Management wants us to believe that the company is ‘subsidizing’ other employers and that UPS Teamsters are losing out by being a plan with other Teamsters.
The fact is that UPS Teamsters won the benefits we have today by joining forces with other Teamsters. Freight Teamsters won record pension contributions from their employers in the 1950s, 60s, and 70s and built up our union pension plans when UPS was relatively small.
In the 1990s, UPSers teamed up with freight and other Teamsters to win the first 25- and 30-and-out benefits. That’s the power of Teamster solidarity.
Today, UPS is the largest single employer in the Central States Fund, Western Conference Fund, and most others. But the company is still only about 20 percent of the participants in those funds; some 80 percent are other Teamsters.
Our power to win benefit improvements comes through Teamster unity—not trusting management to take care of us in our retirement.
In West Pension Multiplier Goes Up, But 38% Pension Cut Remains
December 5, 2006: When is an increase actually a cut? Teamsters in the Western Conference Fund are finding out the hard way.
Fund trustees voted to raise the pension multiplier. But a typical Teamster will lose $100 a month off of their pension check every year that the new multiplier is in effect. Trustees of the Teamsters Western Conference Fund voted to slightly increase the pension multiplier, the number that determines the amount of pension credit that Teamsters earn each year. But the good news ends there.
The new multiplier means Teamsters will continue to face a pension cut of nearly 40 percent when the fund is 100 percent funded.
Trustees to the Western Fund—including International Vice Presidents Al Hobart, Chuck Mack, Jim Santangelo and Randy Cammack—voted to raise the multiplier to 1.65 percent in October. They kept the vote secret until after the IBT election because they know that Teamster members will see this for what it is: a continuation of the pension cuts imposed in 2003.
The 2003 Pension Cuts
In 2003, Teamster trustees voted with employers to drastically slash the pension multiplier by more than half, to 1.2 percent, from 2.65 percent. Before those cuts, the multiplier was never once below 2.2 percent for Teamsters with 20 or more years in fund.
The 2003 pension cuts have already reduced the monthly pension of UPS and freight Teamsters by $500 a month. That’s a loss of $6,000 a year, over a whole retirement.
A typical Western Teamster is going to continue to lose another $100 off of their monthly pension check for every year this cut is in effect.
Even worse, the increase to 1.65 percent is just a bonus. The 1.65 rate will only be in effect until December 31, 2007. At that point, the multiplier will snap back to 1.2 percent unless the Teamster and employer trustees vote to extend the increase.
Fund Assets Up, Pensions Down
Top Teamster officials have promised members in the West that the cuts would be ended when the fund’s financial condition improved.
But even though the fund has completely bounced back from the stock market dip, members’ pensions have not. According to its own statement recently released, the Western Fund is 100 percent fully funded. There is no reason Teamster benefits cannot be restored right now.
It's obvious why the employers want to keep benefit levels as low as possible. But why are our Teamster trustees voting to continue pension cuts—at a fund that is 100 percent funded?
Hobart, Mack, Santangelo and Cammack all have multiple pensions and free health care for life. Do you think their golden parachutes might be one reason they're not fighting harder for the rest of us?
Pension Cuts Hit Flagship UPS Local
December 5, 2006: Just two months into early negotiations with UPS to protect Teamster benefits, the company has cut the pensions of thousands of UPS Teamsters in New York City. Local 804 members will be hit with a 30 percent cut in their pension accrual effective Jan. 1.
The cuts send a clear signal that UPS management is continuing its offensive against Teamster benefits.The largest UPS local in the East, Local 804, was the first Teamster local to win 25-and-out benefits. UPS management knew what it was doing when it targeted Local 804 for a pension cut just as early bargaining is getting underway.
Reportedly, the Local 804 pension fund will have a shortfall in its credit balance (a technical measure of the fund’s strength) sometime next year without either a cut in the accrual rate or higher employer contributions. The Teamsters and UPS are at the table right now, supposedly to negotiate increases in company contributions and restore Teamster pensions to top levels.
In connection with those talks, management reportedly complained to the Hoffa administration that Local 804 was opposing the company’s pension cut proposal.
Hoffa could have told the company to drop the pension cut demand and let negotiations about proposals to strengthen Teamster benefits take their course. Hoffa could have threatened to cancel early talks if the company insisted on these cuts.
He could have at least warned Local 804 Teamsters about the threat. He didn’t even do that.
UPS management imposed the pension cut by securing the vote of the union trustee from the separate union that represents the mechanics.
Local 804 President and fund trustee Howie Redmond voted against the cuts, but has come under fire in the local for his pass-the-buck approach.
Redmond is a Hoffa ally and a member of the National Bargaining Committee. If Hoffa will not stand up for Teamster pensions in a key local, led by an ally, at the outset of early bargaining to protect Teamster benefits, then when will he take a stand?
UPS Teamsters who care about the future of our pension and health benefits need to get united, informed and organized. TDU is forming a UPS Pension Protection and Contract Mobilization Network.
Interested? Contact the TDU office.
TDU Will Continue to Oppose Benefit Cuts and Fight to Strengthen Teamster Benefits
December 5, 2006: While Hoffa can boast of a 65 percent winning margin overall in the IBT election, he would be well advised to look at the big groups of Teamsters who voted for a change of direction—starting with the with 175,000 Teamsters in the Central States Pension Plan (CSPF).
These voters sent a strong message that we need new pension and benefit policies.
Most Central States participants belong to mixed locals along with the 400,000 other Teamsters in the Central and Southern Regions and the Carolinas so it’s impossible to precisely separate and count their votes. But a review of the results clearly reveals that the locals with a high percentage of Central States Pension Fund members usually went for Leedham.
Some of the locals where Central States Pension Fund Teamsters voted for Leedham include Charlotte, N.C., Atlanta, Houston, Oklahoma City and the state of Tennessee (which voted 63 percent for Leedham overall). Leedham carried St. Louis Joint Council 13 on the strength of his support from CSPF Teamsters. In Ohio, Leedham captured 49 percent of the vote overall and and a clear majority of the CSPF vote.
Across the Midwest the pattern continued, including Des Moines Local 90 and Detroit Local 243. Hopefully the Hoffa leadership will get the message. It is time for change in the Central States, and in the pension policies of the IBT.
- Teamsters want information: Hoffa hid the crisis at Central States until after members ratified the national contracts. The International Union should stop keeping members in the dark and ask all Teamster pension trustees to make the facts and options available to members before benefit cuts are made.
- Teamsters want to stand up to the cuts: After employers demanded benefits cuts in the Central States, the Hoffa administration and our union trustees spent three years defending the cuts instead of mounting a fight to protect our pensions. The UPS negotiations are an opportunity to reverse course and unite Teamsters to stand up to our union’s biggest, most profitable employer and say no more cuts.
- We need to organize new employers into our pension funds: Organizing UPS Freight would bring more than 12,000 new participants into our funds. Elsewhere, we can add tens of thousands more Teamsters into the funds without organizing a single unorganized worker. In the West, New England and upstate New York UPS part-timers are in Teamster plans. But part-timers are excluded from the Central States Pension Plan and other Eastern funds. All UPS part-timers need to be brought into Teamster benefit plans in the new contract.
Western Conference Fund: Pension Cuts Aren't Justified
October 18, 2006. At the Aug. 25 debate between Tom Leedham and Hoffa’s stand-in, Tom Keegel, a Teamster member questioned Keegel about the 60 percent pension accrual cuts in the big Western Conference Pension Plan. The member said the plan is 100 percent funded, with zero unfunded liability, and yet top Teamster officials go along with management on continuing the pension cuts. The member pointed out that Hoffa’s running mates sit on the fund board: Al Hobart, Chuck Mack, Jim Santangelo and Randy Cammack.
Keegel denied that the fund is 100 percent funded. But the fact is, earlier in August, the Western Fund mailed a report to all local unions which states right up top, “The Plan’s vested benefit liabilities are 100 percent funded.”
Leedham told Keegel: “I suggest that ‘Mr. Stand-in’ look at the most recent publication from the Western Conference of Teamsters Pension Plan, which arrived in mailboxes about two weeks ago, that indicates, in black and white from the pension office itself, that the fund is 100 percent funded. Yet Teamster members are still experiencing a cut in their benefits of 60 percent. A freight Teamster has lost $500 per month from their retirement check for the rest of their life, from a fund that is 100 percent funded.
“And it goes to a different problem here, and the problem is this administration has given up control of our pension funds to greedy corporations who are extracting more money from Teamster members by way of these reduced benefits.”
Member Action Wins Greater Accountability From Central PA Fund
October 18, 2006: For years the Central Pennsylvania Teamsters Fund was plagued with questionable administration and benefits inferior to many other Teamster Funds.
Fed up with this state of affairs, members formed the Central PA Reform Committee.
In 2002, three members filed a lawsuit against the fund. Initially they did the legal work on their own, but then attracted experienced pension attorney Ann Curry Thompson, who enlisted Alan Sandals, another experienced pension litigator, to serve as co-counsel with her to help the plaintiffs carry the case forward.
The suit cited breaches in fiduciary duty on the part of fund trustees and managers. Although fiduciary breach suits are difficult, the committee and their legal counsel poured through thousands of documents in order to build a strong case.
In 2005, the fund and its insurance carrier agreed to enter into settlement talks. In March 2006, both sides reached agreement on measures that will bring greater oversight and accountability to the fund. Additionally, a monetary settlement was reached for $1.75 million
Approximately $280,000 of the settlement was reserved to fund a comprehensive review of fund operations and investment management over the next four years by an outside consultant, Independent Fiduciary Services. The balance after fees and costs was restored directly to the Central PA Fund.
The agreement includes accountability measures that Teamsters in other funds have long argued for.
The comprehensive independent studies that will review all aspects of the fund’s performance will be made available to plan participants, as will any responses from the trustees.
The fund will also have to make detailed information publice that funds normally hide from participants, including:
- The annual actuarial valuations for the plan and any amendments or revisions.
- Actuarial reports relating to plan amendments.
- Quarterly reports on the fund’s investment performance from 2006 and into the future.
- Summaries of formal actions taken by trustees.
“Before, fund decisions and their impact were kept hidden,” said Drake Saxton, one of the plaintiffs. “This giant spotlight shining on the fund will provide the pressure needed to maintain policies that will protect and improve member benefits.”
Teamsters in other areas would like to see the same level of transparency from their funds. So far, Hoffa and fund trustees have opposed greater accountability.
The Pension Protection Act: The Good, the Bad and the Ugly
October 18, 2006: The misnamed “Pension Protection Act” of 2006 will go into effect in 2008. Here we provide a summary of some of its impact on Teamsters. Thanks to attorney Ann Curry Thompson and the Pension Rights Center for their help interpreting this law for Teamsters. For a copy of “Frequently Asked Questions” about the PPA by Ann Curry Thompson, contact TDU.
What Are Some Positive Aspects of the New Law?
There are more negatives than positives. On the positive side, it could make pensions more secure in several major ways. First, it requires fund advisors to identify and fix problems proactively. Second, the new law will require that fund trustees provide frequent and better information about the health of a fund and give participants more access to the fund’s actuarial and investment reports. TDU has fought for this right.
The law could also rein in fund trustees who might adopt irresponsible interest rate assumptions (the rate at which fund assets are projected to grow) and actuarial assumptions (the rate of retirements, deaths and forfeitures at various benefit levels provided by the fund).
What About the Negatives?
There are many. The overall effect of the law will be to encourage policies that lead to full funding, sometimes at the expense of reasonable and affordable benefit improvements. Even if funds are not in endangered or critical status, employer trustees and fund managers will have an excuse for limiting improvements.
It may also have the long-term effect of discouraging some employers from either joining or maintaining defined benefit plans because it requires funds to move to full funding at a relatively fast pace. For example, the amortization period for changes in benefits and actuarial assumption is shortened from 30 to 15 years, putting pressure on the employer to pump more money into the fund in a shorter period of time.
Red Zone, Yellow Zone
The law describes funds as “endangered,” “seriously endangered” or “critical” status. What do these mean?
The provisions relating to “endangered” and “seriously endangered” status are the so-called “Yellow Zone” amendments to ERISA. “Critical status” is called the “Red Zone.”
A plan is “endangered” if: It is 80 percent funded or less (note: Many Teamster funds will fall into this category) or if there is a “funding deficiency” in the Funding Standard Account in the current year or one is projected in any of the next seven years. If a fund meets both criteria, it is “seriously endangered.”
A plan is in critical status if it is 60 percent funded or less and if there is a funding deficiency or one is projected in the near term. A plan in the “Red Zone” can cut not only future benefits, but in some cases can even cut accrued pension benefits, a roll-back of a legal protection won over 20 years ago.
What Does This Mean for the Largest Teamster Funds?
The Western Conference Fund is 100 percent funded, and none of this applies to it. They really have no excuse whatsoever for not restoring full benefit accrual. The reason the cuts in the West are still in place is that Teamster trustees have made a policy decision to go along with unnecessary pension reductions proposed by the employers.
The Central States Fund and the New England Fund will very likely be in the “Yellow Zone” (also called endangered status) because they are less than 80 percent funded. A Yellow Zone Fund must develop a funding improvement plan. The union can bargain over its terms, so union leadership is critical to protecting members’ interests.
In the case of Central States, the law actually provides some protection, in a strange way: the union trustees have already agreed to huge cuts in pension accrual, down to one percent of contributions. The law provides that no fund can ever pay less, so it is already at the legal minimum.
Also, a plan in the Yellow Zone cannot raise benefits until its funding level improves. This makes it critically important to bargain increased employer contributions, bringing part-time UPSers and UPS Freight into the Central States Fund, and to step up organizing as well.
A strong bargaining plan in the national contracts will be an important factor in ending pension accrual cuts, providing medical coverage to retirees, and protecting our pension plans. The other key is leadership from union trustees, who hold 50 percent control of the funds. Teamster trustees wield 50 percent control of the fund but have not used their authority to counter employers and defend members from benefit reductions.
How Can I Find Out More About My Own Fund?
One positive aspect of the new law is that funds will require that more detailed information be given to participants starting in 2008.
Presently the best single source of information is the annual “5500” form your pension fund must file. These are just becoming available now for the year 2005. And certain information, such as the funding level, is often for the beginning of the year, and thus about two years old by the time you see it. These forms are available to any participant; contact TDU for info on how to obtain them.
Click here: Road Ahead for Pension Justice
Click here to download the informational bulletin "The Pension Protection Act: The Good, the Bad, and the Ugly"
Road Ahead for Pension Justice
October 18, 2006: It’s up to Teamster members to lead the fight for pension justice.
The past three years have proven that the Teamster leadership’s approach is a complete failure. They lied to sell us contracts, let the employers take over our pension funds, slapped Teamsters with the first-ever cuts, and tried to cover it all up.
Members have learned to fight back, and in some cases, gain ground.
We need action around the upcoming contracts. Contracts covering over 300,000 Teamsters in national agreements expire in 2008. With or without early bargaining, we should focus on building campaigns in 2007 to win back our benefits. Neither UPS nor the freight employers want disruptions or even uncertainty during this critical growth period for their businesses. This puts us in an excellent position.
We need rank and file networks that have the ability to vote down any offer that fails to improve benefits.
We need local action as well. We need to continue to build TDU and Pension Improvement Committees in our locals and link nationally to educate Teamsters and retirees to exert the kind of power we need to win.
Teamsters are hungry for information and for positive action around benefits. It’s up to us to help turn that concern into action and provide a positive plan to win.
TDU will be there with information, with legal help, and with a network to help build this movement as broad and strong as possible.
Click here: The Pension Protection Act: The Good, the Bad, and the Ugly
Too Little, Too Late from the IBT Leadership
Pension Legislation Loss
August 9, 2006. Late in the evening of August 3, the U.S. Senate voted to approve a piece of pension legislation which contains much of the “Red Zone” cut-back language that rank and file Teamsters have fought hard to get removed from the bill. President Bush is expected to sign it.
Thanks to rank and file action, a portion of the red zone was cut that would have let funds cut benefits of members who had already retired. Certain other restrictions were also included, thanks to an extensive rank and file effort over the past year.
The IBT’s PR machine was ready with a press release denouncing the bill and congress. "Congress has failed the American worker," trumpeted James P. Hoffa.
Congress should be blamed for opening the door to possible cuts in earned benefits in certain troubled pension plans, but the role (or lack thereof) played by the Hoffa administration makes them co-responsible for this defeat.
Rank and file Teamsters, officers and Leedham Slate candidates traveled to Washington D.C. three times, on their own dime, to meet with congress about the red zone. They organized a petition drive that sent thousands of letters and petition signatures to members of the conference committee. They got media coverage in the New York Times, Wall Street Journal, ABC News and numerous media outlets. They passed motions at union meetings. And they got the Senate to remove the red zone entirely when the Senate voted on it in November of last year.
Let’s look at how Hoffa compared to the grassroots effort:
• Hoffa supported the bill, and the red zone measure, starting during hearings in the House, through the House vote in June 2005 and after that. In fact congressional staffers reported in May 2006 that in their last contact with the IBT’s lobbyists, they were avidly supporting the red zone cuts.
• After rank and file delegates traveled to Washington, and the Leedham Campaign took up the red zone issue, Hoffa announced in late 2005 that he was reversing himself. Still, the IBT took no action.
• In 2005 and 2006 Hoffa did not mobilize the vast resources of the IBT to send Teamster delegations to DC to lobby against the bill, or to circulate petitions against the cutback provisions or to get media coverage on the issue. The Teamster legislative department delivered zero results.
“Then at the very end, when all was said and done,” Local 391 retiree Frank Bryant pointed out, “Hoffa did some robo-calling to stewards and members. I’ve seen what is involved when a union really lobbies over an issue, and this is no where near what has to be done. It’s just another PR stunt, while member rights are on the line.”