UPS management has put a proposal on the table in bargaining to pull UPS Teamsters out of the Central States Pension Fund, the plan which covers 42,000 full-timers in 25 states. This is a dangerous proposal which could put our future pensions at risk, and could weaken our union. Unfortunately, the Hoffa administration is seriously considering going along with management's plan. What would it mean for UPS Teamsters?
Q: What is management’s proposal?
A: Management proposes to pull out of the Central States Plan. By law, UPS would be required to pay the "withdrawal liability," which would be about $4 billion, to the Fund. Then UPS would abandon the Central States Pension Plan, and would establish a UPS Pension Plan, with management officials and Hoffa administration Teamster officials as trustees.
If management's proposal is accepted by the union, a Teamster vested in the Central States Plan could 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.
Our healthcare and retiree healthcare would continue to be provided by Central States.
Q: How much would the pension benefit be under UPS’s proposal?
A: We don't know. Management's first offer is only for $3,000 at 30-and-out, $3,500 at 35-and-out, with a cap at 35 years. This is less than Central States currently pays, even at the reduced accrual rates currently in effect and far below what some other Teamster plans pay. A UPS worker in Central States presently accumulates $123 a month each year. So a 30-year pension is about $3,700. However, the UPS Proposal would have the advantage of a true 30-and-out at any age; presently Central States reduces the $123 a month by 6% for each year of age under 62. So, if you retire at age 59, Central States would be slightly better than the UPS Proposal, paying $101 per year of service. Central States credits earned prior to 2004 are not reduced at all below $100, so the UPS proposal has few advantages at all, and serious disadvantages.
A Teamster retiring with 37 years at age 62 in 2007 would get about $3,733 a month from Central States, but only $3,500 from the UPS Plan. A Teamster retiring at age 54 with 30 years would get $2,873 a month from Central States presently, so would gain a little from the UPS proposal. But not much, far too little to split our pension plan and weaken our whole union for a risky future.
We can expect the company to up their offer, to sweeten it and try to get us to think about a short-term gain. But we should resist taking that bait, and instead unite to win improvements in our Central States benefits—including affordable retiree healthcare.
Q: Would UPS's pension plan restore our retiree healthcare?
A: No. These are separate issues. Retiree health coverage is provided by the health and welfare fund, not the pension fund. To get us to accept their plan, the company may offer to provide retiree health coverage too. But they are not yet. And we don't have to let management break us out of our fund to win the health benefits we need.
We can win retiree health coverage at minimal cost to retirees, like we did in 1997, by negotiating more money into our health and welfare fund.
Q: We've got to do something. What's the alternative for protecting our pensions and restoring early retirement?
A: Many UPS Teamsters are rightfully angry that we were sold the "Best Contract Ever" in 2002 and then had our pensions and retiree healthcare cut. UPS Teamsters need to win improvements in this contract, and they can be won.
First, retiree health and welfare for $50 per month, as it was prior to 2004, can and must be restored. This was cut for one reason: our health and welfare moneys were diverted into the pension fund. To fix this situation, we need to negotiate enough money to health and welfare to restore benefits. That is practical and must be done.
Second, we need enough money negotiated toward our pensions to provide a reasonable timetable, in writing, to phase-in pension improvements, including the restoration of 25- and 30-and-out with no reduction for age.
Q: Isn't the Central States Fund too messed up to be saved?
A: The Central States Fund is currently under-funded (it’s 63% funded), but that situation is rapidly improving. Last year the Fund assets jumped up to nearly $21 billion, and the fund continues to grow this year. This is because money negotiated for health and welfare has been diverted to the pension fund for three straight years, pouring hundreds of millions extra into the fund each year. Also the stock market has done well in recent years.
We can't afford to give up on Central States. Remember, if UPS pulls out of Central States, UPS Teamsters will 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 depend on the fund later on to support our retirement.
Q: Would a UPS pullout from the Central States Fund put my pension at risk?
A: You bet. UPS presently contributes $500 million per year to Central States, and that income would be gone forever. So $4 billion is a lot, but it's a one-time only boost. And, the fund would shrink considerably in size, and lose its youngest and fastest growing contingent.
If the big freight companies follow UPS's example and pull out, we would be even worse off. The CEO of ABF, a major freight carrier, is threatening to do just that.
We should be looking for improvements that will strengthen our fund for the long haul—such as including part-timers into Central States the way they are in other Teamster funds like the Western Conference, New England and Upstate New York.
Q: Isn't a UPS pension safer?
A: Actually, no. Look at this way: if you are 35 years old, you may well be alive and drawing a pension 50 years from now, in the year 2057. Right now, UPS is the big dog in the industry. What is the guarantee that it will still be dominant 20 years from now, or 30 or 40 years from now? Think back 20-30 years when General Motors dominated the world in car production and sales. And United Airlines dominated the skies. United went bankrupt, and so did workers' pensions. GM's parts division is bankrupt now, and GM is cutting benefits.
A multi-employer plan is safer. Freight Teamsters were the main builders of the Central States Fund and other Teamster funds. Now UPS is the biggest. In the future, it may not always be that way. With a multi-employer plan, you are much safer for the long haul.
Q: Are there any examples of UPS-Teamster plans like the one being proposed in the Central States? Have they faced pension cuts?
A: Yes and yes. Local 804 in New York is one example. Over the last ten years, that fund's investments have performed worse than Central States. And 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.
Q: Why would UPS pay $4 billion to break out of Central States? What's in it for the the company?
A: Under the law, management would have to pay $4 billion to Central States to withdraw from the fund. Management looks at the long run, and their proposal will save the company money because they will pay lower benefit contributions over time.
Management's main goal is to divide and weaken our union. That's why UPS management has repeatedly tried to split our pension. Other Teamster employers have tried it too. PepsiCo, which owns PepsiCola and Frito-Lay, has managed to pull out of Teamster pension plans in some areas. In each case, they later moved to bust the union.
A strong union is the key to a strong pension. (Ask yourself, can you name a nonunion worker that has a $3,000 a month pension?)
Many Teamster leaders are against UPS's proposal because they know if UPS succeeds in breaking out of the Central States, they will try to do the same in other funds—and other employers will follow suit. Our union depends on solidarity. Division weakens us. That's why Teamsters across our union's political spectrum have united to beat UPS when the company tried to break out of our pension plans before. Ten years ago when UPS put forward a similar proposal, UPS Teamsters, led by then-president Ron Carey, struck for 15 days and won a decisive victory. Not only were our pensions protected and increased, but we also won 10,000 new full-time jobs and other record gains. We need to build on that experience of union power and protect our pensions for the future.
Q: I'm still mad that Hoffa lied to us in 2002 about benefits. And I don’t trust him.
A: We're all mad. But being mad can lead us to act impulsively. And when it comes to your pension, impulse-buying is not a good idea.
We're not going to get even with Hoffa by jumping for a bad proposal from management. Remember, management's plan will only go to a vote if Hoffa is backing it. Hoffa and UPS sold us a bill of goods in 2002. We won't get even by falling 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. We should not ratify an early agreement unless it restores affordable retiree health coverage and gives us a written timetable for improving our pensions.
We can win the improvements we need without giving in to a corporate takeover of our pension plan that will hurt us in the long run.
Click here to download the Q&A.
Q: What is management’s proposal?
A: Management proposes to pull out of the Central States Plan. By law, UPS would be required to pay the "withdrawal liability," which would be about $4 billion, to the Fund. Then UPS would abandon the Central States Pension Plan, and would establish a UPS Pension Plan, with management officials and Hoffa administration Teamster officials as trustees.
If management's proposal is accepted by the union, a Teamster vested in the Central States Plan could 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.
Our healthcare and retiree healthcare would continue to be provided by Central States.
Q: How much would the pension benefit be under UPS’s proposal?
A: We don't know. Management's first offer is only for $3,000 at 30-and-out, $3,500 at 35-and-out, with a cap at 35 years. This is less than Central States currently pays, even at the reduced accrual rates currently in effect and far below what some other Teamster plans pay. A UPS worker in Central States presently accumulates $123 a month each year. So a 30-year pension is about $3,700. However, the UPS Proposal would have the advantage of a true 30-and-out at any age; presently Central States reduces the $123 a month by 6% for each year of age under 62. So, if you retire at age 59, Central States would be slightly better than the UPS Proposal, paying $101 per year of service. Central States credits earned prior to 2004 are not reduced at all below $100, so the UPS proposal has few advantages at all, and serious disadvantages.
A Teamster retiring with 37 years at age 62 in 2007 would get about $3,733 a month from Central States, but only $3,500 from the UPS Plan. A Teamster retiring at age 54 with 30 years would get $2,873 a month from Central States presently, so would gain a little from the UPS proposal. But not much, far too little to split our pension plan and weaken our whole union for a risky future.
We can expect the company to up their offer, to sweeten it and try to get us to think about a short-term gain. But we should resist taking that bait, and instead unite to win improvements in our Central States benefits—including affordable retiree healthcare.
Q: Would UPS's pension plan restore our retiree healthcare?
A: No. These are separate issues. Retiree health coverage is provided by the health and welfare fund, not the pension fund. To get us to accept their plan, the company may offer to provide retiree health coverage too. But they are not yet. And we don't have to let management break us out of our fund to win the health benefits we need.
We can win retiree health coverage at minimal cost to retirees, like we did in 1997, by negotiating more money into our health and welfare fund.
Q: We've got to do something. What's the alternative for protecting our pensions and restoring early retirement?
A: Many UPS Teamsters are rightfully angry that we were sold the "Best Contract Ever" in 2002 and then had our pensions and retiree healthcare cut. UPS Teamsters need to win improvements in this contract, and they can be won.
First, retiree health and welfare for $50 per month, as it was prior to 2004, can and must be restored. This was cut for one reason: our health and welfare moneys were diverted into the pension fund. To fix this situation, we need to negotiate enough money to health and welfare to restore benefits. That is practical and must be done.
Second, we need enough money negotiated toward our pensions to provide a reasonable timetable, in writing, to phase-in pension improvements, including the restoration of 25- and 30-and-out with no reduction for age.
Q: Isn't the Central States Fund too messed up to be saved?
A: The Central States Fund is currently under-funded (it’s 63% funded), but that situation is rapidly improving. Last year the Fund assets jumped up to nearly $21 billion, and the fund continues to grow this year. This is because money negotiated for health and welfare has been diverted to the pension fund for three straight years, pouring hundreds of millions extra into the fund each year. Also the stock market has done well in recent years.
We can't afford to give up on Central States. Remember, if UPS pulls out of Central States, UPS Teamsters will 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 depend on the fund later on to support our retirement.
Q: Would a UPS pullout from the Central States Fund put my pension at risk?
A: You bet. UPS presently contributes $500 million per year to Central States, and that income would be gone forever. So $4 billion is a lot, but it's a one-time only boost. And, the fund would shrink considerably in size, and lose its youngest and fastest growing contingent.
If the big freight companies follow UPS's example and pull out, we would be even worse off. The CEO of ABF, a major freight carrier, is threatening to do just that.
We should be looking for improvements that will strengthen our fund for the long haul—such as including part-timers into Central States the way they are in other Teamster funds like the Western Conference, New England and Upstate New York.
Q: Isn't a UPS pension safer?
A: Actually, no. Look at this way: if you are 35 years old, you may well be alive and drawing a pension 50 years from now, in the year 2057. Right now, UPS is the big dog in the industry. What is the guarantee that it will still be dominant 20 years from now, or 30 or 40 years from now? Think back 20-30 years when General Motors dominated the world in car production and sales. And United Airlines dominated the skies. United went bankrupt, and so did workers' pensions. GM's parts division is bankrupt now, and GM is cutting benefits.
A multi-employer plan is safer. Freight Teamsters were the main builders of the Central States Fund and other Teamster funds. Now UPS is the biggest. In the future, it may not always be that way. With a multi-employer plan, you are much safer for the long haul.
Q: Are there any examples of UPS-Teamster plans like the one being proposed in the Central States? Have they faced pension cuts?
A: Yes and yes. Local 804 in New York is one example. Over the last ten years, that fund's investments have performed worse than Central States. And 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.
Q: Why would UPS pay $4 billion to break out of Central States? What's in it for the the company?
A: Under the law, management would have to pay $4 billion to Central States to withdraw from the fund. Management looks at the long run, and their proposal will save the company money because they will pay lower benefit contributions over time.
Management's main goal is to divide and weaken our union. That's why UPS management has repeatedly tried to split our pension. Other Teamster employers have tried it too. PepsiCo, which owns PepsiCola and Frito-Lay, has managed to pull out of Teamster pension plans in some areas. In each case, they later moved to bust the union.
A strong union is the key to a strong pension. (Ask yourself, can you name a nonunion worker that has a $3,000 a month pension?)
Many Teamster leaders are against UPS's proposal because they know if UPS succeeds in breaking out of the Central States, they will try to do the same in other funds—and other employers will follow suit. Our union depends on solidarity. Division weakens us. That's why Teamsters across our union's political spectrum have united to beat UPS when the company tried to break out of our pension plans before. Ten years ago when UPS put forward a similar proposal, UPS Teamsters, led by then-president Ron Carey, struck for 15 days and won a decisive victory. Not only were our pensions protected and increased, but we also won 10,000 new full-time jobs and other record gains. We need to build on that experience of union power and protect our pensions for the future.
Q: I'm still mad that Hoffa lied to us in 2002 about benefits. And I don’t trust him.
A: We're all mad. But being mad can lead us to act impulsively. And when it comes to your pension, impulse-buying is not a good idea.
We're not going to get even with Hoffa by jumping for a bad proposal from management. Remember, management's plan will only go to a vote if Hoffa is backing it. Hoffa and UPS sold us a bill of goods in 2002. We won't get even by falling 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. We should not ratify an early agreement unless it restores affordable retiree health coverage and gives us a written timetable for improving our pensions.
We can win the improvements we need without giving in to a corporate takeover of our pension plan that will hurt us in the long run.
Click here to download the Q&A.