FO Central States (3): UPS Withdrawal – 2007

The Pension Protection Act of 2006 was set to require stricter funding rules for multiemployer plans in 2008 and, worried about participating in a seriously underfunded plan, the United Parcel Service (UPS) wanted out of the Central States Pension Plan in 2007. Here is some history of what happened that year as taken from the Teamsters website (T), Internet sources (I), and court papers and other correspondence (C).


May 10, 2007 T:

June 8, 2007 T: 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.

July 26, 2007 C: Term Sheet

August 31, 2007 T: The only option that will dramatically increase the funding ratio of Central States and permit us to improve pension benefits for UPS employees during the term of the next contract is to reach a new collective bargaining agreement that permits UPS to withdraw from the Fund and pay a significant amount of cash in exchange for being able to leave.

September 11, 2007 T: “It is the company’s proposal to leave Central States, not the union’s. UPS made an internal financial decision that should not be counted as part of the final economic settlement,” [General President Jim] Hoffa said, “We are still expecting major economic improvements if we are to reach an agreement.”

September 14, 2007 T: On the table is UPS’ proposal to withdraw from the Central States Pension Fund, which would create a new joint union/company-administered pension fund for those workers formerly covered by Central States. In return, the company will pay billions of dollars to cover its withdrawal liability.

September 30, 2007 I: Deal announced.

December 17, 2007 C: Fund’s motion for approval of agreement

An agreement (“UPS-CSPF Agreement”) was signed and entered by United Parcel Service, Inc. (“UPS”), a major contributing employer of the Fund, and the Trustees on September 30, 2007, the terms of which require a $6,100,000,000 payment ($6.1 Billion UPS Payment”) by UPS to the Fund on December 26, 2007, as part of a complete withdrawal on that date by UPS and related entities from the Fund (the terms also include a transfer of specified benefit liabilities of the Fund to a plan or plans maintained by UPS), contingent upon the satisfaction of conditions precedent that are described in the agreement.

December 17, 2007 C: Court order approving agreement

2. The Court authorizes the allocation of the $6,100,000,000 payment (“$6.1 Billion UPS Payment”) to the Fund from United Parcel Service, Inc., which according to the agreement described in the Motion is scheduled to be received by the Fund on December 26, 2007

December 17, 2007 C: Investment policy statement

December 18, 2007 C:

December 19, 2007 C: DOL Response and partial objection:

Insufficient Time Provided to the Secretary to Allow Her to Respond:

The instant Motion was first provided to the Secretary in the afternoon on Monday, December 17, 2007, only two (2) hours before it was filed with the Court (less than three (3) days before the scheduled hearing on the matter). The papers provided to the Secretary on December 17, 2007 were the first notification to the Secretary

 

7 responses to this post.

  1. Posted by skip3house on February 19, 2018 at 9:17 pm

    all these 2007……..not 2017…? September 30, 2017 I: Deal announced

    Reply

  2. Posted by Stephen Douglas on February 20, 2018 at 12:01 pm

    FWIW… How much do UPS drivers make?

    U.P.S. drivers earn $28 an hour, which, with overtime, generally amounts to $75,000 a year. With health benefits, pension benefits and other benefits included, their compensation totals $40 an hour.” (2007)

    For a comparison of UPS and other teamster pensions (2012)…

    http://www.tdu.org/news_ups-pension-comparison

    Reply

    • Posted by Stanley on February 20, 2018 at 5:25 pm

      It would be interesting to know if UPS drivers favor bailing out the Central States Pension Fund. It would also be interesting to know what the general public thinks of this. Heidtkamp is campaigning to save the pensions of 2,000 retired N Dakota Teamster’s pensions and I am having a hard time thinking that that will go over well with the thousands of N Dakota voters who don’t have a defined benefit pension.
      And even in W Va and Ohio there are surely many who haven’t drawn the high union wages and don’t have a defined benefit.

      Reply

    • Posted by A watcher on February 20, 2018 at 8:09 pm

      UPS itself is interested in fixing the problem. They agreed to cover their employees liabilities, who paid into this fund until 2008. There have been no UPSers added to the fund, since that time. The MPRA submission under MPRA was cutting everyone but the UPS participants. No wonder Feinberg stated the cuts were not equitable to all.
      . As far as most funds I would agree, that “the general public,” would not be too happy, but unlike other funds, the Federal Government took the Central States fund away from the “Teamsters, and let the banks be the fiduciaries of this fund. So having direct access to this money, especially in 2008, did they take advantage of this fund, do they hide fees, is there disrepancies?

      Reply

  3. Posted by A watcher on March 9, 2018 at 5:26 pm

    This is a big question. Central States Plan submitted to the Treasury, did not include cuts to the UPS Employees, and stair-stepping cuts from 75-80 years old, with no cuts to those over 80 years old. Anybody here have any reason, why UPS would have been excluded from these cuts?

    Reply

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