FO Central States (4): UPS/IBT 5500 History

UPS did set up a new plan in 2008 for former participants in the Central States Pension Plan not yet retired and a review of form 5500 filings going back to 2009 (earliest year available on efast) for the UPS/IBT Full Time Employee Pension Plan provides some perspective (and contrast). It is a Defined Benefit Plan but benefits are flat dollar (code 1B) instead of salary-based (1A) and there is some sort of offset (1D) on the benefit. The plan’s normal retirement age is 65 which is higher than the average reported for the Central States Plan (59 on the SB in 2009) with those participants moving over presumably having their benefits (including retirement age) protected.

But the biggest difference between this new UPS/IBT and the Central States plan:

As of January 1, 2016 the UPS/IBT Plan was 109.9% funded while the Central States Pension Plan was 29.3% funded.*

The 5500 data is in this spreadsheet starting with the participant count:

Asset history:

Funding data:

Links to 5500 filings for the years:

.

* Albeit the RPA rate for Central States was 3.28% while the UPS plan had a 6.19% Effective Interest Rate (which seems high to me since the 2016 HATFA segment rates are 4.43%, 5.91%, and 6.65%). Another oddity that those of you who read down this far might find of interest is that on the 2016 UPS/IBT filing the SB contribution does not match what is reported on the H and the attachment to the filing (pages here) as if they arbitrarily added $450 million to the contribution reported on the SB for some reason not related to funding – since a massive prefunding balance would remain under either scenario.

7 responses to this post.

  1. Posted by skip3house on February 21, 2018 at 4:14 pm

    UPS (and FedX) has to be First Class, or else, as too many of their pilots/drivers/…are X military who can think/do for themselves.

    Reply

  2. The first thing I always want to know is to what extent a pension disaster was caused by retroactive pension increases for older generations scored by unions, and to what extent it was caused by the underfunding of the pensions workers had been promised to begin with — in the public pension case by past taxpayers.

    No one on any side wants to talk about this. But when it comes to which party should make the most sacrifices, and which GENERATION should make the most sacrifices, it is central to the morality of the situation in my opinion.

    The generations on the right side of the pillage in any even tend to prefer pointing fingers in a circle. When people say “lets not talk about the past” when discussing sacrifices in the future, it’s pretty clear what is going on.

    Perhaps FedEx and UPS owe past profits — and executive pay — to low pension contributions. Perhaps Teamsters retired earlier with richer pensions than they had been promised when they were hired. To what extent are different groups of Generation Greed members guilty?

    Reply

    • Posted by A watcher on February 22, 2018 at 5:30 pm

      Larry Littlefield, have you looked at the Western Conference of the Teamsters? I find it interesting, that the sister fund of Central States, is not having to ask these questions. Who deserves what and why? Maybe it’s management. How many funds have judges that are supposed to be approving these decisions? How many have special independent Counsel watching this fund? How about the DOL, under ERISA Law? And maybe in their laziness, they assumed each other was watching, hence no one was. Why is the issue the participants at all?
      How many CEO’s,have been dismissed from companies that are on a down swing, and yet, this particular company seems to blame everyone else especially the participants. Seriously? 9 billion lost by direct fiduciaries, who were banks, and we know they have never defrauded anyone in their lives. And even after 2008, they still are the fiduciaries, and no one sees nothing wrong with this? I believe some Enron Executives are somewhere here in the mix now. Maybe we should check the rolls of Central States, or these banks.
      The generations of the Western Conference are not facing this. Same union, same people except a publicly owned Company managing the funds. Let’s face it, the only thing the Federal Government did, under the Consent Decree, was make this fund less transparent, less scrutinized, and created less accountability than when the “mob” had it. I believe without figuring out what created this, no matter how many cuts anyone gets, this fund will just continue to go down, down down, because no one, who has any “good” financial experience is overseeing it. And why should they? They are getting paid no matter what, with no risk of being fired.
      The people driving the trucks didn’t decide their pensions. They worked 16 hours a day off 8 hours, driving 8 hours. for years. So, if the “pension disaster” was caused indeed by the retroactive pension increases for older generations, then why is the Western Conference just fine?

      Reply

      • Posted by Tough Love on February 22, 2018 at 6:17 pm

        Not sure where you were going with this but even if the “cause” of the Multi-employer pension mess was NOT contributed to in any way by the workers (and was contributed to by the Companies, the Plan advisors, the Banks, etc.) there remains no justification for uninvolved Taxpayers to “bail them out”……. no more so than would be the “bailing out” of the Millions of 401K account holders who lost significant sums in the Great Recession.

        Reply

    • Posted by Tough Love on February 22, 2018 at 5:39 pm

      Quoting Larry ……….

      “The first thing I always want to know is to what extent a pension disaster was caused by retroactive pension increases for older generations scored by unions, and to what extent it was caused by the underfunding of the pensions workers had been promised to begin with — in the public pension case by past taxpayers.”

      In this paragraph, you appear to be talking more about Public Sector Plans (not multi-employer Plans). You also identify only 2 possible sources (retroactively applied pension increases, and underfunding) as the causes of the pension mess.

      You are ignoring a BIG 3-rd one…….. that the BASIC pensions granted Public Sector workers (w/o any retroactively applied increases) are MULTIPLES greater in value upon retirement than those of comparably situated Private Sector workers.

      Reply

  3. Posted by Tough Love on February 22, 2018 at 6:09 pm

    Larry,

    With respect to Multi-employer DB Plans, the “problem” is that they are NOT structured to PROPERLY function as DB Plans are intended.

    PROPER functioning of DB Plans requires that the annual contribution be re-determined each year based on any Plan changes and differences between actual experience (investment, mortality, salary changes, termination rates, etc.) and assumed experience. In other words, the employer’s contribution is UNKNOWN ahead of time and becomes the calculated amount necessary to bring the Plan “back on track” based on the actual vs assumed experience differences.

    In Multi-employer Plans, the annual contribution is FIXED as part of Union/Company “negotiations” …….. and there is no self-correcting mechanism to account of experience differences. In other words, when there is a Stock Market crash ala 2008/2009 the Participating Companies are NOT “responsible” for those losses.

    In my opinion, these Plans should never have been called DB Plans, and our Gv’t failed miserably in allowing such a absurd benefit/contribution structure to exist..

    Reply

  4. Posted by A watcher on February 22, 2018 at 10:36 pm

    https://www.citizen.org/sites/default/files/disclosurememo.pdf Part of the Problem of Central States.
    https://www.bloomberg.com/news/articles/2017-03-02/world-s-biggest-banks-fined-321-billion-since-financial-crisis- Enough money shouldn’t be called a bailout.
    And the retirees, are alone. Their Government, their Union, and others, are just saying die so we don’t have to worry about you anymore.

    Reply

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