UPS to Freeze Pension Plans for Nonunion Staffers -- Update
June 27 2017 - 12:16PM
Dow Jones News
By Paul Ziobro
United Parcel Service Inc. is planning to freeze pension plans
for about 70,000 nonunion employees, seeking to contain the burden
of a retirement fund with a nearly $10 billion deficit.
The carrier is expected to announce measures to corral the
rising pension obligations to its workforce as soon as Tuesday,
people familiar with the matter said. Other details couldn't be
learned.
UPS has more than 434,000 workers world-wide, with more than 80%
in the U.S. Most of them are unionized. Any retirement plan changes
would apply only to management employees, who number 78,000.
A UPS spokesman declined to comment. The company closed the
pension plan to new hires in July 2016. Freezing a pension plan
means some of the benefits stop accruing for some or all plan
participants.
Such an action would put UPS in line with a wide swath of
Corporate America. In 2014, 37% of Fortune 500 companies with
defined benefit plans had frozen them in some way, compared with
35% with open plans, according to the consultancy Willis Towers
Watson. As recently as 2010, half of large companies with defined
benefit plans were open.
Atlanta-based UPS is trying to make a dent in a U.S. pension
deficit that reached $9.85 billion at the end of 2016, according to
its annual report. The plan, with $41.07 billion in obligations,
was 76% funded at that point, down from nearly 90% at the end of
2013.
Last year, UPS offered buyouts to all former UPS employees who
were vested in the pension plan. Around 22,000 accepted the deal,
accelerating $685 million in pension benefits that were due last
year.
The move by UPS could prove to be a key element in coming
negotiation with the powerful International Brotherhood of
Teamsters union, which represents 268,000 UPS drivers and other
workers. The national master agreement expires July 31, 2018, and
talks on renewals are expected to begin later this year.
Vipal Monga contributed to this article.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
June 27, 2017 12:01 ET (16:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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