Has IBT/CS been a wise steward of our pension?

Discussion in 'UPS Retirement Topics' started by nospinzone, Apr 18, 2005.

  1. nospinzone

    nospinzone Guest

    Just wanted to share some information that was made aware to me on this board, and that I have found interesting in light of this new APWA organization and what they are offering. The APWA is promising $7,000 a month when IBT/CS can only offer $3600 and you ask "How?" Dont take my word for it or Sawmans. Here is the proof in black and white.

    These are excerpts taken from the US House Subcommittees March 18, 2004 hearing on "Reforming and Strengthening Defined Benefit Plans: Examining the Health of the Multiemployer Pension System The full transcript can be downloaded from the House subcommittee's home page
    For our employees in multiemployer pension plans, UPS pays into the plan an average of $8,000 a year for each employee.*

    Those contributions should accumulate to permit an employee to have a nest egg of $827,000 after 30 years, assuming a conservative 7.5 percent rate of return. If these funds were placed in a simple interest bearing account rather than in a multiemployer plan such as Central States, this would produce $70,000 annually for that employee over the next 30 years of retirement. *

    But that is not today's reality. The Central States benefit would only provide such a driver about $36,000 a year*

    It is important to understand that the underlying problems are not simply caused by swings in the stock markets which could be cured by waiting out the downturn. Central States, for example, pays approximately $1 billion annually to about 100,000 retirees who no longer have a contributing employer because those companies are out of business. These factors were in place before the market downturn. And a reversal of Wall Street will not solve the underlying problem.*

    Three examples:
    Today, a 50 year old UPS driver who will retire in six years after thirty years of service will lose $3,216 annually from the $36,000 he was planning on as a Central States retirement benefit. The second example is a 31 year old driver who also plans to retire after thirty years of service; this driver will lose $17,000 annually. And our third employee is a 21 year old driver hired today. This new driver will have to work 42 years in order to get to today's benefit levels; again not even half of what a simple interest bearing account would have generated.*

    In 2003, UPS had over 41,000 active employees in the plan and only 6,300 retirees, a stark contrast to the non-UPS portion of the plan (136,000 actives and 195,000 retirees). In 2003, UPS contributed $350 million to the Central States Pension Fund while the fund paid only $161 million in benefits to retired UPSers.** }

    These are not my thoughts or estimates on pension returns. I am merely assisting in the dessimination of public information regarding the state of UPS hourly employee pensions. However, it is my opinion that an organization composed of ONLY UPS hourly employees such as the APWA would directly address the fundamental flaw in a IBT/CS pension, and would in turn ensure that UPS contributions would be disbursed to ONLY UPS hourly employees.

    *excerpts found on page30-32 of report
    **excerpt found on page60-61 of report
  2. moreluck

    moreluck Guest

    nospin....O'Reilly fan??
  3. ok2bclever

    ok2bclever Guest

    I am not sure I agree with 7.5% as a safe conservative estimate of average earnings in the stock market from here on out, but setting that aside for now there are other issues involved here that need to be addressed.

    It isn't a simple matter of the difference of getting the $36,000 that current 30 year UPS retirees got up to the changes in the plan or a potential estimate of $70,000 (not fact, just estimate).

    Would UPS withdrawing from the Central States doom that pension fund?

    Quite possibly, many would say probably.

    In that case, IF the government had enough liquidity in the fund that is supposed to insure such calamities (that in itself is a big if as it has been running in the red by millions of dollars for several years now), but IF it could meet it's obligations the top monthly retirement payout for current retirees and future retirees would be $1080 a month.

    All currently still working UPS employees would be affected to whatever extent we have already accrued benefits.

    The longer you have left, the more possible benefit it would be to you IF the APWA pension becomes and stays financially viable.

    However, the closer you are to retirement, the significantly greater the loss of your retirement benefits.

    Those already retired from UPS would immediately be making less than the poverty level.

    And none of this addresses the medical benefit side which is rapidly becoming the more crucial as our medical costs continue to spiral out of control with no end in sight.

    So these are serious issue that affect each UPS worker differently and it isn't a simple matter of switching allegiances and living happily ever after for all, even if the APWA and it's pension fund(s) ultimately become successful (or survive).
  4. teddyr

    teddyr Guest

    This issue is a no brainer. We need to ditch the multi employer pension and keep all ups money for ups employees. Supporting employees of defunct companies is a huge drain on our pension.
  5. trickpony1

    trickpony1 Guest

    Let's get hypothetical....
    Suppose UPS gains full control of our pension.....
    Who's to say we are really gonna see that $7000 a month retirement, which is more than I make now and.....
    Who's to say the company isn't gonna pull some tricks like they did with the Thrift Plan and...
    If we all agree to a two year wage freeze to bail the company out of the pension are they still gonna treat us like :censored2: after we saved their ass?
    Why should I trust the company?
  6. robonono

    robonono Guest

    trickpony1 said "If we all agree to a two year wage freeze to bail the company out of the pension are they still gonna treat us like after we saved their ass? Why should I trust the company?

    Are you kidding me? ...after we saved their ass?

    It is your pension that the IBT has destroyed.
    If UPS takes over the running of the pension - THEY ARE SAVING YOUR ASS, not the other way around (as you suggest).
  7. ja7618

    ja7618 Guest

    trickpony How did we lose out with the Thift plan? I came way with stock and a bunch of money sitting in my IRA? That money is still making money not sure what you meant?
  8. trickpony1

    trickpony1 Guest

    I joined Thrift Plan as a PT'er and was told it would be around forever. I know people who didn't roll it over to stock and their money, essentially, progressed at the same rate as those who bought stock with the Thrift Plan. I'm not necessarily complaining as I bought stock with the Thrift Plan as well as additional monies. Just the idea that the company can up and "change horses in the middle of the stream" and the people affected really had no say in the matter at all. Can you tell me you have never seen the company abuse a system or established policy?
  9. nospinzone

    nospinzone Guest

    Moreluck,,,,yeah, i like the way O'Reilly approaches topics. And I also happen to agree with about 90% of what he says. So for me, its an enjoyable hour of entertainment; although im sure some would disagree :D

    Ok2bclever,,,,,,I agree with you. There are a MULTITUDE of various scenarios that have to be considered and planned for regarding this possible switch in bargaining agents. If you have questions about the "what if" scenarios, I would recommend you using the question/answer option on the site. Let us know what kind of response you get. In the long haul, I believe this change would benefit all hourly employees. Teddyr is right...IBT/CS is full of dead weight that is just holding UPS employees back.
  10. trickpony1

    trickpony1 Guest

    Look a little further down the road.
    Current rumor is we hourlies will take a two year wage freeze so UPS can get the 4 billion dollar buy out of the pension....thus the reference to "...save their (UPS) ass".
    If this occurs, at some point in the future, UPS will have so much money in the fund that it will perpetuate just from the interest earned and they can stop throwing money at CS and spend it on something wiser....thus the reference to "...save their (UPS) ass.
    Both of these are wise business decisions in my opinion. This could be a win-win situation that would further strengthen the company. But there is still that tiny bit of mistrust of the company.....
  11. pretender

    pretender Guest


    I was going to dismiss the rumor regarding the pay freeze/pension buyout--But I see that you are a feeder driver; and the grapevine is usually pretty accurate...

    Is this pay freeze supposed to happen soon, or is it going to be part of the next contract?
  12. wkmac

    wkmac Guest

    I also agree the 7.5% figure is a little to high to expect from such a large fund. With an individual in a self managed 401 or IRA a 7.5% over time I think is achieveable but a large fund requires to much liquidity and therefore harder to get those higher results but that's just my opinion. That said however I do believe the charge of not being good stewards is a fair claim but to also be fair it may have more to do with the current nature of the entire situation rather than bad investing specifically although this may not be entirely void in the current situation.

    As to the rumor of the pay freeze/pension buyout. I'm not so certain this isn't more an issue of pipedreaming and what if's rather than reality. First off, there is a labor agreement calling for specific performance by both sides and to void this part pertaining to pension I have to ask this. Can the union leadership on it's own agree to this with the company and have this take place or does it require memebership approval in the way of a revised contract? Is there something in the labor law that allows UPS in concert with it's IBT represented employees to circumvent the union leadership if some form of wrong or improper action on the part of IBT is found to harm the represented employees? Also, will the $4 bil set CS and the other pension plans on strong course and will it strengthen the union? I believe unless you can do what I asked in that last question you'll never get the IBT to go along. I'm also not convinced that labor law allows the pay freeze/ pension buyout to take place as easily as some suggest.

    It's no secret I'm not a big fan of CS nor am I a fan of any pension system other than one that gives the money weekly directly to me for me to decide how and where to be invested but since this is my own pipe dream I'll just say be very careful on jumping with rumors and "IF" this ever goes from fiction to fact we all need to look long and very carefully at all scenarios before we act. Before we do anything we need some very clear and precise details as to what a company plan would entail or another union plan as APWA has suggested they have. Going from a boiling pot to cool waters sounds good but we need to make damn sure that the cool waters aren't in another pot and the heat element under it is just turned down low for the time being!
  13. trickpony1

    trickpony1 Guest

    don't know when or if it will happen. Not sure of the logistics involved. I'm sure if the company tried to make unilateral changes in the contract hell would pay. My guess is next contract but....you never know. It would be sweet if the hourlies could deduct the freeze as a loss on the taxes. I don't think the company is allowed to promote, sell or market this idea at all.
  14. pkgman688

    pkgman688 Guest

    Do you really think a two year pay freeze would take care of $4 billion dollars?
    Why do you think everybody would take a pay freeze to cover Central States? The last figure I saw for UPSer's in CS was roughly 44,000.
    Taking that 44,000 number with an average paid day of 9.5 hours with either an .75 cents or $1 average raise per year.
    (40 hours + (1.5 hours*1.5)) * 52 weeks * 44000 members * either .75/hr or $1/hr
    You get 117.26 million per year savings with $1 raise or 87.9 million per year savings with .75 raise. Compunding the amount you save on future year raises $1/hr the first year and $3 the second year ($1 the first year and $2 for the second year) and so forth, you get these savings.

    Year 1 - 117.26 87.9
    Year 2 - 351.78 263.7
    Year 3 - 703.56 527.4
    Year 4 - 1172.60 879.0
    Year 5 - 1758.90 1318.5
    Year 6 - 2462.46 1845.9
    Year 7 - 3283.28 2461.2
    Year 8 - 4221.36 3164.4
    Year 9 - 3955.5
    Year 10 - 4834.5

    Its ether slightly over 8 or 9 years of no raises to cover the $4 billion dollars for the 44000 UPS members of Central States. But you say there is 120,000 part-timers and 80,000 full-timers at UPS. If everyone took a pay freeze it would be a shorter period of time - maybe closers to two years. I will do that math later today, if you want to argue that point. But first can you reconcile the two statements.

    1. UPS puts in enough money for me to have a better pension than I am going to get from Central States. Make those other employers pay for their employees pension.
    2. Ups puts in enough money for me to have a better pension from my non-Central States pension (Local 688, in my case). Make those other employees take a pay freeze to get a better pension.

    Oops! I am looking out for myself while I do not want to help anyone else. But I want everyone else to help me while I do not look out for them.
  15. ok2bclever

    ok2bclever Guest

    I have been in the Central States Pension Fund for 28 plus years.

    It is interesting listening to UPS representatives in management talking to congress and suddenly now speaking about being interested in looking out for our welfare and showing where we would be doubling our retirement benefits if we were on our own now that their potential future obligations to the fund could be financially taxing.

    Any employee wage freeze agreement to "fund" a legal pull out from the Central State Pension, regardless of how long it would have to be would certainly be to "save UPS's behind", not ours.

    teddyr, it is a no brainer for a new hire, short timers and retirees.

    But the no brainer part for short timers and retirees is to NOT want this to happen.

    For new hires, I agree they have nothing to lose in supporting anything different unless they believe they can work for UPS until they are 65.

    Those with ten years or so need to do some math.

    As it stands now, those near retirement or retired would be brain dead to support this as it would probably suicide what pension earnings they have accrued.


    You are correct, over the Teamsters dead bodies (before or after) would they support a wage freeze to finance UPS leaving their troubled pension funds.

    You are literally asking for them to voluntarily suicide.

    This could only happen if they had already lost the battle to the newcomer APWA and had been decertified as the union representative for contract negotiations.

    Then APWA and UPS could screw them (and a lot of us) legally with such as move.

    For instance, I am going on 29 full-time years with the Central States Pension and they would owe me around $3500 if I retired in six more years and the pension is still surviving when I turn 57. (ohhhhhhhhh, that is soooo depressing, both how long away that is and the uncertainty of the fund's financial viability)

    If APWA was successful in ousting the Teamsters towards the end of this contract in 2008, made a deal with UPS to freeze wages for the three years I would have left to 2011 and UPS pays up and pulls out of CSPF immediately with this contractually locked in promise.

    What happens to me?

    My income producing power stagnates while inflation continues to eat up my current (at that time) ability to pay the bills and diminishes my effective purchasing power and ability to maintain my quality of living level.

    The CSPF goes under, the PBGC insurance kicks in and my $3500 drops to $1080.

    The APWA says my additional three years earns me a staggering great double the $100 a year that the CS use to pay so I get another $600 credit (perhaps not, perhaps only a "gee, sorry about that for you", but $600 for three years would be a best case scenario) and so I would get $1600 instead of $3500, losing $1900 in the deal, a 54% loss and no medical that I know of, but heh, that's just my scenario.

    Retirees would just plummet to below poverty level and probably have no medical so I am sure they would be for this.

    So it comes down to how much you have accrued with CS and how much longer you have left and how much you believe in APWA's promises and longterm viability and their capability to make good on keeping UPS contractually contributing to a new pension where the national trend if for companies to terminate their pension contributions.

    Lots of ifs there unless you are a new hire or close to that.
  16. sawman

    sawman Guest

    While there are a few small pockets of employees that still enjoy a decent pension, CS is only the largest fund that is in trouble. Thus, it would be a nation wide freeze on raises not just CS. I now some are going to say that they wouldn't vote for this because there pensions are still good, but the fact of the matter is that the majority of the employees pensions nation wide are in trouble and while no one wants a raise freeze it may be the only way to save the majorities pensions, and for those few that are not in trouble, I'm sorry but the majority will rule in order for all to enjoy a good retirement.

    Now, as far as the people that are already retired or have less than 10 years to go. The deal with the buy out would protect all of our pensions.
    In order for us to agree to the raise freeze, the company would have to agree to buy the multi-employer funds out and roll the money into our new plan along with our years of service. So, someone with 29 years in CS would have there pension and years of service rolled into the new plan and would get full credit in the new plan. The company would be more than glad to do this because it would get them out of the multi-employer fund, which is what they want the most.
  17. wkmac

    wkmac Guest

    I like what APWA is suggesting and provides in the way another idea and I applaud the efforts of all concerned but I'd like to play devil's advocate for a moment if I may because at the end of the day to go forward APWA will have to address this. Before I do I just want to disclose to you where I'm coming from. I've always opposed union or company controlled pensions as I believe the 401k vehicle for example provides a better situation for the employee. 401k is not the only option but it is one most are familiar with. I've believed this for years and not since the CS disaster. You can go back from the beginning of Browncafe and look at my posts on this subject or the archives of the Motley Fool UPS stock site from it's beginning 6 months before going public until they went to a pay per format. I believe we, the average union UPSers were made victims in 97' as we got caught in the middle of political games. Had we not been in that position I'm not saying there would not have been a strike but I feel a strike would have required very defined reasons rather than the vague nonsense we got.

    Now that said let me give you my point on you idea of the company taking over the plan. On it's face and looking at CS, yes it would suggest based on what you say this is a no-brainer but just take a look at what happen just moments earlier with the latest UPS earning reports. We beat street estimates by $.05 if I understand correctly but I'm hearing $.045 of that $.05 was from the readjusted MIP. Now longterm this just may boost the stockprice and it works out better but my point is the company IMO changed the rules of the game "FOR THEIR OWN" just to chase a stock price. That said, here's the question you will face from 1000's of UPSErs across the country and that is how can you guarantee our pension won't become a source for the bean counters to also chase the stock price.

    No doubt UPS controlling the fund could not only provide us with a better and more secure retirement and for UPS also allow them to better control this cost which would help them on Wall Street and this is great because we all would win but this is a business and they have their end to protect but my view is business as well and I have my end to protect. UPS IMO has had many opportunities to really gain huge in the area of trust over the last few years but the leadership of this company IMO has proven a disaster in that area. This is where APWA and that effort will have to work before people will jump ship on a wide scale. I do think this effort has some feet down south as unlike OK2BC I have heard of the effort around the workplace and have seen flyers going around promoting the website. I myself have even promoted the website to co-workers. Good luck and keep up the good work because I do believe it's vital to the conversation all UPS Teamsters need to sit down and have with one another.
  18. sawman

    sawman Guest

    While UPS controling the pension might be the lesser of two evils, we do not want that. We want the employees to have there own employee controled pension fund.
    You ask how?
    By us taking a two year pay freeze in order to allow the company to buy out of the Multi employer fund we will be able to demand some concessions, since the employees will be footing the bill so to speak.
    Number one the company doesn't take control of our pension the employees do, and we roll it into the APWA fund and get full credit in that fund for years of service and past contributions.
    Why would the company agree to this?
    Because, (1) they don't have to foot the bill to get out of the multi-employer fund which is what they want. (2) Think of the billions the company will save once they are out, by only paying UPSers pensions and not all the other companies pension.
    As I see it, It is a win win situation for the company and its employees.
    Also by taking control of the funds and the money we have a way of protecting our retirees pensions.
    All the money that UPS pays now will go into our employee only fund, and our fund only has to look after UPSERS. I don't think anyone will argue that UPS isn't putting enough in to more than cover UPS employees retirements.
  19. sawman

    sawman Guest

    One more thing.

    I think that many are under the impression that if UPS buys us out of the multi-employer funds, then we're at there murcy and basically have to start over.
    If UPS buys us out of the multi-employer funds, our pensions and money come with us!
    I for one think that it would be well worth giving up two years of my raises in order to secure my retirement.
  20. my2cents

    my2cents Guest

    I wonder if the company will reintroduce the partitioning bill again with the 109th Congress. Tried searching using thomas.loc.gov and found no "Multiemployer Pension Security Act of 2005" in the mix. Probably wouldn't fly anyway, especially given the deficit of the PBGC.