Letter from NYS Teamsters Pension Plan

[UpstateNYUPSer(Ret)]

I just received a letter from the NYS Teamsters concerning possible changes to our pension plan, which I should note is a multiple employer plan owned by the Teamsters. It seems that our plan is in "critical status" as of Jan. 1, 2010, which means that the plan's funded status is at 65% or less and is projected to have an accumulated funding deficiency within the next four years.

The plan is required under Federal law to develop a rehabiliation plan aimed at restoring the financial health of the plan. Included in this plan is the possible reduction of adjustable benefits, which include:

---Post retirement death benefits

---Sixty month payment guarantees

---Disability payments

---Early retirement benefits or retirement type subsidies

---Benefit payment options other than a QJSA, to include lump sum payments

The level of any benefit payable to you at Normal Retirement Age that you have already earned will not be reduced and if you are already receiving benefits from the plan these payments will continue.

What does this mean? From what we have been told the local is looking to increase the minimum retirement age to 57 regardless of years of service. Currently we can retire with 30 years of service at any age and receive a full pension. We can also currently retire with 25 years of service at any age and receive a reduced pension.

I would strongly urge all fellow Teamsters to look beyond the pension as your only source of retirement income. Social Security should also not be considered a primary source of retirement income. I am talking about fully funding another form of retirement income, whether it be a 401k, Roth or traditional IRA, a stock portfolio, or perhaps a combination of any of the above. While I do feel safe that my pension will be there in 9 years it may not be at the level that I had planned on so I will also be looking to boost my other retirement investments.

I should also note that in the letter it stated that all contributing employers must pay a 5% surcharge to help correct the plan's financial situation. This surcharge is for the first year the plan is in "critical status" and will increase to 10% for each succeeding year until the next contract agreement is finalized and a new contribution rate established.

The part that I find most concerning is that our younger employees may end up working 5 to as many as 10 years longer to receive what may turn out to be a lesser benefit from that which our current retirees enjoy for their 30 years of service. I should note that our most current retiree receives about $4K the first of every month. I don't know what he is paying for health insurance but I do know that the local is also looking to raise that.

 

[JonFrum]

I suspect your pension plan is a multi-employer plan explicitly not "owned by the Teamsters." By law, it is a completely seperate legal entity run by a Board of Trustees composed of an equal number of Union and Employer trustees.
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Good advice about providing for your own retirement beyond what you may (or may not) get from your pension plan and Social Security. Just be aware that many who have followed that policy already invested their private money in the very same stock market as the pension funds did, and probably lost comparable amounts of money. Ironically, the more prudent you were by saving over the years, the more you probably lost.
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Other pension plans are sending out similar letters. TDU discusses the Central States letter and provides a copy here:
https://web.archive.org/web/20101220234221/http://tdu.org/node/3893

 

[ideliver2u67]

Are you in the 118? If not, ours is doing the same thing. We have a meeting scheduled in a couple weeks to go over the proposed changes, and take a vote. I do fee bad for many of the guys who started young, that are gonna gave close to 40 years at UPS. I started later, and if it does go to 57, wont really affect me, except for the decrease in benefits. When you start at UPS, the one thing you really count on is the pension, it sucks. You wanna believe that is the one thing UPS will really go after next contract.

 

[UpstateNYUPSer(Ret)]

687

 

[705red]

Are you in the 118? If not, ours is doing the same thing. We have a meeting scheduled in a couple weeks to go over the proposed changes, and take a vote. I do fee bad for many of the guys who started young, that are gonna gave close to 40 years at UPS. I started later, and if it does go to 57, wont really affect me, except for the decrease in benefits. When you start at UPS, the one thing you really count on is the pension, it sucks. You wanna believe that is the one thing UPS will really go after next contract.

I counted on the medical benefits, everything else is a bonus in my opinion.

 

[JonFrum]

Are you in the 118? If not, ours is doing the same thing. We have a meeting scheduled in a couple weeks to go over the proposed changes, and take a vote. I do fee bad for many of the guys who started young, that are gonna gave close to 40 years at UPS. I started later, and if it does go to 57, wont really affect me, except for the decrease in benefits. When you start at UPS, the one thing you really count on is the pension, it sucks. You wanna believe that is the one thing UPS will really go after next contract.

One selling point of multi-employer "defined benefit" pension plans is that if the markets dive and your plan's assets drop, the employers are mostly responsible to make up the difference. Whereas in a personal "defined contribution" plan like an IRA or 401(k), you take the loss yourself.

However Hoffa, Hall & Co. inserted this new language into our current Contract, and the "Yes" voters (as usual) approved it:

Article 34 --- Health & Welfare and Pension
Section 1 Health & Welfare and Pension Provisions
(a). . . If, in accordance with a duly adopted funding improvement plan or rehabilitation plan, an IBT Pension Fund is required to issue a schedule pursuant to ERISA Section 305 (added by the Pension Protection Act of 2006) that requires contributions in excess of those contained within this Article, the Union and the Employer shall promptly meet to negotiate changes in the Agreement to generate sufficient savings to cover the cost of the increased contributions. Agreement shall not be unreasonably withheld. Once completed, the applicable Fund shall be obligated to accept the schedule as if it was the beginning of the term of a new labor agreement.

I think this means the Contract will be reopened for the limited purpose of reducing UPS's labor costs by about $700 per participant the first year, and about $1,400 per year thereafter. It looks like the cost of any 5% surcharge, and subsequent 10% surcharges will be borne by us, not UPS.

Let us know what you learn at the meeting, and what you will be voting on. This is uncharted territory. Anyone have any more info?

 

[UpstateNYUPSer(Ret)]

Article 34 reads totally different from the version that the Union sent us. In the Union version the employer pays 5% the first year of critical status and 10% for any successive years up until a new contract is ratified.

 

[tieguy]

One selling point of multi-employer "defined benefit" pension plans is that if the markets dive and your plan's assets drop, the employers are mostly responsible to make up the difference. Whereas in a personal "defined contribution" plan like an IRA or 401(k), you take the loss yourself.

You do need to take the time to understand your investment options with the 401K plan. a financial planner advising your selections is not a bad idea.

With the past and current economic issues its going to be interesting to see if there are any more pension bailouts in the next contract.

 

[tieguy]

I suspect your pension plan is a multi-employer plan explicitly not "owned by the Teamsters." By law, it is a completely seperate legal entity run by a Board of Trustees composed of an equal number of Union and Employer trustees.
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]

employer not necessarily ups employer trustees?


Looking at the new england teamsters plan which I would think you are familar with has 4 teamster trustee's and three employer trustees. One employer trustee being ups. So the teamsters control the plan and the employer reps are not necessarily going to look out for the best interests of ups employees.

http://www.nettipf.com/

 

[tieguy]

This tdu web page highlights the difficulties that central states is still having despite excellent stock market returns last year. Its intended to be a slam on hoffa for letting UPS out of central states but in the processing of slamming Hoffa I think they actually have to take the devils side in this argument and agree that retirees from other companies were draining the plan dry. A point ups has made all along.

http://www.tdu.org/node/3714

 

[TechGrrl]

This tdu web page highlights the difficulties that central states is still having despite excellent stock market returns last year. Its intended to be a slam on hoffa for letting UPS out of central states but in the processing of slamming Hoffa I think they actually have to take the devils side in this argument and agree that retirees from other companies were draining the plan dry. A point ups has made all along.

http://www.tdu.org/node/3714

Didn't UPS have to buy itself out of the Central States fund? Like $6billion or so? I wasn't a Teamster or an active employee in 2008, so I wasn't paying a lot of attention to the details.

 

[tieguy]

Didn't UPS have to buy itself out of the Central States fund? Like $6billion or so? I wasn't a Teamster or an active employee in 2008, so I wasn't paying a lot of attention to the details.

lol, you were paying more attention then you give yourself credit.

 

[JonFrum]

You do need to take the time to understand your investment options with the 401K plan. a financial planner advising your selections is not a bad idea.

With the past and current economic issues its going to be interesting to see if there are any more pension bailouts in the next contract.

Has anyone proven that using a professional financial advisor to pick investments is any better than just putting your money in an index fund and leaving it there long term?

employer not necessarily ups employer trustees?

UPS affirms in writing before joining the funds, and periodically in our Contracts thereafter, that it endorses all the actions of all the employer trustees, so long as they are acting legallly.

Looking at the new england teamsters plan which I would think you are familar with has 4 teamster trustee's and three employer trustees. One employer trustee being ups. So the teamsters control the plan and the employer reps are not necessarily going to look out for the best interests of ups employees.

By law, there must be an equal number of trustees on both sides. Sometimes a trustee dies, quits, has to do a streach in the slammer, whatever, and there is a temporary vacancy until he can be replaced. A while ago a UPS executive finally became a Central States trustee, stayed for a little while, then resigned when it was announced UPS wanted to quit the fund and "offered" to pay about $4 billion in Withdrawal Liability. Central States informed UPS the actual amount due was $6.1 billion. UPS also paid $1.7 billion to set up the new fund and cover the expense of early retirements.

All trustees, employer and labor, are "fiduciaries" and are legally bound to act in the best interests of all the participants, taken as a whole. A UPS trustee couldn't legally display a pro-UPS bias.

 

[tieguy]

Has anyone proven that using a professional financial advisor to pick investments is any better than just putting your money in an index fund and leaving it there long term?

I have proven it to myself. simply by moving my 401 k money between equities and bonds depending on economic conditions I have ridden out two recession without consequence. I think its safe to say most people
do not know enough about their investment options. you may be confusing a stock broker with a professional financial advisor.

UPS affirms in writing before joining the funds, and periodically in our Contracts thereafter, that it endorses all the actions of all the employer trustees, so long as they are acting legallly.

As I read that I think of the godfather movie and the godfather making an offer you can't refuse. Basically you're saying ups agreed to the teamsters chosing to join the teamster multi-employer pension plans. Not sure they have much of a choice as long as the teamster leadership pushes that poison pill to its members.

By law, there must be an equal number of trustees on both sides. Sometimes a trustee dies, quits, has to do a streach in the slammer, whatever, and there is a temporary vacancy until he can be replaced. A while ago a UPS executive finally became a Central States trustee, stayed for a little while, then resigned when it was announced UPS wanted to quit the fund and "offered" to pay about $4 billion in Withdrawal Liability. Central States informed UPS the actual amount due was $6.1 billion. UPS also paid $1.7 billion to set up the new fund and cover the expense of early retirements.

All trustees, employer and labor, are "fiduciaries" and are legally bound to act in the best interests of all the participants, taken as a whole. A UPS trustee couldn't legally display a pro-UPS bias.

all that sounds wonderful and you are supposed to be our resident pension expert but you never directly answered the point that the new england pension plan has four teamster and three employer trustee's. Is there some type of selection process taking place to get a fourth employer trustee or is this the normal make up of the new england plan?

 

[JonFrum]

I too more or less road out the stock market troubles (by parking my money in a money market fund,) but no one knows for sure when to switch into and out of the stock market. I'm asking if anyone has ever proved that professional financial advisors are any good at market timing. The best of them advise the big pension plans and they don't seem to have done so good. It's especially difficult when the other markets (bonds, real estate, money) go down right along with the stock market. Then there's the problem of advisor bias. They tend to favor stock ownership and usually advise being "in" the market. So when stocks crash, you take a beating.

When I said that by law there must be an equal number of Labor and Employer trustees I thought I answered the question. Plans have rules in place to select trustees and replace trustees who leave. In the New England Fund Tom J. Ventura of YRCW left when he became no longer eligible to hold an employer trustee position when Yellow Roadway Corporation Worldwide stopped being an active contributor to the fund. I assume he was promptly replaced.

Legally speaking, UPS joins these Teamster sponsored pension funds voluntarily as a result of the collective bargaining process. The give-and-take of negotiations is a two-way street, with pressure on both sides, but it is still considered a voluntary decision in the end.