UPS and the Teamsters both know that the Central States pension is in serious trouble of becoming insolvent. Under the new law (Red Zone Amendment), starting on January 1, 2008, pensions are required to meet minimum funding. Companies will be required to contribute additional funding to meet these standards. UPS knows this, but rather than pay additional money that its employees don't receive anyway, UPS is willing to spend $6.1 billion to withdraw from Central States. The Teamsters mismanagement of the pension fund has created a situation whereas the Teamsters have no choice but to allow UPS to control the pension. This would be a good thing, except for the details in the contract and its supplement.
1. The following can be found in the Master contract (page 24) as well as the Central States supplement (page 14) : " If the benefit paid from the CS Plan is reduced as permitted or required by law, the amount of such reduction shall not be included in this offset." The Teamsters and UPS are telling us that the money is guaranteed, but it doesn't say "guaranteed" once in the contract. UPS has the money, and will pay the pension up until a retiree reaches the age of 65. After that, he/she receives two checks; one from UPS and another from CS, and the combined checks will total $3000 for a 30 and out pension. However, if CS CAN NOT pay its obligation, and must reduce your pension check under the new law(see above), UPS will NOT make up the difference or offset. In all likelihood, this is going to be the case, as CS is still obligated to pay its current retirees, but no additional money is being contributed by UPS. The pension fund will drain faster than before, and become insolvent.
2. In 1997, the pension in CS was increased to $3000 per month for 30 years of service. The following chart is the consumer price index taken from the U.S. government statistics
.............cpi........... what $3000 is worth
1997.....160.8...........$3000
1998.....163.4.............2952.26
1999.....167.1.............2886.89
2000.....172.8.............2791.66
2001.....177.5.............2717.75
2002.....180.7.............2669.62
2003.....184.6.............2613.22
2004.....189.5.............2545.65
2005.....196.4.............2456.21
2006.....203.8.............2367.03
2007.....207.9.............2320.35
As you can clearly see, the $3000 that was negotiated back in 1997 is worth much less today after adjusting for inflation. What do you think your pension will be worth when you retire? It is worth less each year as the cost of inflation rises. The contract must have a cost of living built into the pension plan. This contract doesn't. UPS was contributing $238 per week per employee into the pension fund under CS, but with the new UPS/IBT plan, UPS starts out contributing only $132 per week and increases it each year. UPS will contribute less, so in actuality, UPS is getting their $6.1 billion back in a few years. If UPS contributes more each year starting in 2009, then why are we still receiving only $3000 per month? If more money goes in, shouldn't the monthly payment go up? UPS will benefit the most as they still will only pay out $3000 a month, but the money will be worth less each year, so the bottom line is that after this new fund is fully funded, UPS will never have to contribute another dime, as the interest alone will pay the pension for the retirees. This is exactly what the APWA proposed, only they included a cost of living increase each year.
In conclusion, if this contract is to be acceptable, it needs a guarantee, and a cost of living increase to keep up with inflation.
1. The following can be found in the Master contract (page 24) as well as the Central States supplement (page 14) : " If the benefit paid from the CS Plan is reduced as permitted or required by law, the amount of such reduction shall not be included in this offset." The Teamsters and UPS are telling us that the money is guaranteed, but it doesn't say "guaranteed" once in the contract. UPS has the money, and will pay the pension up until a retiree reaches the age of 65. After that, he/she receives two checks; one from UPS and another from CS, and the combined checks will total $3000 for a 30 and out pension. However, if CS CAN NOT pay its obligation, and must reduce your pension check under the new law(see above), UPS will NOT make up the difference or offset. In all likelihood, this is going to be the case, as CS is still obligated to pay its current retirees, but no additional money is being contributed by UPS. The pension fund will drain faster than before, and become insolvent.
2. In 1997, the pension in CS was increased to $3000 per month for 30 years of service. The following chart is the consumer price index taken from the U.S. government statistics
.............cpi........... what $3000 is worth
1997.....160.8...........$3000
1998.....163.4.............2952.26
1999.....167.1.............2886.89
2000.....172.8.............2791.66
2001.....177.5.............2717.75
2002.....180.7.............2669.62
2003.....184.6.............2613.22
2004.....189.5.............2545.65
2005.....196.4.............2456.21
2006.....203.8.............2367.03
2007.....207.9.............2320.35
As you can clearly see, the $3000 that was negotiated back in 1997 is worth much less today after adjusting for inflation. What do you think your pension will be worth when you retire? It is worth less each year as the cost of inflation rises. The contract must have a cost of living built into the pension plan. This contract doesn't. UPS was contributing $238 per week per employee into the pension fund under CS, but with the new UPS/IBT plan, UPS starts out contributing only $132 per week and increases it each year. UPS will contribute less, so in actuality, UPS is getting their $6.1 billion back in a few years. If UPS contributes more each year starting in 2009, then why are we still receiving only $3000 per month? If more money goes in, shouldn't the monthly payment go up? UPS will benefit the most as they still will only pay out $3000 a month, but the money will be worth less each year, so the bottom line is that after this new fund is fully funded, UPS will never have to contribute another dime, as the interest alone will pay the pension for the retirees. This is exactly what the APWA proposed, only they included a cost of living increase each year.
In conclusion, if this contract is to be acceptable, it needs a guarantee, and a cost of living increase to keep up with inflation.
