UPS/IBT pension funding

35years

Well-Known Member
No one reads the annual reports. However I did dig up this notice from last year:

http://www.ibtupspensionfund.ups.com/content/UPS_IBT_AFN.pdf

The reporting laws were changed in 2012 to make pensions look more fully funded than they are, and lower the amount companies had to contribute to look 100% funded.

As of the last published report (December 31, 2014) the UPS/IBT fund had a Funding Shortfall of $1,095,788,642

"As of December 31, 2014, the fair market value of the Plan’s assets was $4,994,575,825. On this same date, the Plan’s liabilities, determined using market rates, were $6,036,761,451."



Under the old accounting rules the plan would have been only 78.6% funded.
Under the new accounting rules the 1 billion dollar shortfall = 103% funded

Make no mistake, there was still a trillion dollar shortfall, the only thing that changed was the interest rate assumption.

This decreased UPS's minimum contribution by $444,415,385 for 2014 alone.




Something is rotten in the state of Denmark


 
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Ms.PacMan

Well-Known Member
and yet there is a current thread that bashes the Post Office for being in the red because of an actual accounting of pension liabilities......
 

35years

Well-Known Member
Sorry...

The funding deficit is a Billion not a Trillion. To many zeros to keep straight. Anyway at the end of 2014 it was only 78% funded by the old accounting method. With the markets tanking, I wonder how underfunded it currently is.
 

35years

Well-Known Member
and yet there is a current thread that bashes the Post Office for being in the red because of an actual accounting of pension liabilities......
Exactly.
Did the contract spell out how 100% funded was to be determined?

The fact that the fund was obligated to send us this notice (had to be underfunded by a very large amount) is concerning. Also the underfunded percentage jumped significantly using the established accounting method.

A Billion is a lot of money to make up.
 

35years

Well-Known Member
http://www.benefitspro.com/2013/09/05/map-21-the-wrong-course-for-pension-plans

"The change was a godsend to companies experiencing cash flow issues, allowing them to redirect cash otherwise destined for higher pension fund contributions to fund other, more immediate needs. As a result, many companies responded to the MAP-21 rule by lowering their pension contributions for 2012, some by double-digit percentages.

Pozen warned last year against companies relying too heavily on MAP-21 to solve their pension funding problems, saying that the 25-year averaging period went “too far,” and that somewhere in the neighborhood of five to 10 years would be more realistic.

Earlier this year, Milliman warned that, should interest rates remain low, keeping discount rates low, the only options open to companies would be strong market returns or larger contributions. In other words, companies that have availed themselves of MAP-21 to reduce plan contributions may have bought themselves some time but aren’t really better off than before."
 

Inthegame

Well-Known Member
That's the loop hole Congress gave the unions in the omnibus bill
Good catch 35years. This Congress doesn't give Unions any "loopholes". This business friendly change applies to the funding of pensions which is derived from employer contributions. UPS can now assume an unrealistic 8.75% per year ROI over a 25yr projection to claim a 104% funding pct. Fortunately (for now) the funding formula also takes into account experience along with the age demographic and still requires the minimum funding necessary to fulfill the benefit obligation.

It's a numbers game that frees up single employer plans from additional cash outlays. A few years back UPS lobbied for a scheme in which they could substitute assets for cash. See that airplane, there's your pension. (BTW Teamster DRIVE money fought that back for those of you who believe all DRIVE money goes to Democrats.) Anyway, the big danger here is it makes companies with large cash reserves (like UPS) more prone to pay off withdrawal liabilities from all multi-employer plans.

So this is far from a bone thrown to unions unless you consider a bone full of rat poison to be tasty.
 

35years

Well-Known Member
The new annual statement has been published.

The fund continues to slide, and the slide is accelerating.

Using the standard accounting methods...
-As of the last published report (December 31, 2016) the UPS/IBT fund had a Funding Shortfall of $1,949,988,961
- Now funded at 70.68%
down from 76% in 2015 and 79% in 2014.

-The shortfall of $2 Billion is now nearly twice what it was 2 years ago.

Was there not language that UPS would keep the fund near 100% funded?
If not, this needs to be addressed in this contract cycle.
This pension was to rescue us from the demise of the Central States fund, not mimic it.

Bug or anyone else, is this even being discussed???????





 

Wally

BrownCafe Innovator & King of Puns
Something is rotten in the state of Denmark.

I'm an idiot, thought I was adding something to the thread when it was right there in the original post
No problem! Don't beat yourself up, nobody reads that far up!
 

CMSgt Brown

New Member
I retired back in 2006 after 35 years of humping cardboard and I am still concerned about my pension going forward. We were told Central States placed the 2.6 billion UPS gave them to buy us out of the UPS program in the stock market in 2007 and it was lost. HOW CAN THAT HAPPEN?
 

oldngray

nowhere special
I retired back in 2006 after 35 years of humping cardboard and I am still concerned about my pension going forward. We were told Central States placed the 2.6 billion UPS gave them to buy us out of the UPS program in the stock market in 2007 and it was lost. HOW CAN THAT HAPPEN?
2.6 Billion? I think it was more like 6.1 billion.

Where did the money go? Good question. Ask the pension Trustees.
 

rod

#1 on Upstates "list"
I retired back in 2006 after 35 years of humping cardboard and I am still concerned about my pension going forward. We were told Central States placed the 2.6 billion UPS gave them to buy us out of the UPS program in the stock market in 2007 and it was lost. HOW CAN THAT HAPPEN?

If you retired in 2006 out of Central States you are screwed--like the rest of us who retired before 2008. The last I heard we have maybe 7 more years of pension checks before the plan goes totally broke. It all depends on how many old retired geezers die.
 

Richard Harrow

Deplorable.
I retired back in 2006 after 35 years of humping cardboard and I am still concerned about my pension going forward. We were told Central States placed the 2.6 billion UPS gave them to buy us out of the UPS program in the stock market in 2007 and it was lost. HOW CAN THAT HAPPEN?
The same way that other pension funds go broke. Everyone sees dollar signs until the market takes a :censored2:.
 

Brownslave688

You want a toe? I can get you a toe.
The same way that other pension funds go broke. Everyone sees dollar signs until the market takes a :censored2:.
Well not exactly. I mean they have to be invested in the stock market to get the growth needed to pay everyone's pension.


The problem is when the market tanks you or I would withdraw less money if possible so that we weren't selling low. Pension funds can't do that.
 
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