UPS Wants Out of Future Multi-Employer Pension Plans

Dec. 16, 2003
Congress next year is expected to consider a proposal that would shift ultimate responsibility for billions of dollars in future pension obligations to the federal government from United Parcel Service and other companies that pay into multi-employer pension plans. UPS, which is finding sympathetic ears among some in Congress, bristles at the notion that it must foot most of the bill for future retirees
Congress next year is expected to consider a proposal that would shift ultimate responsibility for billions of dollars in future pension obligations to the federal government from United Parcel Service and other companies that pay into multi-employer pension plans.

UPS, which is finding sympathetic ears among some in Congress, bristles at the notion that it must foot most of the bill for future retirees covered by multi-employer plans in which many companies pool their pension funding even for workers that they do not employ.

UPS has expressed concern over the fragile financial condition of these multi-employer pension plans because it may be obligated to pay pensions for workers whose companies default or whose plans are mismanaged. UPS is the largest company in pension plans that contribute to International Brotherhood of Teamsters funds giving the company responsibility for billions of dollars in obligations.

The original reason for these multi-employer plans was that workers often changed jobs in the same industry – mining, construction and trucking, for example - and having an industry-specific pension funding was seen as beneficial to workers who wanted pension stability and employers who relied on the same labor pool. According to the Department of Labor, about 35 million Americans are covered by single-employer pension plans paid for by a single company, and about 9.5 million people participate in multi-employer plans.

UPS officials say they are willing to pay for its own employees' pensions and for the obligations it has already taken on from other companies, but wants to make companies responsible for their own workers’ pensions in the future. If these companies’ plans default, the federal government should be ultimately responsible, UPS officials argue.

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