Hard times make for strange bedfellows. United Parcel Service, based in Sandy Springs, and the International Brotherhood of Teamsters teamed up to cut ties with the beleaguered Central States Fund pension plan before the federal government intervenes in January and likely makes things worse for them.
UPS and the Teamsters both have seen diminishing returns on their contributions to the multiemployer plan, which cut pension payouts last year due to underfunding and has a history of making poor investments.
Under the agreement, UPS will withdraw from the Central States Fund and transfer the 44,000 employees currently enrolled to a new jointly administered plan. UPS will have to pay $6.1 billion into the Central States Fund before withdrawing. This will leave the plan 30% underfunded, an improvement over the current level of 49%.
Union officials expect bigger pensions for workers; UPS hopes to reduce costs. The company paid $1.4 billion into the plan in 2006.
The deal is part of a collective-bargaining trend in which employers and unions seek to revamp pension and health care funding. General Motors’ latest contract shifted health insurance funding to a plan managed by the United Auto Workers.