Tuesday, October 2, 2007
Steven Greenhouse of the New York Times reported yesterday:
The International Brotherhood of Teamsters announced last night that it had reached a tentative five-year contract with the United Parcel Service that calls for sweeping changes in the pension plan for many workers.
Under the accord, which covers 238,000 drivers and other workers, U.P.S. would be allowed to withdraw from the Central States pension plan, which was notorious for corruption in the 1960s and 1970s, but is now known for being underfunded.
Union and company officials hailed the agreement, saying it would help protect the pensions of the 44,000 active U.P.S. employees in the plan. Because of underfunding, the trustees in that multiemployer plan have reduced pension payments to retirees since 2003 . . . .
Unhappy with the high annual expenses of paying into the Central States plan, U.P.S. obtained the blessing of the union and the pension trustees to withdraw, but to do so it must first pay $6.1 billion to shore up the plan.
Actuaries estimate that the plan is underfunded by 49 percent, and with the $6.1 billion contribution, will remain 30 percent underfunded.
As Greenberg points out, "[t]he deal is part of a wave of corporate efforts, including the recent General Motors deal, to revamp pension and health care obligations."
This is just the beginning, folks.
Hat Tip: Jennifer Wright