The agreement, covering approximately 240,000 U.S. full- and part-time package employees, allows UPS to withdraw employees from the Central States multi-employer pension plan and establishes a single-employer plan for this group that will be trusteed by UPS and the Teamsters Union, according to the announcements from both sides.
The tentative contract was negotiated nearly a year in advance of the current pact’s expiration on July 31, 2008. Upon ratification, most provisions of the new agreement will take effect on August 1, 2008, according to the UPS statement .
“This agreement is good for our people, good for our customers and good for our company,” said Mike Eskew, UPS’s chairman and CEO, in the statement. “This agreement will allow us to remain competitive in a challenging marketplace. And the fact that we have reached an agreement earlier than at any time in our history is a testament to the skills and determination of all those involved in these talks.”
UPS will make a pre-tax $6.1 billion payment to the Central States plan in connection with its withdrawal and will fully fund the new plan, a Teamsters news release said.
James P. Hoffa, Teamsters General President and co-chairman of the Union’s National UPS Negotiating Committee, said the union made it clear to UPS it wanted a deal reached by October 1 for members to ratify the agreement before new pension funding rules from the Pension Protection Act take effect on January 1, 2008.
Bloomberg reported the Central States Fund faces a shortfall of about $18 billion, according to an estimate by Thomas Wadewitz, a JPMorgan Chase & Co. analyst.
The tentative contract includes wage increases and significant contributions to health care, the announcements said, but no details were given.