UPS to take $896m hit from New England pension restructuring
UPS has secured an agreement with a pension fund in New England to restructure the pension liabilities for 10,200 of its employees. The agreement with the New England Teamsters and Trucking Industry Pension Fund (NETTI) will see UPS able to move its employees into a new “pool” within the pension fund.
It will mean UPS assuming responsibility only for the pension liabilities of its own employees in future.
However, in moving to the new “pool” within the pension fund, UPS said it will record a one-time charge of $896m within its third quarter results.
The charge represents the present value of the company’s $2.1bn withdrawal liability from the original NETTI pool, which it will pay over the next 50 years.
UPS said subject to agreement by local unions, the change will take place on 16th September, 2012.
The Atlanta-based shipping giant said its agreement with NETTI also ensures a contribution rate for future accruals so that UPS employees do not see a reduction in their pension benefits, and the company will not need to increase its cash contributions for 10 years.
“UPS’s goal when considering any change to participation in a multi-employer pension plan is to safeguard the pensions earned by our employees in a cost-effective manner,” said John McDevitt, UPS’s senior vice president of human resources and labor relations.
“This transfer will remove uncertainty associated with this plan for our people while being fair to the company and our investors.”