Pension Agency Faces a New Front

[pretzel_man]

ok2bclever:

The way you describe the benefit calculations, it sounds like an accumulation of many single employer plans? The only difference being that the company does not have control of the funds?

You implied that each company pays for the benefits of only their employees.

This seems contrary to what I've read from Judge Moran and what the congressional hearings said.

If what you say is true, then it would be true that if UPS employees pulled out of the plan, no other teamsters would be impacted.

Maybe I misread what you wrote?

P-Man

 

[ok2bclever]

Yep,

A major part of understanding why UPS invited the Teamsters in, and they did, was the prevailing business environment of the times where worker abuse was the norm.

It wasn't a grass roots movement by the workers, but rather a farsighted, calculated decision by Jim Casey.

It brought the stability of the family man to the workforce and the company prospered accordingly because of, rather than in in spite of the unionized workforce.

Times have morphed and government (oops,sorry, bad word wkmac) rules, most of which originated from organized labor lobbying,ironically have lessened the need for unions, especially in the minds of the inexperienced younger workers.

This environment has allowed far seeing companies to avoid the necessity of unions with progressive employee relation's policies in such areas as how they treat the workers as respected, valued individuals, rather than gears in a machine and other beneficial areas such as personal time, childcare, etc.

UPS is NOT one of those companies and by the nature of the high paced, high pressure, physical labor intensive delivery industry I don't see anyway it ever will be and hence the need of some sort of governor to the push, push harder nature of the job.

That the company has now gained more tangible financial leverage on the big boys of the union can only be seen as a desireable tool by UPS.

It's not as clear how the worker will fair with the developing company/union relationship, only time will tell.

 

[ok2bclever]

p-man,

Well in the main you could view it as an conglomeration of individual plans, although that is a extreme simplification.

You had it right the first time in that it's intention was to act as an insurance policy where the total is banked beyond any one company's ability to access and abuse the funds if they found themselves in financial dire straights.

This is what happens virtually every time in a single employer fund when a company gets in financial trouble.

They raid (we would call it steal, but corporate language is different) all sources of accessible money in an attempt to stay afloat including at the expense of their workforce.

The multi-employer fund prevents this.

So you are right in the fact that it takes direct control away from any one company as each company is at most only one trustee out of a bunch (one of twelve in the case of the Central States Pension Fund).

IF the financial equations that the fund is based on were sound (contributions level, average investment results of those contributions beyond what must be immediately paid out in benefits, and promised benefits) your scenario would be true, UPS or any other company could pull out with their employees and it would not seriously impact the fund.

In such as situation it would be a warning bell to that company's workforce that their company was making a suspicious move (the most likely reason would be because of that specific company being in financial trouble and looking to raid funds.

So the multi-employer plan has financial stipulations to discourage this type of move and individual company solution.

However, that was a big IF (financially secure underpinnings) and isn't the case and we all know it.

The financial underpinnings (ratio of money in, added investment interest versus benefit payout) of the fund is a pie in the sky equation that simply isn't close to reality and functions strictly on a "works as long as the workforce is young and not actually calling in the promises".

Now that the baby boom generation is aging to the retirement point the jig is up.

Excessive company failures and multiple bad years in the stock market has just hastened and intensified the problem.

(Message edited by ok2bclever on May 28, 2005)

 

[wkmac]

ok2bc,
One other thing about the Casey/Teamster relationship. Casey was a very smart man and he understoood the power at the time of the Teamsters. He also wanted to branch out his company and he understood to do that, he needed a partner and someone with the muscle and clout to get him where he wanted to go. I now in today's UPS this won't taste well but it's a fact, the Teamsters are just as responsible for UPS being the powerhouse they are as anyone else out there. The Teamster union helped Casey expand into areas that at best he would have had to expend enormous energies to get into but rather the Teamsters did the leg work as they understood also it meant expanding their empire as well.

You know, I'd almost bet most of these new college wonders being hired off the street have no clue Casey invited in the Teamsters and in some cases I'd not be surprised to learn that many of them don't even know who Casey is. As time goes by I see Casey referred to less and less. IMO this is sad because I think in many ways he had sage advice that was not specific to a period of time but in fact understood the nature of people and unless some evolutionary leap takes place with mankind his thinking will always apply. If I had the chance to give Mr. Eskew one piece of advice as we approach the 100th anniversary of UPS it would be to rediscover who and what Jim Casey was about and not just with the management ranks but with everyone.

 

[ok2bclever]

Agreed on all acounts.

Every new supe I talk to is always surprised when told that UPS invited the Teamsters in.

Most don't even believe is at first.

Amazingly, a bunch of them are pretty unfamiliar with Jim Casey as well.

It is my belief that somewhere along the line upper management made a decision to downplay the Jim Casey legacy and have made a concerted effort to minimize his influence in how the business is run.

I think that has been to our detriment.

A lot of the stuff that he believed in as far as creating and maintaining a positive and constructive relationship between management and the employees has been given short shrift and turned into lip service only.

The concentration seems to be in perfecting and limiting the questions and answers in the annual company survey to give the best positive spin on the end tabulations rather than a tool to see where UPS is truly coming up short and then acting on that.

 

[pretzel_man]

ok2bclever:

I understand the concept, and you're right, I know I oversimplified.

I also understand the benefit to the employees of a multi employer fund. Risk is shared among employees of many companies. The risk can be the company going out of business or poor company practices.

What I do not understand is how employees are only using funds from their infividual employers. That is in conflict with the concept.

By definition, if the risk is shared, so is the reward.

I'm still unclear. Are you saying that if UPSers pulled out of the multi employer plan, other teamsters would not be affected?

If employees only took money from their own companies, that would have to be true, would it not?

P-Man

 

[ok2bclever]

No, you misunderstand.

I am not and have never said that workers are "only using funds from their employers" as all the contributions go into one fund that is invested and pays out benefits to those who have accrued enough credit at the benefit rate they earned accruing that credit.

The problem is there is a common misconception here that UPS is somehow paying the retirements for all these various Teamster workers who's companies have gone belly up like those workers are some sort of welfare chits and UPS is the free meal.

It seems to be a very popular rallying cry here, but it just ain't accurate.

Those workers had companies putting in money for them for EVERY hour/day/year they worked that they got credit for, just like UPS workers.

When their company went out of business they stopped accruing any further credit towards a pension, just like would happen to us if UPS went under.

If they already had enough credit for a pension, they EARNED it as much as any other worker, including UPS workers.

UPS is not paying for them.

UPS's liability derives from a plan that is BASED on underfunding by all contributors in relationship to the benefits promised, including UPS.

That was fine and acceptable to all companies until recently when the sht hit the fan with the lack of industry growth, bankrupting companies, bad stock years and the baby boom generation growth curve cresting the hump and starting to put pressure on the benefit side of the inadequacy.

All remaining companies now must proportionally share the liabilities to this inadequately funded promise.

That UPS is currently the single largest, most affluent company left means that it is most likely to bear the brunt of this detereorating scenario.

That to get out from under this financial burden will come at the cost to their own workers is "most unfortunate" probably in their opinion, but it will still be "oh well, that's life" if they can make it happen legistlatively.

And sadly, in my opinion that scenario is far more likely than any happy ending for we, the people.

 

[wkmac]

OK2BC,
You needed to clarify that because at times what P-man was misunderstanding was not just P-man's misunderstanding. I was also confused because at times your comments seemed to suggest workers were only taking their company's money and nothing else and then other times your explaination above which I too happen to agree with seem to come out. Now there's no doubt and this really helps clarify. Thanks.

The big question I have about the underfunding concerns whether the Teamsters in order to protect certain mob controlled trucking companies back in the day from shelling out to much money got caught up in very young retirement funds that was known to be dipped into at times for the right people and in the course of this practice the Teamsters couldn't just stick it to the other non-mob employers so they got the same sweet deal. These other employers weren't gonna squeal as they were paying bottom dollar so to speak and in turn could look their employees in the eye and say, "see, we pony up for you to have a good retirement!" Now the chickens are coming home to roost and they face the probability of having to really pony up now. UPS knows it faces a huge liability as by law they would have to fork over the monies necessary but if they can just limit that liability to their people ie UPSers and the partitioning idea then it's a cost effective means of solving a real threatening problem out there. Good for us? Hard to truly say for certain. For sure bad for the other non UPS CS members.

I see we face 2 real dilemmas here. The first and obvious is the real threat to our pensions itself as many of us have already seen some of that results as with the cuts at CS. The second threat not yet truly bared out is the liability threat to our employer UPS. "IF" and if is a potential not a fact yet, a nightmare scenario happens with CS or other multi-employer fund or even several funds at the same time then this could impact hugely on UPS as a major economic drain. As a result we could see demands for major concessions in the way of wages and or benefits or it could go to the level, again we're talking absolute worse case which is a long way off, of forcing UPS to downscale as a company costing jobs and could even go to the level of bankruptcy, reorganization not liquidation and then where would we be. Ask the United Airline folks for starters. And United Airline is also good to look at for those who favor a single employer fund.

Far fetched? Not really because if the nuclear scenarion happened and if the bean counters show that approach (bankruptcy)to be more cost effective and over time they come out the other end in much better shape I truly believe they would take it. It's business, not personal. We are lucky we work for a deep well and yes that well is stengy with water at times but it made the well deep. UPS is happy to sit back and let us dip bucket fulls of water from the well because we pour it in by the tanker load but if we get greedy these folks do have options even by the law that can leave us in much worse conditions than we find ourselves in today. In some respects you defend maintaining funds like CS and I can understand that and I agree they can be fixed by the right people but the question is, do we have the right people?

The problem is in the case of your arguement and to be fair on the flip side with the argument of going with the AWPA plan, company plan or even my idea of self managed, it's not all black and white but many, many shades of gray. The more we continue to push and push to get the facts out on the table from all quarters the more those shades will go from gray to black or white and the direction we need to go in will become more obvious and clearer.

This is why I believe the threat talk of going to alternative plans is a good thing. I'm not so sure UPS would like to see us jump to another union, even one we created for ourselves as they are in the catbird seat right now with the Teamsters. A new union minus the history of corruption might pose a harder nut to crack and control. We need facts and I'm not convinced at this point either side is willing to give us that. We need to keep the pressure on and hope the dam wall start to crack and the water of truth leaks out faster and faster.

You just have to beat the grass in order to startle the snakes!

 

[wkmac]

Just read a piece about Social Security I thought you guys might find of interest. Not trying to open up a debate but rather just pass along info so we all stay informed. If you see anything similar I know I'd appreciate a link.

 

[teddyr]

ok2bc, It is not a misconception that UPS is funding the pensions of other teamsters. Of the top 50 trucking co.s in 1980 only 6 are still alive. Only four of those six are union. 44 of those were contributing employers to multiemployer pension plans. There have been no major union companies to replace any of the bankrupt companies. The thousands of retirees from these defunct companies, who no longer contribute into the plan, are now covered by three or four major union companies still in business, along with other smaller companies that are still alive. This jeopardizes all the pensions of the employees from the healthy companies because our dollars are spread over a much larger base. UPS currently contributes 1 billion a year to 21 multi emp. plans representing 127K upsers, an average of 9k per employee. The average fund is only 72pct funded where single employer pension plans enjoy government protection of 90pct. Too many people taking out and not enough putting in leaves us in a social security crisis. If this plan fails, the PBGC(pension benefit guarantee corp.) will step in and give up to the max of $1,072. Whereas under a single employer plan the guarantee is up to $3,699. Rough waters lie ahead for the central states guys and I feel for you. I'm just glad the western states pension trust is solvent and I have something to look forward to at the end.

 

[ok2bclever]

teddy, you just don't get it.

I am not denying many trucking companies have gone out of business over the years.

Many of them directly because of us, actually, but that is irrelevant to this thread.

The point is not one of their employees received even one minute of further credit towards their pensions after their company went out of business.

So IF the plan had a valid contribution rate in relationship to the benefit payout then neither UPS or any other still remaining participating company would owe a dime towards those retirements.

The problem is the contribution rates were allowed to be too low to support the retirement benefits given and still are to this date.

The companies, including UPS knew this then and they know it now.

The problem for UPS is they are still one of the ones around so they get to hold the financial responsibility bag they consented to ignore for all those decades.

UPS has no superior moral, financial or intelligence position on this issue.

Only one of demographics where their workers have been too young to retire in significant numbers to expose this problem.

Guess what, it's exposure time as the baby boomers are retiring.

UPS entered into binding legal agreements regarding these pension funds.

They will do their best to escape their financial obligations through legislation.

I expect they will be successful in some degree regarding this, but the bad guy ain't the retired workers.

And if you still think so then you truly just don't get it and we will have to agree to disagree.

 

[chipperv]

Teddy, 4 of the six are union? that is pretty good in this day and age. if we went to a non multi pension, would not put many other unions out of business? i'm not saying the unions are not looking after themselves, but look at how many jobs would be lost getting union wages. should these people go to wal-mart to find jobs? how can you raise a family at minimum wages? the way things are going in our government and economy, i don't see much of a future for unions. when it is all said and done, companies like UPS will have the final say in what happens with our future. watch out for big brown, and what they can do to it's employees.

 

[wkmac]

ok2bc,
As I understand it, here's the scenario that is happening. Because of pension loses and shortfalls over the years current UPS money is going to non-UPS retirees. Granted, it's not the exact picture UPS is trying to paint in that we totally subsidize non-UPS retirees but because of the fact the fund is short and UPSers as a whole are not yet large scale withdrawers from the fund this arguement can kinda be made. In a few more years when a much large percentage of UPSers start drawing benefits this arguement will not be so easy to make. It also would suggest when a larger percentage of UPSers do start drawing then the fund will be in real serious trouble making the present look like a picnic unless something is done. That's the way I understand the current situation and for the record I don't like it and I'm concerned as my money now is being used to pay out some present obligations because of poor fund management, poor investment results, etc. etc. and you could list many reasons I haven't even thought of including the companies having not paid enough over the last several years. IMO that is lumped into bad management.

You guys enjoy the weekend as I'm kicking back and waiting on Arlene to come on shore in the panhandle and then move North towards us. The next couple of days are really gonna suck weather wise!

 

[my2cents]

To put the liability factor of remaining contributing employers into perspective, here is a quote from Mr. Lynch's testimony before the Senate on June 7, 2005: "This will only add further cost to what is already one very stark financial fact of life for the Central States fund: half of its annual benefit payments now go to beneficiaries who no longer have a current contributing employer." Mr. Lynch, is the President and CEO of the Motor Freight Carriers Association.

 

[wkmac]

Thanks for the quote m2c and he made a very good point for all of us to consider no matter what the cause. OK2BC does make a valid point about the employers not making large enough payments to cover but I still wonder concerning 2 different issues.

The first is healthcare costs especially of retirees. Who would have guessed years ago that healthcare would scream through the roof like it has and I do believe this is one of the primary reasons we are in the trouble we are in just a General Motors and Ford now find themselves.

The 2nd point concerns to increase in monthly pension payouts as a result of the 1997' UPS strike. I do not believe that the fund was prepared to handle such a large increase based on the picture the demographic data was appearing to suggest was about to happen. To compound further our union failed to get pension increases in the 97'and 02'contracts to cover the burden such increases would place on the fund.

I'm also not convinced that UPS didn't know exactly what the implications would be if the many multi pension funds called their bluff which they did. I'm assuming they (pension plans and union) were hoping in 97' the dynamite stock market of the late 90's would fill the difference. I hate to say it but it could appear that UPS played a game in 97' and lost and now more chickens are coming home to roost and they could really be stuck with the bill in the end.

I'm just not convinced the sinking ship of CS can be made to float and sail to the beautiful sunset we were lead to believe we would see. It can but I'm not sure all the parties involved really want to. I think as a group we will stick with CS to the end and in the end we will get little to nothing when we had the chance to bail and not only get something but maybe even get what we were promised with CS to begin with. It's time for those of us in our late 40's to rethink our careers at UPS and consider options elsewhere as a real possible solution to all of this. JMH(but sad)O

 

[my2cents]

More compelling testimony on the burden of multiemployer withdrawal liability, which is even more devastating to small business.

Anyway, from what I've read so far, "red zone" plans will reorganize, much like a company does when it goes into Chapter 11.

(Message edited by my2cents on June 11, 2005)

 

[ok2bclever]

wkmac,

I agree and I have said as much, although the nuances have apparently been missed over and over by at least some.

Yep, UPS contributes a ton of money to the fund (not one penny more than what they owe contractually and legally, though).

Yep, because it is a "general" fund you can make the argument that UPS is paying for other company retirees.

So are all the other particpating companies, but yep, UPS being the largest single employer in relation to these funds has the largest portion (proportional though) of the dollars.

However,it is isn't because poor innocent UPS is just a "good guy" being taken advantage of.

It's because UPS and all the rest of the companies have underfunded these plans for decades those that are left, UPS being one, now are beginning to bear the burden for the "pea under the shell game" mathmatics they consented to run the fund by.

UPS and the remaining still viable participating companies are having to support the additional funding of all the retirees because of this underfunding that they had full knowledge of from inception.

My point consistently from the beginning is about the "spin" that many have put on this here like poor UPS is getting shafted.

NOT.

No company is more knowledgeable than UPS at business.

They knew what they and the other companies were doing all along as far as what they were contributing versus what they were promising.

And for the union haters, the union is just as responsible for allowing the situation to develop although one could argue that they are far less competent and possibly were more stupid than devious.

The national union heirarchy, stupid or devious, hmmmmm, tough call.

my2cents, I agree with your preliminary diagnose regarding red zone funds.

Such legislation I believe will facilitate companies "dumping" their responsibilties of such funds onto the government at the cost of higher premiums.

Still, higher premiums are a desireable trade off for the companies for getting to dump all their liability to us onto the government where we will take a two/thirds loss of what we had "earned".

This would be an acceptable solution for the companies, not so sure how it would be handled by the government, but sure it is just more dismal news for the individual retiree's (us) future financial situation.

 

[teddyr]

ok2bc, You have missed the point entirely. Retired workers are not the bad guys, UPS is not the bad guy nor is the IBT. UPS has not underfunded the plan at all. For what they put in we should be geting alot more out of it. My point is we would be far better off under a single employer pension plan. UPS wants to escape its obligation to the MEPP because they feel they can give us the same benefit and spend less money in doing so. If you go back and read the thread "UPS EMPLOYEES START NEW UNION" and read Feeders post he breaks down what we could be getting with a modest return of 6% and 12%, he actually quotes Hoffa as saying what UPS puts into the fund is "more than enough". I would have to agree. The quote by Mr Lynch that MY2C posted reaffirms what I have been saying all along, we do foot the bill for other retirements. As for "poor UPS getting the shaft" I think it's employees are the ones getting the shaft. You can argue with me but you can't argue with the facts ok2bc.

 

[ok2bclever]

Sorry, but with all due respect to Feeder the real world has shown it ain't that cut and dried or the USA wouldn't be in an epidemic of pension failures, both multi-employer funded and the single employer funded ones (which have had a far far higher rate of failure)

And it has been exposed that the UPS spokesman certainly used "smoked" statistics (many would just call them lies) basing his statement of what we would have earned to date in a plan of his design using today's contribution levels instead of the real ones.

There are facts, and then there are facts, but mostly there is wishful thinking.

 

[wkmac]

ok2bc,
I don't think it's so much the nuances but rather this issue has been discussed over several threads with responses coming over a period of time. Sometimes it is hard to keep up and not get lost on a person's point of view. Had we all been sitting around a big table with a good cup of coffee then I'm sure within less than 5 minutes your point would have been completely understood.

Having had many conversations with you on this subject I too have come to better understand your point and appreciate where you are coming from. It took some time granted, not your fault but mine, but now that I understand, you do have a very valid point. I do think instead of nuances we all need to lay it out like it is.

Fact: Neither side union or company IMO can be trusted. They both have a vested interest in themselves. Both will use accounting tricks and legal flips to sell you a picture that benefits them and them alone.

Fact: Most all UPSers have in some form been hit by the pension problem. Most worse than others. In all cases of the pension problem facing UPSers, the pension funds are apart of a multi-employer plan.

Fact: There are a handfull of pension funds in great shape with great benefits and a few are union, maybe even multi-employer plans and some are strictly UPS plans covered by contract.

Fact: Single Employer plans have a far larger failure rate than multi-employer plans and mutli-employer plans "CAN" provide a great safety net for the workers especially when trouble hits. In fact, the major concerns in Congress right now for pension plans is focus on the single plans and not so much the multi. They are not being left out as they know there are concerns but the great problem is the single plans.

Fact: Union leadership has in the past done some not so proper things with some retirement plan's monies. Now this must be understood that to my knowledge this was past not so much recent past or even present but the fact is our money was used in improper ways. Not saying this caused us to be where we are but it ain't helping none either.

Fact: TDU did a study and their findings showed a max benefit for 30 years service should be about $700 less per month than what was being paid out prior to the 2003' benefit cuts. I'm not a fan of TDU as they to have a vested interest that I don't believe is genuine but I do believe their numbers are probably nearer to being right than anything else.

Fact: In a UPS only plan you could get a higher rate of return and payout a higher benefit but that's because of the demographics. If not run right in 20 to 30 years you could be facing a far worse picture than you are right now.

Fact: Any plan that moves current workers from a MEPP to a SEPP covered exclusively by and for UPS workers does not include present retirees and all current workers vested service prior to creation of new UPS plan will not be covered. Even the current plan proposed by APWA does not cover prior service and that's a fact. Go to a new system and you ill draw 2 retirement checks instead of 1 as one will come from a MEPP and the other from a SEPP. It's possible and likely that going to a SEPP will bankrupt the MEPP and you will be at the gov't insurance plans mercy.

Fact: Companies on a broad scale have not paid the proper insurance premiums for the pension insurance coverage run by the gov't. This is why the pension insurance plan is in far worse shape than thought.

Fact: Medical costs are through the roof and this more than any other has had the impact on the pension system. Remember, our pension payments not only pay for retirement but also our medical coverage in retirement.

Fact: UPS does have a trustee on the CS pension board but from my understanding this has come about only over the last 10 years and I was told happen after the events of 1997'. If the timeframe doesn't fit the facts I'd appreciate clarification to correct that point.

Fact: UPS does present a sweet picture to Congress on what it could do if they had exclusive control of the money but what they don't tell you is that is the picture from the time they take control forward. Whatever employees have earned in the past is not covered and we all start at the bottom on day 1 of the plan.

Are there more? Sure and some I've not even considered that you guys know but the bottom line is most of us have been bitten by the pension impact and major lifestyle decisons had to be altered with some massively altered. Right now we are much like a patient who has just learned we have a deadly disease and our own doctors have missed it time and time again. It's was our own choosen doctors that we trusted and who told us "I'm looking out for you and you alone!" That trust has not only been violated but grossly shaken to it's core. At the same time here's another doctor who has said he has the cure and yes in some ways it will keep you from dying but there are side effects. Our dilemma is do we stick with the same doctor who got us where we are or do we go with this new doctor who has a cure but massive side effects.

Your choice? And many of us are considering taking that chioce, is like deciding whether to be bitten by a Rattlesnake or a Cobra. Many like myself see the union now as Cobra and the company a rattlesnake mostly because the trust has been broken and the belief that it's not repairable. Yes, the company is a rattlesnake and can inflict pain and death but the union is now in many quarters seen the bad guy and the company "with mask" riding the white horse to save the day. The mask is to hide it's true face. In the end whether we stay where we are or go elsewhere there will be pain and suffering and I believe we will stay with CS and the other plans and sometime in the future the house of cards will collapse and we will be left with nothing. I honstly and firmly believe that. With UPS because of the demographics I believe it's possible for this not to happen but there are other factors that come into play that could change that. This is also why I firmly believe that the best scenario is to get the money up front and walk away. It's not my fault if you believe that most of the folks out there can't handle their money and it's probably true but then are you going to insist then that because they can't handle money we all place our money into a large fund, UPS Hourly Employee Rent, Light and Food bill Fund, and from that all our rent, house payments, groceries, utilities and car payments are made as well? How far do we go before we make the individual responsible for themselves? I know this is falling on deaf ears but I won't stop raising this point because I'm tired of living on another man's plantation.

You trust the Death Star, I want to destory it!