UPS, Teamsters settle on Pension Shift

United Parcel Service Inc., the world's largest parcel delivery company has reached a tentative five year agreement with the Teamsters Union after careful bargaining through the weekend. The settlement calls for a boost in the wages of parcel workers and a raise in the company's contributions to funds that provide pensions and benefits.

“It's clearly more money than has ever been put into a contract for pension and health benefits,” Ken Hall, director of the Teamsters parcel and small package division, said. “The average guy working for UPS has clearly told us they want us to focus on their benefits, pension and health care.”

Under the terms of the agreement, full-time union members at UPS will be given an increase in wages and benefits of $9 per hour over the course of the new 5-year contract, up from the gains of $8.75 per hour in the last six-year contract.

The two sides settled upon the terms for the labor treaty about 10 months before the current contract expires and right before the union-set deadline of today.

The contract between United Parcel Service and teamsters will expire next July 31, but a conscious effort was made to negotiate a deal by Oct. 1 to give some time to the members to confirm it well before January to avoid potential adverse effects of new pension fund rules.

It covers about 240,000 drivers, clerks and package sorters at UPS, the largest employer of Teamsters.

According to the terms, the UPS could withdraw from the Central States pension plan, which remains underfunded. The UPS, which is expecting to save money from the withdrawal, will fully fund the new pension plan jointly administered by the union and the company. But the UPS must first pay $6.1 billion to shore up the plan.

Union and company officials believed the agreement would help protect the pensions of the 44,000 active U.P.S. employees in the plan.

“This agreement will allow us to remain competitive in a challenging marketplace,” said Michael Eskew, UPS chairman and chief executive officer.

The early contract now seeks an approval from the employees.