United Parcel Service Inc., Atlanta, and the $2.6 billion New England Teamsters & Trucking Industry Pension Fund, Burlington, Mass., finalized their agreement to restructure pension liabilities that calls for UPS to pay $1.2 billion in withdrawal liabilities to the union pension fund, according to a company filing Monday with the SEC.
Under the withdrawal agreement, effective Sunday, UPS will pay its withdrawal liability in equal monthly installments over 50 years, recording an $896 million liability based on the present value of the payments.
The agreement also includes the creation of a new structure in which UPS will be liable only for the pension benefits of its own Teamster-represented employees. Under the previous multiemployer structure, contributions made by UPS also supported pension benefits of non-UPS participants.
The New England Teamsters pension fund has $6.28 billion in liabilities, or 41.4% funded, and is in critical status, defined by the Pension Protection Act of 2006 as less than 65% funded, according to the pension fund's 2011 Form 5500, filed with the Department of Labor's Employee Benefits Security Administration.
Charles Langone, New England pension fund manager, and Norman Black, UPS spokesman, couldn't be reached for comment.