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UPS to deliver $2.3 billion pension contribution, pays out $685 million in lump sums

UPS planes at Miami International Airport

United Parcel Service Inc., Atlanta, plans to contribute $2.3 billion to its U.S. defined benefit plans in 2017, the company announced in a 10-K filing with the SEC.

UPS also announced in the 10-K it made $685 million in lump-sum payments in the fourth quarter to about 22,000 former employees in the company's U.S. defined benefit plans.

UPS had made the offer to about 50,000 former employees who were vested in the U.S. defined benefit plans but who had yet to retire. The population consisted of former employees in non-union and some union plans who had terminated their UPS employment between July 2003 and June 2016.

UPS had contributed $2.5 billion to the plans in 2016 and $1 billion in 2015.

As of Dec. 31, according to the 10-K filing, U.S. defined benefit plan assets totaled $31.22 billion, while projected benefit obligations totaled $41.07 billion, for a funding ratio of 76%, slightly lower than the overall 78.4% funding ratio the year before.

The discount rate for the U.S. plans fell to 4.41% in 2016 from 4.86% in 2015.

As of Dec. 31, the actual allocation of the U.S. defined benefit plans was: 19.8% domestic government fixed income; 15.6% domestic large-cap equities; 14.4% domestic corporate fixed income; 9.7% international equities; 9.2% hedge funds; 8.3% global equities; 5.6% real estate; 5.5% private equity; 4.5% emerging markets equities; 1.7% domestic small-cap equities; 1.6% each private debt and structured products; 1% each cash and cash equivalents and risk-parity funds; and 0.5% global fixed income.

Glenn Zaccara, UPS spokesman, could not be immediately reached to provide further information.