Tags: UPS | Accenture | pension | AIG

UPS to Freeze Pension Plan for Non-Unionized Employees

Image: UPS to Freeze Pension Plan for Non-Unionized Employees
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By    |   Tuesday, 27 Jun 2017 12:30 PM

United Parcel Service Inc. plans to freeze pension plans for thousands of nonunion employees in an attempt to help a retirement fund that’s straining under a $10 billion deficit.

The package delivery service is expected to announce measures to corral the rising pension obligations to its workforce Wednesday, The Wall Street Journal reported, citing people people familiar with the matter.

UPS employs more than 434,000 people worldwide, with more than 80% in the U.S., most of are in a union. Retirement-plan changes would apply only to the company’s 78,000 managers. Freezing a pension plans means some of the benefits stop accruing for some or all plan participants, the newspaper reported.

A freeze on the pension plan mirrors similar actions by other U.S. companies. In 2014, 37 percent of Fortune 500 companies with defined benefit plans had frozen them in some way, compared with 35 percent with open plans, according to the consultancy Willis Towers Watson. As recently as 2010, half of large companies with defined benefit plans were open.

UPS’s pension plan has $41.07 billion in obligations, but only 76 percent of the amount was funded by the end of 2016, down from nearly 90 percent at the end of 2013, the WSJ reported.

Last week, consulting firm Accenture Plc. terminated its U.S. pension plan by transferring $1.6 billion in obligations to American International Group and MassMutual.

The transfer includes about $600 million in lump-sum payments to about 7,000 current and former U.S. employees of Accenture and $1 billion in purchases of annuities from insurance companies, Reuters reported.

“U.S. insurers are buying corporate pension plans at a record clip as rising interest rates and all-time high stock-market values give companies the perfect excuse to offload them,” according to the newswire. “Calculating they can make more money from selling companies an annuity to cover the cost of the pension plans and then invest the proceeds in bonds and other securities, insurers are competing to persuade corporate America to sell them their pension risk.”

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United Parcel Service Inc. plans to freeze pension plans for thousands of nonunion employees in an attempt to help a retirement fund that's straining under a $10 billion deficit.The package delivery service is expected to announce measures to corral the rising pension...
UPS, Accenture, pension, AIG
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2017-30-27
Tuesday, 27 Jun 2017 12:30 PM
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