UPS and IBT Approve Five-Year National Agreement with Healthcare Changes and Despite Local Rejection of Some Items
The International Brotherhood of Teamsters (IBT) has ratified a new national master agreement (NMA) on April 24, 2014. The prior agreement expired on July 31, 2013 and was indefinitely extended until ratification of a new agreement.
In a SEC 8-K filing, also published on April 24, 2014, UPS reported its plan to record a pre-tax charge of approximately $1.05 billion in the second quarter of 2014 for health and welfare changes in the new NMA.
Previously, Teamster-represented employees received healthcare benefits through a UPS-sponsored plan. Effective June 1, 2014, NMA employees will transfer to three multiemployer healthcare funds.
In 2014, the company will also make a one-time cash transfer totaling $2.27 billion to multiemployer funds to help with the initial transfer of employees from the UPS plan. These funds will administer active and retirement medical benefits for the 253,000 Teamster represented employees.
According to UPS, under the new NMA, employees and dependents will be eligible for health insurance after 12 months.
The agreement also provides for increases in the UPS/IBT pension plan. Effective Jan. 1, 2014, benefits increase from $3,000 per month to $3,200 per month for full-time employees with 30 years at UPS. Additional years over 30 are paid $100 each up to a max of $3,700 per month. Previously, the monthly maximum was $3,500.
Benefits will further increase in 2017 when full-time employees with 30 years at the UPS will receive $3,400 per month plus $100 per year up to a new monthly maximum of $3,900.
The new agreement became effective April 25, 2014, is retroactive to August 1, 2013, and will expire July 31, 2018. The agreement was approved at the national level in June of 2013, but various local contracts failed to ratify. The announcement of an approved national agreement indicates the national union overrode the three local units that did not approve the contract.
According to the Wall Street Journal, the ne five-year master agreement was not supposed to take effect until local unions resolved all outstanding items. It is still unknown if the three local unions that rejected the agreement will take any action.
IAM Membership Continues to Decline in 2013
According to the union’s LM-2 Annual Report filed with the Department of Labor, the International Association of Machinists (IAM) saw membership decrease by 6,524 members in 2013. Current membership stands at 570,423.
According to prior LM-2 reports, the IAM has seen membership decrease almost every year since 2000. Since 2011, membership has decreased by 10,557.
According to IAM spokesman Frank Larkin as published by Bloomberg, “The fact is six years ago I think we were still deeply feeling the impact of the recession,” and “Back further, there was the bankruptcy and restructuring in the airline industry, which had a major impact. The degree to which manufacturing was and still is struggling is even greater than six years ago.”
In 2012, eight of the largest 10 US-based unions also saw decreases in membership according to their 2013 LM-2 reports. The three unions with the largest decreases were the National Education Association down by 99,175 members, the International Brotherhood of Teamsters down by 51,924 members and the Service Employees International Union down by 44,960 members.
Many Baby Boomers Less Confident in Retirement Plans According to an IRI Report
According to a survey conducted by the Insured Retirement Institute (IRI), baby boomers are becoming less confident about their financial preparation for retirement.
Thirty-five percent of baby boomers said they were either “extremely” or “very” confident with their retirement preparations in 2014. This statistic reflects a nine percent decrease since 2011 when 44 percent of respondents answered “extremely” or “very” confident.
The report “Boomer Expectation for Retirement 2014” also showed the percentage of respondents who said they were “not too confident” or “not at all” confident increased to a new high in 2014 with 31 percent. In the prior three years of the survey, only 21 – 23 percent answered “not too confident” or “not at all” confident.
In addition, the percentage of not-yet-retired boomers who are planning to retire at age 70 or later has increased each year, rising from 17 percent in 2011 to 28 percent in 2014.
On the slightly more positive note, the report indicates boomers are gaining clarity on when they plan to stop working. In 2011, 35 percent did not know when they would retire whereas only 17 percent reported being uncertain in 2014.
The full report is available online here.
Bloomberg BNA’s “Employer Bargaining Objectives” Report Reveals Optimism Among Employers in 2014
In early April, Bloomberg BNA published a summary of findings in its annual “Employer Bargaining Objectives” report. The report is based on a telephone survey, email surveys and captures the responses of 80 employers with labor contracts expiring in 2014.
While employers are generally confident heading into negotiations, this year more than half expressed the highest level of confidence (“very”) about meeting their bargaining goals.
Regarding pension and retirement plans, Bloomberg reported the continued demise of defined benefit (DB) plans. Companies are seeking to replace DB plans with more cost-effective alternatives. Since 2004, the number of employers with some kind of DB plan decreased from 73 percent to 60 percent in 2014.
Bloomberg cited the example of a Boeing-IAM contract in Washington state that freezes DP plan accruals and introduces a new 401(k) plan as a replacement. The contract ratified in January 2014 and covers about 30,000 employees.
In addition, many companies reported utilizing several types of retirement plans: 60 percent have tax-deferred savings plans, 43 percent have defined contribution plans, and 41 percent participate in multiemployer plans. It is noted that multiemployer plans are more prevalent in nonmanufacturing companies than manufacturing companies (44 percent verses 29 percent).
Regarding healthcare, Bloomberg concludes many employers are sill taking a “wait-and-see approach” to the Affordable Care Act. The ACA’s requirements will, however, impact the bargaining table sooner rather than later. In fact, coverage has increased across the board in the past year. For example, 91 percent said current settlements contain mental health benefit provisions, up from 79 percent in 2013.
In sum, Bloomberg expects paid leave provisions to be a minor item while healthcare and retirement will be priority items in 2014.
The entire survey report is available for $195 from Bloomberg BNA’s Research & Custom Solutions.