United Parcel Service Inc. reached an agreement with Teamsters union to overhaul the pension plan for 10,200 workers that will freeze liabilities and preclude cash contributions for 10 years.
The company will have an $896 million cost in the third quarter related to the accord with the New England Teamsters & Trucking Industry Pension Fund, according to a statement today. The agreement freezes Atlanta-based UPS’s liabilities under the old program and allows it to move workers to a new plan.
“This transfer will remove uncertainty associated with this plan for our people while being fair to the company and our investors,” John McDevitt, UPS chief of labor relations, said the statement.
Trustees of the New England Teamsters fund are creating a second pool to attract more businesses to the multi-employer plan, according to UPS, which said its cost will be paid over 50 years. UPS said the charge represents the present value of its $2.1 billion withdrawal liability from the original plan.
The change is effective Sept. 16, subject to local unions’ approval, UPS said.