United Parcel Service Inc. (NYSE: UPS) plans to set up a pool of money that will be run by the Teamsters. The capital will become the new health fund for employees at the company. First, UPS will pull out of the Central States Pension Fund, which handles benefits for a number of trucking companies.
According to The Wall Street Journal (subscription required), "the move would shed an annual expense that reached $1.4 billion in 2006, up 14% from a year earlier." The plan is not unlike the one that General Motors Corp. (NYSE: GM) has negotiated with the UAW.
These deals are good for the companies, but are they good for the unions? They do often get job guarantees for their members as part of the contract. But, the new funds can lose value, and their ability to cover employee health care costs. Several years ago, a fund established for Caterpillar Inc. (NYSE: CAT) employees ran out of money.
Big labor may believe that it is doing a good job for it members who are in the workforce now. But, it may not be doing them any favors as they get older.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-30-2007 @ 9:03PM
Mark Smith said...
Mr. McIntyre gets is wrong on this one. The Teamsters-UPS pension plan is a jointly-managed, Taft-Hartley pension fund. Not a union managed VEBA. The two are nothing alike.