UPS Braces For $3.8 Billion Charge As Treasury's Pension Benefit Decision Looms

Tyler Durden's picture

As we covered previously, in an effort to remain solvent the Central States Pension Fund has submitted an application to the Treasury for approval to cut member benefits.  While some plan participants could see pension incomes cut in half, the fund projects that it will become insolvent by 2025 if nothing is done.

Treasury is set to decide on the matter by May 7th, and as it turns out, the decision impacts more than just current plan participants...

During its Q1 earnings call, UPS told investors that if Treasury approves the CSPF plan to cut benefits, the company would have to take a charge of approximately $3.2 to $3.8 billion.


As part of a collective bargaining agreement with the International Brotherhood of Teamsters when UPS withdrew from the fund in 2007,  the company agreed to provide supplemental benefits to any remaining members in the event that certain benefits were lawfully reduced.

While any income statement impact will be adjusted out by analysts, it will be a significant drain on UPS' cash flow (UPS generated $5 billion in free cash flow in fiscal 2015) as it funds the benefit gap over time.

UPS is just the latest example of what lies ahead and forces the government's hand to provide yet another bailout (and encourage yet more moral hazard over-promising).

As we concluded previously, "This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It's going to open the floodgates for other cuts." said Karen Friedman, executive president of the Pension Rights Center.


We can't help but wonder that as more pension funds become insolvent, and more and more participants are forced to take reductions in benefits, whether helicopter money won't soon become a reality for the United States, even before it becomes one in Japan. Especially if it is spun by some opportunistic politicans as the "only hope" for America's workers to preserve some of their retirement savings.

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venturen's picture

I am sure there is a GAAP for that!

cossack55's picture

Should have followed the USPS model

0b1knob's picture

I have no sympathy for anybody dumb enough to trust the teamsters.

skinwalker's picture

Have you ever noticed how it's always the UPS guy? I've been around a lot of drivers, and have yet to meet a female one. I guess all the delivery chicks work for the mail. 

zhandax's picture

My neighborhood has a female one.  And I would want her on my side in a bar fight.

Freddie's picture

Years ago we had a tall blond female with long hair.  She was cute and also very nice.  She also was a hard worker.

sun tzu's picture

You're thinking of that movie with Jenna Elfman

John Kich's picture

This is Donald Trump's most shocking statement yet,

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

ClydeCrashcup's picture


Have you ever noticed how it's always the UPS guy? I've been around a lot of drivers, and have yet to meet a female one.

It's because that particular shade of brown accentuates the camel toe.

Freddie's picture

Seriously F UPS.  They supposedly had or have a contract with Uncle Sham aka Uncle Schlomo to air frieght in illegals on their cargo planes for Obola.

onewayticket2's picture

Our biz switched it all to non Union FEDEX.

RyeWhiskey's picture

I have no sympathy for paid shills pretending to be pro-capitalism and in reality being pro-oligarchy.
Yes, like you 0b1 shill.

Billy the Poet's picture

Unions have power above and beyond what they would have in a free market.

dark pools of soros's picture

you mean a fair market or a free one?  a fair market wouldn't include globalist games to force everyone to use slave wages to compete... and face it, companies try to use pensions and promises so they can pay less wages now and try to run away before they pay the back half


Billy the Poet's picture

There's no such thing as a fair market that isn't a free market.

all-priced-in's picture

Who gets to decide what "fair" is?


What is your definition of fair?


Sounds like liberal progressive crybaby talk.



11b40's picture

Can we agree that privatizing profits and socializing losses is NOT fair? How about looting pension funds? Sound fair to you?

all-priced-in's picture

I actually agree we should not be privatizing profits and socializing losses - that has nothing to do with this - UPS is on the hook -


If the private pension can't pay then they can't pay - no way I want government to step in and pay for it -



Still no such thing as fair -


11b40's picture

But, isn't that what UPS agreed to?  So, who is whining?

WorkingClassMan's picture

WHAT unions?  The three left?  The ones controlled by politicians and corporations through highly paid "Union leaders?"


If we had unions led by sane people who cared about the common, everyday union membership, we would still have strong unions and jobs.  As it is, government and business took over and shipped jobs overseas where the people of said third world nations never HAD unions to protect them.  Thus, they work long, grueling hours in dangerous conditions for garbage pay.  That iCrap you likely have?  Made by people paid crap wages who KILL themselves to escape the misery of their job.


They also have no unions.


Unions had their place, and they still do...but they must be led by honest people, and they aren't now.

g speed's picture

when unions were "nationalized"  ----I mean became national unions they were fooled into believing that "local job action" was no longer needed and so gave up the only trrue barganing chip they ever had---fooled um good with that one---

kenny500c's picture

Unions are socialized labor, in a union there is no reason for a worker to excel, he will be paid whatever the union boss determines and will be ostracized by the other workers.

Dave's not here's picture

You mean the iCrap phones made in Communist China? The workers party China? That one?

Lorca's Novena's picture

Has a brief stint with the IUOE (international union of operating engineers) Local 501... what a frikkin joke that was. Guys in their 60's and all they look forward to was that 3k a month pension, and nothing else saved... The union had a guy embezzle millions out of the fund and nobody 'knew' what was happening. I was the guy walking around saying fuck the union, as it was mandatory to join. Surely I didnt make many friends...


Carlos if youre reading this, go jump off a bridge you asswipe.

RyeWhiskey's picture

What free market? Oligarhy is the name. If it's teamsters defending working man's right - so be it.

Enough of this free market idiocy. This is bullshit. People worked their whole lives and got shafted.

That's what it is.

Billy the Poet's picture

There is currently little freedom in the market or anywhere else but I fail to see why taking away even more freedom helps that situation. If you're sick you seek a cure. You don't say, "What's health?" and then double down on unhealthful habits.

Katos's picture

Unfortunately,  our entrenched political class watched as the Mafia in the 50's and 60's, walked away with billions by scamming the system. They said," hey, we can do this"! So after destroying the Mafia and imprisoning their  eider top guns,  the government took over their scams.  We are now run by the Clinton Mafia crime family, and the Bush criminal crime cabal . The police and military are paid enforcers, who are also allowed to scam the public, by using hiway confiscation techniques,  and paid prison slave labor. The military is used to fly drugs around the globe in military transports, making the war on drugs, just another scam. We are at the mercy of a crime syndicate that would just a soon shoot you as look at you. They have no one to fear as they control the world's largest military.  These parasites have just about killed the host. What happens then is anyone's guess. 

milking institute's picture

"PEOPLE WORKED THEIR WHOLE LIVES AND GOT SHAFTED"    welcome to the real world buddy....

all-priced-in's picture

They were mostly ass fucked by the union leadership -


The union leadership knew that cash was not being set aside to fully fund the pension obligation - they didn't give a fuck as long as they got theirs - fact is the leadership is normally covered under a separate pension agreement - and you can bet your nutsack that it is fully funded with union dues collected from every member paycheck.


 Even the rank and file should have been smart enough to figure this out - when it is this obvious and you don't do anything about it, it becomes your own fault.


mary mary's picture

Owners have Chambers of Commerce.

Workers have unions.

Anyone who doesn't organize and work politically becomes a slave to those who do.

Shpedly's picture

Yup. The US goverment always pays, even if its from money printed out of thin air.

Antifaschistische's picture

as the world slowly slips into the economic abyss, I expect at some point (not now) stories like this will be weekly, if not a daily occurance.   .gov will determine winners and losers and the FED/IMF will determine winners/losers.

In this case, UPS pensionners win...shareholders lose.  stay tuned for the next daily battle.


Mr. Kwikky's picture

"life has its ups and downs" Isn't that a new American soap going to be broadcasted by the MSM at the end of 2016?

mary mary's picture

It can't.  The Constitution empowers and protects USPS (for very good reasons).  Anyone who wants to compete with it is on his own.

Truther's picture

"We've De-Pensioned some folks"

mary mary's picture

Janet Yellen, Ben Bernanke, Alan Greenspan: "We discovered that, by keeping interest rates artificially low for 25 years, we could bankrupt every pensioner in the USA, and send his money to Israel.  Doing God's Work."

mary mary's picture

P.S.  Remember last month's fight over whether the Senate is even going to hold hearings to consider President Obama's nominee to the USA Supreme Court?  Anyone want to guess whether, of all the 330-million people in the USA, President Obama was not able to find a single person who was not a member of the TRIBE to nominate?  His nominee would put the USA Supreme Court at 4 TRIBE representatives, 5 VATICAN representatives, and 0 AMERICANS.

United Colonies of America.

venturen's picture

Wait I meant there was a non-Gaap for that....and magically it isn't recorded! 

Yen Cross's picture

  Blame it on Amazon.  </sarc>

D Nyle's picture

Damn, how am I going to get free delivery from amazon, I live 56 miles from the nearest big town


Arnold's picture

Tunneling seems to be the Hispanic way of shipping product in our Brave New World.

RyeWhiskey's picture

Amazon has done enough harm. No "sarc" needed.

cognitive dissident's picture

just crash this shit already...

Truther's picture

The great Finale is 5 minutes away. Got popcorn?

Muppet's picture

From your words to Gods ear. Sadly, there is only more of the same in sight.

Linglishboy's picture

Obama said everything was cool... so those retires needs to shut up.