Annual report pursuant to Section 13 and 15(d)

Compensation Related Costs, Postemployment Benefits

Compensation Related Costs, Postemployment Benefits
12 Months Ended
Dec. 31, 2020
Postemployment Benefits [Abstract]  
We contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in multiemployer plans are different from single-employer plans in the following respects:
Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
If we negotiate to cease participating in a multiemployer plan, we may be required to pay that plan an amount based on our allocable share of its underfunded status, referred to as a "withdrawal liability". However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.
If any of the multiemployer pension plans in which we participate enter critical status, and our contributions are not sufficient to satisfy any rehabilitation plan funding schedule, we could be required under the Pension Protection Act of 2006 to make additional surcharge contributions to the multiemployer pension plan in the amount of five to ten percent of the existing contributions required by our labor agreement. Such surcharges would cease upon the ratification of a new collective bargaining agreement, and could not recur unless a plan re-entered critical status at a later date.
The discussion that follows sets forth the financial impact on our results of operations and cash flows for 2020, 2019 and 2018, from our participation in multiemployer benefit plans. As part of the overall collective bargaining process for wage and benefit levels, we have agreed to contribute certain amounts to the multiemployer benefit plans during the contract period. The multiemployer benefit plans set benefit levels and are responsible for benefit delivery to participants. Future contribution amounts to multiemployer benefit plans are determined only through collective bargaining, and we have no additional legal or constructive obligation to increase contributions beyond the agreed-upon amounts (except potential surcharges under the Pension Protection Act of 2006 described above).
The number of employees covered by our multiemployer pension plans has increased with the growth in our business. There have been no other significant changes that affect the comparability of 2020, 2019 and 2018 contributions. We recognize expense for the contractually-required contribution for each period, and we recognize a liability for any contributions due and unpaid at the end of a reporting period.
Status of Collective Bargaining Agreements
As of December 31, 2020, we had approximately 327,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the Teamsters, of which approximately 11,000 are employees of UPS Freight. These agreements run through July 31, 2023.
We have approximately 3,000 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"). This collective bargaining agreement becomes amendable September 1, 2023.
We have approximately 1,600 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,400 of our auto and maintenance mechanics who are not employed under agreements with the Teamsters are employed under collective bargaining agreements with the International Association of Machinists and Aerospace Workers ("IAM"). The collective bargaining agreement with the IAM runs through July 31, 2024.
Multiemployer Pension Plans
The following table outlines our participation in multiemployer pension plans for 2020, 2019 and 2018, and sets forth our calendar year contributions and accruals for each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection Act zone status available in 2020 and 2019 relates to the plans’ two most recent fiscal year ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Plans certified in the red zone are generally less than 65% funded; plans certified in the orange zone are both less than 80% funded and have an accumulated funding deficiency, or are expected to have a deficiency in any of the next six plan years; plans certified in the yellow zone are less than 80% funded; and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. As of December 31, 2020, all plans that have either a FIP or RP requirement have had the respective plan implemented.
Our collectively-bargained contributions satisfy the requirements of all implemented FIPs and RPs and do not currently require the payment of any surcharges. In addition, minimum contributions outside of the agreed upon contractual rates are not required. For the plans detailed in the following table, the expiration date of the associated collective bargaining agreements is July 31, 2023, with the exception of the IAM National Pension Fund / National Pension Plan, which has a July 31, 2024 expiration date. For all plans detailed in the following table, we provided more than 5% of the total plan contributions from all employers for 2020, 2019 and 2018 (as disclosed in the annual filing with the Department of Labor for each respective plan).
Certain plans have been aggregated in the “All Other Multiemployer Pension Plans” line in the following table, as the contributions to each of these individual plans are not material.
  EIN / Pension
Plan Number
Protection Act
Zone Status
FIP / RP Status
Pending / Implemented
(in millions)
UPS Contributions and Accruals
Surcharge Imposed
Pension Fund 2020 2019 2020 2019 2018
Central Pennsylvania Teamsters Defined Benefit Plan 23-6262789-001 Green Green No NA $ 57  $ 48  $ 44  No
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund 55-6021850-001 Red Red Yes Implemented 16 14 13 No
Hagerstown Motor Carriers and Teamsters Pension Fund 52-6045424-001 Red Red Yes Implemented 11 10 9 No
I.A.M. National Pension Fund / National Pension Plan 51-6031295-002 Red Green Yes Implemented 44  41  38  No
International Brotherhood of Teamsters Union Local No. 710 Pension Fund 36-2377656-001 Green Green No NA 161  142  129  No
Local 705, International Brotherhood of Teamsters Pension Plan 36-6492502-001 Yellow Yellow Yes Implemented 120  113  104  No
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan 51-6117726-001 Yellow Yellow Yes Implemented 124  112  116  No
Milwaukee Drivers Pension Trust Fund 39-6045229-001 Green Green No NA 53  48  42  No
New England Teamsters & Trucking Industry Pension Fund 04-6372430-001 Red Red Yes Implemented 140  120  121  No
New York State Teamsters Conference Pension and Retirement Fund 16-6063585-074 Red Red Yes Implemented 135  119  108  No
Teamster Pension Fund of Philadelphia and Vicinity 23-1511735-001 Yellow Yellow Yes Implemented 85  74  66  No
Teamsters Joint Council No. 83 of Virginia Pension Fund 54-6097996-001 Green Green No NA 82  75  69  No
Teamsters Local 639—Employers Pension Trust 53-0237142-001 Green Green No NA 74  68  61  No
Teamsters Negotiated Pension Plan 43-6196083-001 Green Green No NA 40  37  34  No
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan 52-6043608-001 Green Green No NA 27  24  22  No
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan 13-1426500-419 Red Red Yes Implemented 107  100  95  No
Western Conference of Teamsters Pension Plan 91-6145047-001 Green Green No NA 1,138  939  868  No
Western Pennsylvania Teamsters and Employers Pension Fund 25-6029946-001 Red Red Yes Implemented 37  34  31  No
All Other Multiemployer Pension Plans 104  102  72 
Total Contributions $ 2,555  $ 2,220  $ 2,042 
Agreement with the New England Teamsters and Trucking Industry Pension Fund
In 2012, we reached an agreement with the New England Teamsters and Trucking Industry Pension Fund ("NETTI Fund"), a multiemployer pension plan in which UPS is a participant, to restructure the pension liabilities for approximately 10,200 UPS employees represented by the Teamsters. As of December 31, 2020 and 2019, we had $837 and $845 million, respectively, recognized in "Other Non-Current Liabilities" as well as $7 million as of December 31, 2020 and 2019 recorded in "Other current liabilities" in our consolidated balance sheets, representing the remaining balance of the NETTI Fund withdrawal liability. This liability is payable in equal monthly installments over a remaining term of approximately 42 years. Based on the borrowing rates currently available to us for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of December 31, 2020 and 2019 was $1.0 billion and $929 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.
Multiemployer Health and Welfare Plans
We also contribute to a number of multiemployer health and welfare plans covering both active and retired employees. Healthcare benefits are provided to participants who meet certain eligibility requirements as covered under the applicable collective bargaining unit. The following table sets forth our calendar year plan contributions and accruals. Certain plans have been aggregated in the “All Other Multiemployer Health and Welfare Plans” line, as the contributions to each of these individual plans are not material.
  (in millions)
UPS Contributions and Accruals
Health and Welfare Fund 2020 2019 2018
Bay Area Delivery Drivers $ 39  $ 37  $ 40 
Central Pennsylvania Teamsters Health & Pension Fund 35  31  29 
Central States, South East & South West Areas Health and Welfare Fund 3,202  2,899  2,530 
Delta Health Systems—East Bay Drayage Drivers 37  30  30 
Joint Council #83 Health & Welfare Fund 50  45  40 
Local 804 Welfare Trust Fund 110  101  90 
Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund 53  48  43 
New York State Teamsters Health & Hospital Fund 84  71  62 
Northern California General Teamsters (DELTA) 188  157  153 
Northern New England Benefit Trust 72  59  54 
Oregon / Teamster Employers Trust 59  51  43 
Teamsters 170 Health & Welfare Fund 22  19  18 
Teamsters Benefit Trust 57  47  48 
Teamsters Local 251 Health & Insurance Plan 23  18  17 
Teamsters Local 638 Health Fund 60  53  48 
Teamsters Local 639—Employers Health & Pension Trust Funds 39  32  29 
Teamsters Local 671 Health Services & Insurance Plan 23  20  19 
Teamsters Union 25 Health Services & Insurance Plan 69  59  56 
Teamsters Western Region & Local 177 Health Care Plan 859  769  656 
Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund 22  19  18 
Utah-Idaho Teamsters Security Fund 45  37  32 
Washington Teamsters Welfare Trust 76  67  57 
All Other Multiemployer Health and Welfare Plans 175  141  156 
Total Contributions $ 5,399  $ 4,810  $ 4,268