Annual report pursuant to Section 13 and 15(d)

MULTIEMPLOYER EMPLOYEE BENEFIT PLANS

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MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
12 Months Ended
Dec. 31, 2019
Multiemployer Plans [Abstract]  
Multiemployer Employee Benefit Plans MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
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 these multiemployer plans are different from single-employer plans in the following aspects:
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 the years ended December 31, 2019, 2018 and 2017, 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 as described above).
The number of employees covered by our multiemployer pension plans has remained consistent over the past three years, and there have been no significant changes that affect the comparability of 2019, 2018 and 2017 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, 2019, we had approximately 290,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the Teamsters. The current National Master Agreement ("NMA") was ratified on April 28, 2019, and runs through July 31, 2023. Most of the economic provisions of the NMA are retroactive to August 1, 2018, which is the effective date of the NMA. The UPS Freight business unit national master agreement was ratified on November 11, 2018.
We have approximately 2,900 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"), which becomes amendable on September 1, 2021. On February 10, 2020, the Company and the IPA reached a tentative agreement on a two-year contract extension. Upon ratification, the extension will go into effect on September 1, 2021 and become amendable September 1, 2023.
We have approximately 1,500 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2023. In addition, approximately 3,300 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"). On May 2, 2019, the IAM ratified a new collective bargaining agreement which runs through July 31, 2024.
Multiemployer Pension Plans
The following table outlines our participation in multiemployer pension plans for the periods ended December 31, 2019, 2018 and 2017, 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 2019 and 2018 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, 2019, 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 Automotive Industries Pension Plan, the Automotive Machinists Pension Trust and the IAM National Pension Fund / National Pension Plan, which have 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 2019, 2018 and 2017 (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
 
Pension
Protection Act
Zone Status
 
FIP / RP Status
Pending /
 
(in millions)
UPS Contributions and Accruals
 
Surcharge
Pension Fund
Number
 
2019
 
2018
 
Implemented
 
2019
 
2018
 
2017
 
Imposed
Central Pennsylvania Teamsters Defined Benefit Plan
23-6262789-001
 
Green
 
Green
 
No
 
48

 
44

 
40

 
No
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund
55-6021850-001
 
Red
 
Red
 
Yes/Implemented
 
14

 
13

 
12

 
No
Hagerstown Motor Carriers and Teamsters Pension Fund
52-6045424-001
 
Red
 
Red
 
Yes/Implemented
 
10

 
9

 
8

 
No
I.A.M. National Pension Fund / National Pension Plan
51-6031295-002
 
Green
 
Green
 
No
 
41

 
38

 
35

 
No
International Brotherhood of Teamsters Union Local No. 710 Pension Fund
36-2377656-001
 
Green
 
Green
 
No
 
142

 
129

 
118

 
No
Local 705, International Brotherhood of Teamsters Pension Plan
36-6492502-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
113

 
104

 
93

 
No
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan
51-6117726-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
112

 
116

 
110

 
No
Milwaukee Drivers Pension Trust Fund
39-6045229-001
 
Green
 
Green
 
No
 
48

 
42

 
38

 
No
New England Teamsters & Trucking Industry Pension Fund
04-6372430-001
 
Red
 
Red
 
Yes/Implemented
 
120

 
121

 
114

 
No
New York State Teamsters Conference Pension and Retirement Fund
16-6063585-074
 
Red
 
Red
 
Yes/Implemented
 
119

 
108

 
100

 
No
Teamster Pension Fund of Philadelphia and Vicinity
23-1511735-001
 
Yellow
 
Yellow
 
Yes/Implemented
 
74

 
66

 
60

 
No
Teamsters Joint Council No. 83 of Virginia Pension Fund
54-6097996-001
 
Green
 
Green
 
No
 
75

 
69

 
64

 
No
Teamsters Local 639—Employers Pension Trust
53-0237142-001
 
Green
 
Green
 
No
 
68

 
61

 
55

 
No
Teamsters Negotiated Pension Plan
43-6196083-001
 
Green
 
Green
 
No
 
37

 
34

 
32

 
No
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan
52-6043608-001
 
Green
 
Green
 
No
 
24

 
22

 
20

 
No
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan
13-1426500-419
 
Red
 
Red
 
Yes/Implemented
 
100

 
95

 
88

 
No
Western Conference of Teamsters Pension Plan
91-6145047-001
 
Green
 
Green
 
No
 
939

 
868

 
772

 
No
Western Pennsylvania Teamsters and Employers Pension Fund
25-6029946-001
 
Red
 
Red
 
Yes/Implemented
 
34

 
31

 
30

 
No
All Other Multiemployer Pension Plans
 
 
 
 
 
 
 
 
102

 
72

 
81

 
 
 
 
 
 
 
 
 
Total Contributions
 
$
2,220

 
$
2,042

 
$
1,870

 
 

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, 2019 and 2018, we had $845 and $852 million, respectively, recognized in "Other Non-Current Liabilities" as well as $7 million as of December 31, 2019 and 2018 recorded in "Other current liabilities" on 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 43 years. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of December 31, 2019 and 2018 was $929 and $832 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
2019
 
2018
 
2017
Bay Area Delivery Drivers
37

 
40

 
37

Central Pennsylvania Teamsters Health & Pension Fund
31

 
29

 
27

Central States, South East & South West Areas Health and Welfare Fund
2,899

 
2,530

 
2,366

Delta Health Systems—East Bay Drayage Drivers
30

 
30

 
29

Joint Council #83 Health & Welfare Fund
45

 
40

 
37

Local 804 Welfare Trust Fund
101

 
90

 
84

Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund
48

 
43

 
38

New York State Teamsters Health & Hospital Fund
71

 
62

 
59

Northern California General Teamsters (DELTA)
157

 
153

 
132

Northern New England Benefit Trust
59

 
54

 
50

Oregon / Teamster Employers Trust
51

 
43

 
38

Teamsters 170 Health & Welfare Fund
19

 
18

 
17

Teamsters Benefit Trust
47

 
48

 
46

Teamsters Local 251 Health & Insurance Plan
18

 
17

 
15

Teamsters Local 638 Health Fund
53

 
48

 
43

Teamsters Local 639—Employers Health & Pension Trust Funds
32

 
29

 
27

Teamsters Local 671 Health Services & Insurance Plan
20

 
19

 
17

Teamsters Union 25 Health Services & Insurance Plan
59

 
56

 
52

Teamsters Western Region & Local 177 Health Care Plan
769

 
656

 
605

Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund
19

 
18

 
16

Utah-Idaho Teamsters Security Fund
37

 
32

 
29

Washington Teamsters Welfare Trust
67

 
57

 
52

All Other Multiemployer Health and Welfare Plans
141

 
156

 
156

Total Contributions
$
4,810

 
$
4,268

 
$
3,972