Annual report pursuant to Section 13 and 15(d)

Compensation Related Costs, Postemployment Benefits

Compensation Related Costs, Postemployment Benefits
12 Months Ended
Dec. 31, 2022
Postemployment Benefits [Abstract]  
We contribute to a number of multiemployer pension 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 and 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 pension 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 reoccur unless a plan re-entered critical status at a later date.
The discussion that follows sets forth the impact on our results of operations and cash flows for December 31, 2022, 2021 and 2020, from our participation in multiemployer pension plans. As part of the overall collective bargaining process for wage and benefit levels, we have agreed to contribute certain amounts to these plans during the contract period. The plans set benefit levels and are responsible for benefit delivery to participants. Future contributions to the 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 multiemployer pension plans remained relatively flat in 2022, having increased in 2021 due to business growth. Contributions increased in accordance with the terms of our collective bargaining agreements. There have been no other significant changes that affect the comparability of 2022, 2021 and 2020 contributions. We recognize expense for the contractually-required contributions 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
We have approximately 330,000 employees in the U.S. employed under a national master agreement and various supplemental agreements with local unions affiliated with the Teamsters. These agreements run through July 31, 2023. We have begun negotiating the various supplemental agreements with the Teamsters and expect that negotiations with respect to the national master agreement will commence in April 2023. We are negotiating in good faith in an effort to reach an agreement that is in the best interests of our employees, the Teamsters and UPS; however, no assurances of our ability to do so, or the timing or terms thereof, can be provided. Customers may reduce their business or stop doing business with us if they believe that such actions or threatened actions may adversely affect our ability to provide services. We may permanently lose customers if we are unable to provide uninterrupted service, and this could materially adversely affect us. The terms of future collective bargaining agreements also may affect our competitive position and results of operations. Furthermore, our actions or responses to any such negotiations, labor disputes, strikes or work stoppages could negatively impact how our brand is perceived and our corporate reputation and have adverse effects on our business, including our results of operations.
We have approximately 10,000 employees in Canada employed under a collective bargaining agreement with the Teamsters which runs through July 31, 2025.
We have approximately 3,500 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association ("IPA"). This collective bargaining agreement becomes amendable September 1, 2025.
We have approximately 1,800 airline mechanics who are covered by a collective bargaining agreement with Teamsters Local 2727 which becomes amendable November 1, 2026. In addition, approximately 3,100 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 as of December 31, 2022, 2021 and 2020, 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 2022 and 2021 relates to each plan's 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. Certain plans have applied for special financial assistance ("SFA") from the PBGC. These plans' zone status may change if the funds are received and incorporated into the plan administrators' information.
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, 2022, 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 2022, 2021 and 2020, 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 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 2022 2021 2022 2021 2020
Alaska Teamster-Employer Pension Plan 92-6003463-024 Red Red Yes Implemented 10  No
Central Pennsylvania Teamsters Defined Benefit Plan 23-6262789-001 Green Green No NA 75 65 57 No
Eastern Shore Teamsters Pension Fund 52-0904953-001 Green Green No NA 10  No
Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund 55-6021850-001 Red Red Yes Implemented 21 18 16 No
Hagerstown Motor Carriers and Teamsters Pension Fund 52-6045424-001 Red Red Yes Implemented 13 12 11 No
I.A.M. National Pension Fund / National Pension Plan 51-6031295-002 Red Red Yes Implemented 48  48  44  No
International Brotherhood of Teamsters Union Local No. 710 Pension Fund 36-2377656-001 Green Green No NA 191  180  161  No
Local 705, International Brotherhood of Teamsters Pension Plan 36-6492502-001 Green Yellow No NA 136  131  120  No
Local 804 I.B.T. & Local 447 I.A.M.—UPS Multiemployer Retirement Plan 51-6117726-001 Green Green No NA 144  135  124  No
Milwaukee Drivers Pension Trust Fund 39-6045229-001 Green Green No NA 62  58  53  No
New England Teamsters & Trucking Industry Pension Fund 04-6372430-001 Red Red Yes Implemented 167  145  140  No
New York State Teamsters Conference Pension and Retirement Fund 16-6063585-074 Red Red Yes Implemented 149  147  135  No
Teamster Pension Fund of Philadelphia and Vicinity 23-1511735-001 Green Yellow No NA 100  94  85  No
Teamsters Joint Council No. 83 of Virginia Pension Fund 54-6097996-001 Green Green No NA 98  89  82  No
Teamsters Local 639—Employers Pension Trust 53-0237142-001 Green Green No NA 85  80  74  No
Teamsters Negotiated Pension Plan 43-6196083-001 Green Green No NA 49  45  40  No
Truck Drivers and Helpers Local Union No. 355 Retirement Pension Plan 52-6043608-001 Green Green No NA 30  29  27  No
United Parcel Service, Inc.—Local 177, I.B.T. Multiemployer Retirement Plan 13-1426500-419 Green Yellow No NA 124  116  107  No
Western Conference of Teamsters Pension Plan 91-6145047-001 Green Green No NA 1,310  1,260  1,138  No
Western Pennsylvania Teamsters and Employers Pension Fund 25-6029946-001 Red Red Yes Implemented 46  40  37  No
All Other Multiemployer Pension Plans 73  78  89 
Total Contributions $ 2,941  $ 2,787  $ 2,555 
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, 2022 and 2021, we had $821 and $830 million, respectively, recognized in Other Non-Current Liabilities and $8 million as of December 31, 2022 and 2021, 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 40 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, 2022 and 2021 was $686 and $963 million, respectively. We utilized Level 2 inputs in the fair value hierarchy 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 2022 2021 2020
Bay Area Delivery Drivers $ 40  $ 41  $ 39 
Central Pennsylvania Teamsters Health & Pension Fund 42  39  35 
Central States, South East & South West Areas Health and Welfare Fund 3,497  3,374  3,202 
Delta Health Systems—East Bay Drayage Drivers 39  39  37 
Joint Council #83 Health & Welfare Fund 62  56  50 
Local 401 Teamsters Health & Welfare Fund 22  19  15 
Local 804 Welfare Trust Fund 129  123  110 
Milwaukee Drivers Pension Trust Fund—Milwaukee Drivers Health and Welfare Trust Fund 62  59  53 
New York State Teamsters Health & Hospital Fund 89  91  84 
Northern California General Teamsters (DELTA) 211  209  188 
Northern New England Benefit Trust 87  81  72 
Oregon / Teamster Employers Trust 70  66  59 
Teamsters 170 Health & Welfare Fund 25  24  22 
Teamsters Benefit Trust 58  60  57 
Teamsters Local 251 Health & Insurance Plan 26  26  23 
Teamsters Local 638 Health Fund 70  66  60 
Teamsters Local 639—Employers Health & Pension Trust Funds 38  40  39 
Teamsters Local 671 Health Services & Insurance Plan 25  24  23 
Teamsters Union 25 Health Services & Insurance Plan 75  74  69 
Teamsters Western Region & Local 177 Health Care Plan 1,035  980  859 
Truck Drivers and Helpers Local 355 Baltimore Area Health & Welfare Fund 23  23  22 
Utah-Idaho Teamsters Security Fund 54  52  45 
Washington Teamsters Welfare Trust 88  83  76 
All Other Multiemployer Health and Welfare Plans 166  164  160 
Total Contributions $ 6,033  $ 5,813  $ 5,399