Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE BENEFIT PLANS

v2.3.0.15
EMPLOYEE BENEFIT PLANS
 9 Months Ended
Sep. 30, 2011
EMPLOYEE BENEFIT PLANS

NOTE 6. EMPLOYEE BENEFIT PLANS

Information about net periodic benefit cost for our pension and postretirement benefit plans is as follows for the three and nine months ended September 30, 2011 and 2010 (in millions):

 

     U.S. Pension Benefits     U.S. Postretirement
Medical Benefits		     International
Pension Benefits		  
       2011             2010             2011             2010             2011             2010      

Three Months Ended September 30:

             

Service cost

    $ 218      $ 181      $ 22      $ 22      $ 9      $ 6   

Interest cost

      327        300        52        53        10        9   

Expected return on assets

      (489 )      (400 )      (4 )      (5 )      (11 )      (10 ) 

Amortization of:

             

Transition obligation

      —          —          —          —          —          —     

Prior service cost

      43        43        2        1        —          —     

Actuarial (gain) loss

      71        19        5        4        1        1   

Settlements / curtailments

      —          —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net periodic benefit cost

    $ 170      $ 143      $ 77      $ 75      $ 9      $ 6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     U.S. Pension Benefits     U.S. Postretirement
Medical Benefits		     International
Pension Benefits		  
         2011             2010             2011             2010             2011             2010      

Nine Months Ended September 30:

             

Service cost

    $ 654      $ 542      $ 66      $ 65      $ 27      $ 18   

Interest cost

      981        899        156        160        30        26   

Expected return on assets

      (1,467 )      (1,199 )      (12 )      (16 )      (33 )      (27 ) 

Amortization of:

             

Transition obligation

      —          —          —          —          —          —     

Prior service cost

      129        129        6        3        —          —     

Actuarial (gain) loss

      213        58        15        12        3        2   

Settlements / curtailments

      —          —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net periodic benefit cost

    $ 510      $ 429      $ 231      $ 224      $ 27      $ 19   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

During the first nine months of 2011, we contributed $1.307 billion and $90 million to our company-sponsored pension and postretirement medical benefit plans, respectively. Included in the contribution to the postretirement medical benefit plans is $12 million that UPS received during the first quarter under the Early Retiree Reinsurance Program authorized in the Patient Protection and Affordable Care Act. Included in the contribution to the pension plans is a $1.2 billion accelerated contribution to the UPS IBT Pension Plan, which represented an acceleration of contributions that would have been required over the remainder of 2011 and approximately $440 million in contributions that would not have been required until after 2011. An additional accelerated contribution of $60 million was made in the third quarter of 2011 to the UPS Pension Plan that would not have been required until after 2011. We also expect to contribute $6 and $25 million over the remainder of the year to the international pension and U.S. postretirement medical benefit plans, respectively.

 

As of December 31, 2010, we had approximately 250,000 employees employed under a national master agreement and various supplemental agreements with local unions affiliated with the International Brotherhood of Teamsters (“Teamsters”). These agreements run through July 31, 2013. We have approximately 2,800 pilots who are employed under a collective bargaining agreement with the Independent Pilots Association (“IPA”), which becomes amendable at the end of 2011. Our airline mechanics are covered by a collective bargaining agreement with Teamsters Local 2727, which runs through November 1, 2013. In addition, the majority (approximately 3,300) of our ground 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”). Our agreement with the IAM runs through July 31, 2014.

We participate in a number of trustee-managed multi-employer pension and health and welfare plans for employees covered under collective bargaining agreements. Our current collective bargaining agreements set forth the annual contribution increases allotted to the plans that we participate in, and we are in compliance with these contribution rates. These limitations will remain in effect throughout the terms of the existing collective bargaining agreements.