Everything You Need To Know About UPS Pension Plans

For many Americans, pension plans remain a vital component in building a secure retirement. As a UPS employee, your hard work contributes significantly to your pension plan, giving you added peace of mind.

Understanding how UPS’s pension plan operates and its potential future direction is crucial for planning your retirement.

This article covers everything you need to know about your UPS pension plan, ensuring you are informed about your current status and future retirement options.

What Is a UPS Pension Plan?

UPS’s pension plan, like any defined benefit plan, guarantees employees a specific retirement benefit based on years of service. The Central States Pension Plan collaborates with UPS’s plan to provide retirement benefits that are contingent upon your tenure with the company.

Employees under 65 can earn benefits, with a stronger emphasis placed on years of service rather than age. Upon reaching 65, benefits from the lesser of the two plans become payable, even if you are still employed.

The average monthly benefit under the UPS Pension Plan is approximately $2,500 for those retiring at 57 with 25 years of service and around $3,000 for those retiring after 30 years. However, these amounts can vary based on your location.

Importantly, your UPS pension will not be affected by Social Security offsets and remains distinct from any Social Security benefits you might receive. This means you could receive retirement funds from both your UPS plan and Social Security.

UPS Pension Plans by Location

Your UPS pension plan can differ based on your work location due to varying costs of living across states, counties, and cities. Consequently, UPS tailors its pension offerings to meet local needs.

Here are some notable pension plans by state:

• Alabama, Arkansas, Florida, Georgia, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, and Texas: $2,400 for 25-at-57, and $3,050 for 30-and-out with a $196 accrual.

• Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, and Washington: $3,800 for 30-and-out. 1.2% accrual reaches $210, with early retirement pension averaging $4,400 per month.

• Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont: $2,500 for 25-at-57 and $3,500 for 30-and-out. Up to $150 extra for additional years of service, potentially reaching $4,700 for 38 years.

• New York: $5,500 for 30-and-out at any age.

• New Jersey: $3,700 for 25-at-55, and $3,700 for 30-and-out at any age.

• Pennsylvania: Western PA offers $3,500 for 30-and-out pension with a $270 accrual. Central PA provides $3,100 for 25-at-57 pension.

• Virginia: $2,500 for 25-and-out, $3,500 for 30-and-out, and $4,000 for 35-and-out.

• West Virginia: $3,000 for 30-and-out, and $4,250 for 35-and-out.

• Maryland: $3,000 for 25-at-57, $3,600 for 30-and-out, and $4,200 for 35-and-out.

• Illinois and Indiana: $2,800 for 25-and-out, $3,300 for 30-and-out, and $3,800 for 35-and-out.

• Missouri: $2,600 for 25-at-57, $3,100 for 30-and-out, and $3,200 for 30-at-57. Up to $100 extra for anyone beyond 61, with additional years of service reaching $4,000 by age 64.

• Wisconsin: $2,000 for 25-and-out, $3,000 for 30-and-out. Up to $101 extra for each additional year of service.

Based on these figures, the states offering the highest pension plans are New York ($5,500 for 30-and-out) and West Virginia ($4,250 for 30-and-out), while Wisconsin has the lowest ($2,000 for 25-at-57 and $3,000 for 30-and-out).

While your state of residence (pension region) significantly influences your earnings, living in a major U.S. city can also qualify you for special pension plans. Notable cities with distinct UPS pension plans include:

• New York City, NY: $3,100 for 25-and-out and $3,600 for 30-and-out.

• Washington, D.C.: $5,000 for 30-and-out.

• Philadelphia, PA: $3,590 for 30-and-out.

• Chicago, IL: $2,500 for 25-and-out ($25,000 lump sum), $3,000 for 30-and-out ($30,000 lump sum), $3,500 for 35-and-out ($35,000 lump sum).

How to Earn a UPS Pension Plan

To qualify for a UPS Pension Plan, you typically need to be a full-time UPS employee. Your employer will make contributions to the plan on your behalf.

To qualify, you must have at least 20 weekly contributions made on your behalf within any 12-month period of employment. This can occur in your first year or any full year thereafter.

You may also need to meet the minimum Vesting Service requirement to qualify for benefits, initially owned entirely by your employer. Over time, you will gain full ownership, and the more you own, the greater your benefits will be.

UPS Pension Plan and Your Family

Your UPS Pension can also provide benefits to your family if you choose. This is typically done through Joint and Surviving Spouse Options (JSO) or Qualified Domestic Relations Order (QDRO) agreements.

1. Joint and Surviving Spouse Options (JSO)

   If you are married, your spouse can receive benefits under the JSO. To qualify, you must submit written documents during the application process. Without this agreement, your spouse may not be eligible for benefits.

   The JSO benefit ensures lifetime payments to your spouse if you pass away first, usually in the form of monthly retirement payments. However, to accommodate these lifetime payments, your retirement benefits may be reduced by 25%-50% while you are alive. Notably, your spouse remains eligible for benefits even in the event of a divorce.

2. Qualified Domestic Relations Order (QDRO)

   A QDRO works similarly but allows you to designate who receives your benefits. QDROs are often used to provide benefits to children and other dependents.

   These agreements can be more complex than JSO, so consulting an attorney for guidance through the process is advisable.

3. Opting Out

   If you opt out of both options, you can still provide benefits to your family. For instance, if you pass away before 60, your spouse will receive the first 60 payments of your retirement plan.

   If you are unmarried and pass away before receiving benefits, a $1,000 Lump-Sum Death Benefit will be paid to the first of the following:

   • Your dependent children

   • Your non-dependent children

   • Your parents

   • Your siblings

   • Your estate

Future UPS Pension Plan Freeze

In 2017, UPS announced plans to freeze all pension plans for non-union employees by 2023 due to a substantial pension deficit of $9.9 billion, with only 76% of obligations funded.

In light of this, UPS is transitioning away from traditional pension plans, opting instead for a 401(k) replacement plan, which puts investment decisions in the hands of employees.

Fortunately, if you already have a pension plan with UPS or are a union member, you will retain your current benefits. However, you likely won’t accrue additional benefits.

UPS Pension Plan FAQ

1. How many years do you have to work at UPS to qualify for a pension?

   You need to work at UPS for a minimum of ten years to qualify for pension benefits. After a decade of employment, you will have enough Vesting Service to own a significant portion of your pension.

   Major retirement benefits typically begin accruing after 25 years of service by age 57, continuing to increase with 30+ years of service, often maxing out after 35 years.

2. Does UPS still have a pension plan?

   By 2023, UPS ceased funding its pension plan for non-union employees. Current plan members will still receive benefits (especially union members), but new employees won’t have access to pension plans.

   UPS is now focusing on providing 401(k) plans to alleviate the financial burden associated with its pension deficit.

3. How long is vested in UPS pension?

   UPS employees will achieve 100% vesting in their pension after ten years of service. This duration is longer than the three years required for a UPS 401(k) plan vesting. The difference lies in the risk taken by the employer for pension contributions, compared to employees managing their own funds in a 401(k).

4. Can part-time UPS employees receive a pension plan?

   Part-time UPS employees may or may not qualify for a pension plan. Typically, if they remain part-time throughout their employment, they are not eligible for the UPS/IBT pension plan. However, some part-time employees may qualify for the base UPS pension plan.

   If a part-time employee transitions to a full-time status, they may receive partial credit for their previous service years, provided they no longer participate in the base UPS plan.

Final Thoughts

A thorough understanding of your UPS pension plan is essential for securing your retirement. Depending on your location, you can earn over $3,500 in retirement benefits for 30 years of service.

Ultimately, your choice of work location and how you manage your benefits will significantly impact your family and yourself when you retire. Therefore, it’s vital to review the details and navigate your UPS pension plan effectively.

Keep in mind that by 2023, the current UPS pension plan for non-union employees has been frozen. If you’re considering a career as a UPS teamster, be aware that you will only have access to a 401(k) plan.

Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.