Everything You Need To Know About UPS Pension Plans

For many Americans, pension plans are a crucial part of working toward a safe and secure retirement. And, as a UPS employee, you have a whole lot more peace of mind when you know all of your hard work contributes to your pension plan.

However, you may not be fully aware of how UPS’ pension plan works or where the plan may be headed in the future.

Luckily, this article will address everything you need to know about your UPS pension plan. That way, you’ll know where you are currently and what your future retirement options might be.

What Is a UPS Pension Plan?

As with any pension plan, the UPS pension plan offers guaranteed and defined retirement benefits to employees. In the case of UPS, the Central States Pension Plan works together with the company’s plan to provide a retirement benefit based on an employee’s years of service.

This benefit is earned by any employee under 65, and as mentioned, your years of service will have a much greater effect on the total amount earned than your current age as an employee. Then, once you reach 65, the lesser of the plans will start being paid even if you’re still employed.

Overall, the average amount earned under the New UPS Pension Plan is $2,500 for 25-at-57 and $3,000 for 30-and-out. However, his amount can vary depending on your state, country, or city.

Additionally, it’s important to note that your UPS pension plan will not be subject to a Social Security offset and will be considered completely separate from any Social Security benefits you’re eligible for. That means that you could potentially earn retirement funds from your job, as well as from Social Security checks.

UPS Pension Plans by Location

Depending on where you work, you can expect different pension plans from UPS. This is because different states, counties, and cities can have higher or lower costs of living. Therefore, UPS will provide a pension plan that suits that location’s needs.

For example, here are some common pension plans provided by states:

• 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 25-at-57, and $3,050 30-and-out with a $196 accrual.

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

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

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

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

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

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

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

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

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

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

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

By these metrics, the states that offer the highest pension plans are New York ($5,500 30-and-out) and West Virgina ($4,250 30-and-out), while the state with the lowest pension plan is Wisconsin ($2,000 25-to-57, and $3,000 30-and-out).

Additionally, while your state of residence (pension region) will have the largest effect on how much you’ll earn, you may also fall under special plans if you live in a major U.S. city. Some of the most noteworthy cities with their own UPS pension plans include:

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

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

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

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

How to Earn a UPS Pension Plan

If you’re interested in a UPS Pension Plan, there are a few things you should know about becoming a participant. First, you’ll typically need to be a full-time UPS employee to qualify for the plan. If this is the case, your employer will submit contributions to the plan on your behalf.

However, to qualify, you’ll also need to have at least 20 weekly contributions paid on your behalf within 12 months of employment. This can either be within the first 12 months you’re employed or any full year after that.

Additionally, to qualify for benefits, you may need to earn the minimum amount of Vesting Service required. This is typically achieved through years of service, as initially, your employer will own 100% of the plan. But, over time, you will eventually own 100%. Of course, the more the plan you own, the more benefits you will receive.

UPS Pension Plan and Your Family

Your UPS Pension will not only provide benefits to you but also to your family if you choose. Providing your family with benefits is often done through either JSO or QDRO agreements.

1. Joint and Surviving Spouse Options (JSO)

   Firstly, if you’re married, your spouse can take benefits under the Joint and Surviving Spouse Options (JSO). To acquire benefits through JSO, you and your spouse must submit written documents when filing for an application. Without this agreement in writing, your spouse may not qualify for benefits.

   The JSO benefit will provide your spouse with lifetime payments in the event that you pass away first. This payment is usually in the form of monthly retirement.

   However, the downside to JSO comes with the fact that in order to cover these lifetime payments, your retirement benefits will be reduced by 25%-50% while you’re still alive. Additionally, your spouse will still qualify for benefits even if you get a divorce.

2. Qualified Domestic Relations Order (QDRO)

   On the other hand, a Qualified Domestic Relations Order (QDRO), works in much the same way but allows you to choose to who you want to receive your benefits. Most commonly, QDROs are used to provide children and other dependents with benefits.

   QDRO is more complicated than a JSO agreement through, so it’s important to have an attorney who will guide you through the process.

3. Opting Out

   Even if you choose to opt-out of both of these options, you can still provide your family with benefits. For instance, if you’re married and pass away before the age of 60, your surviving spouse will receive the first 60 payments of your retirement plan.

   On the contrary, if you’re not married and you die before receiving your benefits, a $1,000 Lump-Sum Death Benefit will be paid to the first of either:

   • Your dependent children

   • Your non-dependent children

   • Your parents

   • Your brothers and sisters

   • Your estate

Future UPS Pension Plan Freeze

As of 2017, UPS announced that in five years (2023), all pension plans for non-union employees would freeze. This is because the company is currently saddled with a $9.9 billion pension deficit and has enough money to fund only 76% of what it owes.

With that in mind, UPS will be turning away from pension plans this year in favor of a 401(k) replacement plan. That way, non-union employees will be responsible for investment decisions and market changes.

Luckily, if you already have a pension plan with UPS or are a member of a union, you will still get to keep your current pension plan. The only catch is that you likely won’t acquire any extra or increased 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. That’s because you’ll own enough of your pension through Vesting Service after a decade of employment.

   Typically though, major retirement benefits will begin to accrue if you’ve achieved 25 years of service by age 57. Further, these benefits will only continue to increase after 30+ years of service, often maxing out after 35 years of service.

2. Does UPS still have a pension plan?

   By 2023, UPS will no longer fund its pension plan for non-union employees. Those who are currently enrolled in the plan will still receive benefits (especially if they’re part of a union), but new UPS employees will no longer have access to pension plans.

   Instead, UPS will focus its attention on offering 401(k) plans to employees in order to reduce the financial burden of the company’s pension deficit.

3. How long is vested in UPS pension?

   UPS employees will be 100% vested in their pension after ten years of service. This is considerably longer than the three years required to become vested under a UPS 401(k) plan. The difference is that the employer is taking a greater risk when contributing to a pension plan, whereas the employee is more responsible for their own money under a 401(k) plan.

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

   Part-time UPS employees may or may not be eligible for a pension plan. Usually, part-time employees are not eligible for the UPS/IBT pension plan if they remain part-time for the full duration of their employment. Though, part-time employees can sometimes be eligible for the base UPS pension plan.

   However, if a part-time employee becomes a full-time employee, they can have partial credit added to their UPS/IBT pension plan for the years they’ve already worked. Although, this will require that the employee is no longer participating in the base UPS plan.

Final Thoughts

Understanding your UPS pension plan is a crucial part of securing your future retirement. After all, depending on your location, you can earn over $3,500 in retirement benefits for 30 years of service.

Overall, where you choose to work and how you choose to delegate your benefits will have a substantial effect on you and your family when you begin to retire. Therefore, it’s vital that you go over the facts, so you can navigate your UPS pension plan to the best of your ability.

And remember that by 2023, the current UPS pension plan will be frozen for non-union employees. So, if you’re looking to become a UPS teamster today, remember that you’ll 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.