US. UPS to Freeze Pensions for 70,000 Workers to Reduce Costs
United Parcel Service will freeze a pension plan for about 70,000 nonunion U.S. employees because of escalating costs and volatility in determining future payments, replacing it with a different retirement benefit.
UPS joins companies including DuPont Co. and Lockheed Martin in freezing pensions, which means that some or all participants may stop accumulating benefits. UPS’s retirement obligations are on top of a $1 billion jump in capital spending being planned for this year to handle a surge in e-commerce shipments.
“It’s not a red flag,” said Kevin Sterling, a Seaport Global Holdings analyst. “Combine how much money they are spending on automation and on planes, along with discount rates being low maybe forever, and they said ‘we have to cap this or we’ll continue to see funding shortfalls.’”
Full Content: Bloomberg
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