8-KMaterial AgreementsExhibits & Filings

UNITED PARCEL SERVICE INC 8-K Report, Material Agreement (Jun 27, 2017)

Filed June 27, 2017For Securities:UPS

Summary

United Parcel Service Inc. (UPS) has filed an 8-K report detailing significant amendments to its employee benefit plans, primarily impacting non-union participants. Effective January 1, 2023, the company will cease accruals of additional benefits for future service and compensation under the UPS Retirement Plan and UPS Excess Coordinating Benefit Plan for these employees. This strategic shift aims to move away from defined benefit pension plans towards a defined contribution model for a segment of its workforce. Concurrently, UPS is enhancing its 401(k) Savings Plan for non-union U.S. employees, making them eligible for company retirement contributions ranging from 5% to 8% based on tenure. Transition contributions will also be provided to certain participants. While current retirees and vested former employees are unaffected, the company will recognize the financial impact of these plan changes in its second quarter 2017 results. Investors should note that these financial impacts were already factored into UPS's previously announced 2017 financial targets.

Key Highlights

  • 1UPS is amending its defined benefit pension plans (UPS Retirement Plan and UPS Excess Coordinating Benefit Plan) to cease future benefit accruals for non-union employees effective January 1, 2023.
  • 2Non-union retirees already receiving benefits and vested former employees will not be affected by these changes.
  • 3Employees will retain benefits accrued in the defined benefit plans up to January 1, 2023.
  • 4The UPS 401(k) Savings Plan is being amended to make previously ineligible non-union U.S. employees eligible for UPS Retirement Contributions (5%-8% of compensation).
  • 5Transition contributions will be provided to certain participants in the 401(k) Plan starting January 1, 2023.
  • 6Any 401(k) contributions limited by the IRS Code will be directed to the UPS Restoration Savings Plan.
  • 7The financial impact of these plan remeasurements and curtailments will be reported in the second quarter 2017 earnings, and these impacts were previously included in the company's 2017 financial targets.

Frequently Asked Questions

UPS is ceasing future benefit accruals for non-union employees in its defined benefit pension plans (UPS Retirement Plan and UPS Excess Coordinating Benefit Plan) effective January 1, 2023. Simultaneously, it is enhancing its 401(k) Savings Plan by introducing company retirement contributions for these employees and providing transition contributions.

The changes primarily affect non-union U.S. employees. Non-union retirees already collecting benefits and former employees with a vested benefit will not be impacted. Employees will keep the benefits they have already earned in the defined benefit plan up to January 1, 2023.

The financial impact of the remeasurement of plan assets and liabilities and the curtailments will be reflected as of June 30, 2017, and will be reported when UPS announces its second quarter 2017 results on July 27, 2017. These impacts were factored into the company's previously communicated 2017 financial targets.

No, UPS is ceasing future accruals for non-union employees in its defined benefit plans. Employees will retain the benefits they have already earned. Additionally, the company is enhancing its defined contribution 401(k) plan with new company contributions, shifting its retirement benefit strategy for this employee group.