UPS 2013 Annual Report Download - page 94

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
82
Our funding policy for U.S. plans is to contribute amounts annually that are at least equal to the amounts required by
applicable laws and regulations, or to directly fund payments to plan participants, as applicable. International plans will be
funded in accordance with local regulations. Additional discretionary contributions may be made when deemed appropriate to
meet the long-term obligations of the plans. Expected benefit payments for pensions will be primarily paid from plan trusts.
Expected benefit payments for postretirement medical benefits will be paid from plan trusts and corporate assets.
NOTE 5. MULTIEMPLOYER EMPLOYEE BENEFIT PLANS
We contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements that
cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible
employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods
and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans in the following
aspects:
• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other
participating employers.
• If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne
by the remaining participating employers.
• If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount
based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a
multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.
The discussion that follows sets forth the financial impact on our results of operations and cash flows for the years ended
December 31, 2013, 2012 and 2011 from our participation in multiemployer benefit plans. Several factors could cause us to make
significantly higher future contributions to these plans, including unfavorable investment performance, changes in demographics and
increased benefits to participants. However, all surcharges are subject to the collective bargaining process. At this time, we are unable
to determine the amount of additional future contributions, if any, or whether any material adverse effect on our financial condition,
results of operations or liquidity would result from our participation in these plans.
The number of employees covered by our multiemployer plans has remained consistent over the past three years, and there have
been no significant changes that affect the comparability of 2013, 2012 and 2011 contributions. We recognize expense for the
contractually-required contribution for each period, and we recognize a liability for any contributions due and unpaid at the end of a
reporting period.
Multiemployer Pension Plans
The following table outlines our participation in multiemployer pension plans for the periods ended December 31, 2013, 2012
and 2011, and sets forth our calendar year contributions into each plan. The “EIN/Pension Plan Number” column provides the
Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection Act zone status
available in 2013 and 2012 relates to the plans’ two most recent fiscal year-ends. The zone status is based on information that we
received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, plans certified in the red zone are
generally less than 65% funded, plans certified in the orange zone are both less than 80% funded and have an accumulated funding
deficiency or are expected to have a deficiency in any of the next six plan years, plans certified in the yellow zone are less than 80%
funded, and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates
whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is
either pending or has been implemented. As of December 31, 2013, all plans that have either a FIP or RP requirement have had the
respective FIP or RP implemented.
Our collectively-bargained contributions satisfy the requirements of all implemented FIPs and RPs and do not currently require
the payment of any surcharges. In addition, minimum contributions outside of the agreed upon contractual rate are not required. For
the plans detailed in the following table, the expiration date of the associated collective bargaining agreements was July 31, 2013 (see
Note 16), with the exception of the Automotive Industries Pension Plan and the IAM National Pension Fund / National Pension Plan
which both have a July 31, 2014 expiration date. For those plans covered by the collective bargaining agreement that expired on July
31, 2013, we have accrued a liability for the estimated contributions (which are included in the following table) under our new
collective bargaining agreement that has been approved, but not yet ratified (see note 16). For all plans detailed in the following table,
we provided more than 5% of the total plan contributions from all employers for 2013, 2012 and 2011 (as disclosed in the Form 5500
for each respective plan).