April 24 (Bloomberg) — United Parcel Service Inc. will record a pretax cost of about $1.05 billion this quarter for changes to health-care benefits for union workers under a five-year contract approved by the International Brotherhood of Teamsters.

Under the agreement, Atlanta-based UPS also will make a pretax cash payment of $2.27 billion to multi-employer funds assuming administration of active and post-retirement health- care benefits for Teamster-represented mployees, the company said in a filing today.

UPS is moving its health-care plans from a defined-benefit plan to a defined-contribution plan, with contributions set for the term of the contract. As a result of the change, it will also remove $1.2 billion in post-retirement health obligations from its balance sheet. Future retirees will be the responsibility of the multiemployer plan.

The approval removes uncertainty about whether the contract, covering 253,000 workers would be allowed to take effect. The existing agreement was extended indefinitely after it expired in July as local supplemental contracts were renegotiated and voted on.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.