United Parcel Service (NYSE:UPS) is the latest company to freeze employee pension plans, according to a report published Tuesday.
A growing list of American corporations are freezing pension benefits or transitioning to 401(k) retirement plans. By November 2016, 38 companies in the Fortune 100 rankings had frozen their defined benefit plans, according to Willis Towers Watson. When pensions are frozen, some of the benefits in those plans stop accruing. Another seven companies had terminated their pensions entirely.
For new hires, 73% of the Fortune 100 only offer defined contribution plans such as 401(k)s. Defined benefit plans accounted for 71% in 2000, based on data from Willis Towers Watson.
The consulting firm also determined that companies in the Willis Towers Watson Pension 100 are funding 81% of their defined benefit plans through the end of 2016, roughly level with the previous two years. The WTW Pension 100 includes sponsors of the largest pension programs among U.S. publicly traded companies.
UPS’s pension plan was 76% funded at the end of 2016, according to its annual report. That’s down from almost 90% three years earlier.
The shipping giant, which employs at least 434,000 people across the globe, is expected on Wednesday to reveal new actions to combat increasing pension obligations, the Wall Street Journal reported. Among those moves, UPS plans to freeze its pension program for non-union employees.
More than 80% of UPS’s employees are located in the U.S. A majority of the workforce is unionized. According to the Wall Street Journal, changes to retirement plans would affect 78,000 management employees.
A UPS spokesperson declined to comment.
UPS has already distributed pension buyouts to roughly 22,000 employees who accepted the offer, which was made last year. UPS has $41.07 billion in pension obligations.