UPS Retirement Plan. January 1, Summary Plan Description for the Independent Pilots Association

Transcription

1 UPS Retirement Plan January 1, 2008 Summary Plan Description for the Independent Pilots Association

2 Summary Plan Description for the Independent Pilots Association Table of Contents THE UPS RETIREMENT PLAN... 2 The Plan At-A-Glance... 3 Your Plan s Benefit... 4 Early Retirement Postponed Retirement... 6 Suspension of Benefits... 7 Deferred Retirement When You Are Entitled to a Benefit If You Are Eligible to Receive Benefits Under Another Plan Payment Options... 8 If You Die Before Your Benefits Begin If You Die After Your Benefits Begin If You Are Rehired Administrative Information Claims and Appeals Your ERISA Rights Appendix: Terms You Should Know Important Note Effective January 1, 2008, pursuant to the Collective Bargaining Agreement (CBA), the assets and liabilities related to the benefits described in this SPD were transferred from the UPS Pension Plan to the UPS Retirement Plan.

3 UPS Retirement Plan UPS Retirement Plan Summary Plan Description for Independent Pilots Association Effective on January 1, 2008 This booklet is a Summary Plan Description (SPD) of the UPS Retirement Plan (the Plan) for any employees of United Parcel Service Co. (UPS) who: Are not covered under any other defined benefit plan to which any UPS-related company currently makes contributions on their behalf Are represented for purposes of collective bargaining by the Independent Pilots Association Are employed as Crewmembers, and Have at least one Hour of Covered Employment on or after August 31, In addition, this booklet is an SPD of the Plan for: Each Eligible Employee who is accruing Service Credit because of a Plan-approved Disability on or after August 31, 2006 Each Participant who separated from service in 2003 under the Voluntary Separation Package offered by UPS Each former employee who died after December 31, 2003 and before August 31, 2006 while employed in a classification that would have been considered an Eligible Employee, had the Collective Bargaining Agreement ratified on August 31, 2006 been in effect at his death. Where required, words used in the masculine gender shall include the feminine gender. Words used in singular or plural shall be construed as if plural or singular, respectively, where they would so apply. 1

4 Summary Plan Description for the Independent Pilots Association THE UPS RETIREMENT PLAN The UPS Retirement Plan is a defined benefit pension plan which provides Eligible Employees of UPS who are covered by the Collective Bargaining Agreement (CBA) between UPS and the Independent Pilots Association (IPA) with a monthly benefit at retirement that is based on years of service, Final Average Earnings (FAE), and rank. The Plan is considered qualified under the Internal Revenue Code and is subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) as amended. About This Booklet This booklet applies to Eligible Employees who earn at least one Hour of Covered Employment with UPS on or after August 31, If you are presently receiving benefits or are entitled to a benefit from the Plan, but are not credited with such Hour of Covered Employment on or after August 31, 2006, the SPD in effect when you were last eligible for benefits under the UPS Pension Plan describes the provisions that apply to you. In describing the Plan, we have tried to avoid using the technical language of the actual Plan document. Capitalized terms, (e.g., Eligible Employees below) are defined either the first time used in the SPD or described in the Terms You Should Know section. If there is a difference between this summary and the Plan document, the Plan document will control. Eligible Employees You are eligible to participate in the Plan benefits described in this SPD if you: Are not covered under any other defined benefit plan to which any UPS-related company currently makes contributions on your behalf Are represented for purposes of collective bargaining by the Independent Pilots Association Are employed as Crewmembers, and Have at least one Hour of Covered Employment on or after August 31, An Eligible Employee also includes: Each Eligible Employee who is accruing Service Credit because of a Plan-approved Disability on or after August 31, 2006 Each Participant who separated from service in 2003 under the Voluntary Separation Package offered by UPS Each former employee who died after December 31, 2003 and before August 31, 2006 while employed in a classification that would have been considered an Eligible Employee, had the CBA ratified on August 31, 2006 been in effect at his death You are not eligible to accrue benefits described in this SPD if you are covered by any other qualified pension plan to which UPS currently makes contributions on your behalf (other than the UPS/IPA Defined Contribution Money Purchase Pension Plan and UPS/IPA 401(k) Savings Plan). Individuals who perform services for UPS on a contract basis, or under a leasing or temporary services arrangement, are not eligible to participate in the Plan. When You Become a Participant You become a Participant in the Plan on January 1 or July 1, whichever is earlier, after you have reached age 21 and: Have earned at least 750 Hours of Service in the 12-month period beginning with your hire date; or Earned at least 750 Hours of Service in any subsequent calendar year. Additionally, you must be an Eligible Employee on January 1 or July 1 when you have satisfied these participation requirements. 2

5 UPS Retirement Plan The Plan At-A-Glance Here are some key features of the Plan: The UPS Retirement Plan s retirement benefits are paid entirely by UPS. Therefore, employees do not contribute to the Plan. The amount of your retirement benefit depends on several factors, including your age when you retire, the form in which your benefit is paid, your years of Service Credit, your rank, and your Final Average Earnings (FAE). The amount of your monthly benefit is based on the years of Service Credit (up to a maximum of 30) you earn. You earn a full year of Service Credit for each calendar year in which you accumulate at least 813 Hours of Covered Employment. You earn a partial year of Service Credit if you accumulate less than 813 Hours of Covered Employment, but at least 81 Hours of Covered Employment. Final Average Earnings generally means the average of your annual Compensation in the highest-paid five full calendar years (or the actual number of your full calendar years of employment if less than five) out of the last 10 calendar years (or the actual number of your calendar years of Covered Employment if less than 10) that precede the calendar year in which you retire or terminate employment with UPS and all related employers. A Participant earns the vested (that is, non-forfeitable) right to his Plan benefit as soon as he earns at least one year of Vesting Credit or reaches his Normal Retirement Date. A Participant earns a year of Vesting Credit for each calendar year in which he accumulates at least 750 Hours of Service. Typically, your Normal Retirement Date is the first day of the month on or after the date you reach age 60, provided you have completed one year of Vesting Credit. You can, however, choose to postpone your retirement by working with UPS or a related employer past your Normal Retirement Date; but your normal retirement benefit will be suspended and will not be adjusted to reflect postponed retirement. You may retire earlier than your Normal Retirement Date and begin to receive a reduced monthly retirement benefit as early as age 55, provided you have earned at least five years of Vesting Credit. If you die before retirement and have at least one year of Vesting Credit, your surviving spouse may receive a monthly benefit from the Plan beginning at the time you would have been eligible to retire. If you die without a surviving spouse, there is no other benefit payable from the Plan. Your UPS Retirement Plan benefit, as described in the next section, may be calculated using two formulas: the FAE formula and, for certain participants, the fixed formula. 3

6 Summary Plan Description for the Independent Pilots Association Your Plan s Benefit Your FAE benefit is based on your age when you retire or terminate, your years of Service Credit and FAE. FAE Formula at Normal Retirement Date (For All Participants) At your Normal Retirement Date, your benefit is calculated as follows: 1.0% x FAE Times Years (full and fractional) of Service Credit (not to exceed 30 years) Divided by 12 Equals monthly Single Life Only Annuity at Normal Retirement Date Fixed Formula at Normal Retirement Date (Only for Participants who (i) will reach Normal Retirement Age on or before December 31, 2013, (ii) separated from service in 2003 pursuant to the Voluntary Separation Package offered by UPS), or (iii) for others if conditions under the IPA/UPS Implementation Team Decision #0802 apply. Your monthly Single Life Only Annuity payable at your Normal Retirement Date will be the greater of either: Your FAE benefit (described previously) or The Fixed Formula Dollar Amount (described below) At your Normal Retirement Date, your Fixed Formula benefit is calculated as follows: Fixed Formula Dollar Amount (described in the following Fixed Formula Dollar Amount table) Times Years (full and fractional) of Service Credit (not to exceed 30 years) Divided by 12 Equals monthly Single Life Only Annuity at Normal Retirement Date 4

7 UPS Retirement Plan Fixed Formula Dollar Amount(s) Highest Rank Achieved During Covered Employment Amount Captain or Bypassed Captain $3,000 First Officer, Professional Flight Engineer or Bypassed Crewmember $2,400 Second Officer $2,100 Example 1: Normal Retirement Benefit for Participants Reaching Normal Retirement Age by December 31, 2013 Kelly Brown was born December 31, 1950 and hired by UPS on January 4, 1989 as a Second Officer covered by the CBA between UPS and the IPA. He retires from UPS as a Captain on his Normal Retirement Date of January 1, Kelly has 22 years of Service Credit when he retires and Final Average Earnings of $230,000. His monthly benefit is calculated as: FAE Formula 1% x $230,000 (FAE) $2, Multiplied by 22 (years of UPS Service Credit) x 22 Divided by Monthly Normal Retirement Benefit* $4,216.67* * Calculated as a Single Life Only Annuity at Normal Retirement Date. Fixed Formula $3,000 (Captain rank) $3, Multiplied by 22 (years of UPS Service Credit) x 22 Divided by Monthly Normal Retirement Benefit* $5,500.00* *Calculated as a Single Life Only Annuity at Normal Retirement Date Comparison of Benefits Under Both Formulas at Normal Retirement Date FAE Formula $4, per month Fixed Formula $5, per month Monthly Benefit Payable as a Single Life Only Annuity at Normal Retirement Date Equals Larger of FAE or Fixed Formula $5, per month Fixed formulas or Fixed Formula 5

8 Summary Plan Description for the Independent Pilots Association Early Retirement Because the Plan is designed to provide benefits beginning at your Normal Retirement Date, benefits paid upon early retirement will be actuarially reduced to reflect the longer period of time over which they will be paid. You may begin your pension payments at any time after reaching your Early Retirement Date, which is the first day of the month on which you are at least age 55 and you have at least five years of Vesting Credit. You may choose to begin receiving an early retirement benefit at any time on or after your Early Retirement Date and before your Normal Retirement Date. Your benefit will be actuarially reduced for benefits beginning before your Normal Retirement Date. The reduction will be based on the period of time between the commencement of your benefit and the date you reach Normal Retirement Age (the later of reaching age 60 or earning one year of Vesting Credit). Example 2: Early Retirement Benefit Joe Brown was born December 31, 1955 and hired by UPS on January 20, 1991 as a First Officer covered by the CBA between UPS and the IPA. He retires from UPS as a Captain on his Early Retirement Date of January 1, Joe has 20 years of Service Credit when he retires and Final Average Earnings of $205,000. Because Joe will not reach his Normal Retirement Date by December 31, 2013, he is only eligible for the FAE Formula, not the Fixed Formula. His monthly benefit is calculated as: FAE Formula 1% x $205,000 (FAE) $2, Multiplied by 20 (years of UPS Service Credit) x 20 Divided by Monthly Normal Retirement Benefit $3, Multiplied by Actuarial Equivalent factor x Monthly Early Retirement Benefit* $2,152.84* * Calculated as a Single Life Only Annuity at Early Retirement Date Postponed Retirement You can postpone retirement by continuing to work for UPS or a related employer beyond your Normal Retirement Date. If you do so while in Covered Employment, you ll continue to earn Vesting Credit and Service Credit and your FAE may continue to increase. Your Postponed Retirement Date is the first day of the calendar month coincident with or next following your retirement, if that retirement date is later than your Normal Retirement Date. Your benefit will be paid when you actually retire, but it will never be less than the benefit you are eligible to receive on your Early Retirement Date or your Normal Retirement Date. 6

9 UPS Retirement Plan Suspension of Benefits If a Participant entitled to receive benefits should (1) return to Covered Employment or (2) remain in Covered Employment after attaining age 60, the payment of benefits to such a Participant shall be suspended for the period in which the Participant remains employed. Benefit payments will be resumed no later than the first day of the third calendar month after the month in which the Participant ceases to be employed, provided the Participant has informed the Plan Administrator that he has ceased such employment. Deferred Retirement If you stop working for UPS before you reach Normal Retirement Date and you have at least one year of Vesting Credit, you will be entitled to receive a Deferred Retirement Benefit from this Plan at Normal Retirement Date. You must have five or more years of Vesting Credit to begin receiving benefits as early as age 55. Benefits that begin before your Normal Retirement Date are actuarially reduced because they are expected to be paid over a longer period of time. Note: If the present value of your vested benefit is less than $1,000 when you terminate employment with UPS, you will automatically receive your benefit in a single lump sum payment. No further benefit will be paid. When You Are Entitled to a Benefit You are entitled to a benefit on your Normal Retirement Date after you complete one year of Vesting Credit. You earn a year of Vesting Credit for each year you complete at least 750 Hours of Service. If You Are Eligible to Receive Benefits Under Another Plan If the same period of employment is recognized both in the Plan as Service Credit, and in another retirement plan to which UPS or a related employer has contributed, your benefit from the Plan will be reduced by the amount of any benefits you receive from the other retirement plan(s) (not including the UPS/IPA Defined Contribution Money Purchase Pension Plan and the UPS/IPA 401(k) Savings Plan). If you receive benefits from another plan at a different age or in a different form of payment than your benefit from the Plan, the reduction will be based on the actuarial value of the other benefit, determined at the time you start receiving benefits from the Plan. The benefit reduction will be applied, even if you are not yet receiving benefits from the other retirement plan because that plan has a later retirement date or you have not elected to begin benefits. If both you and UPS contributed to the other plan, then your Plan benefit will be reduced only by the portion of that benefit that is attributable to contributions from UPS or a related employer. 7

10 Summary Plan Description for the Independent Pilots Association Payment Options Normal and Optional Payment Forms The Plan s normal form of payment is a Single Life Only Annuity if you are not married and a Qualified Joint and 50% Survivor Annuity if you are married. If you are married and elect a payment form other than the Qualified Joint and Survivor Annuity, your spouse must agree to your choice of payment form, as well as to the beneficiary designation. Your spouse s agreement must be in writing and be witnessed by a notary public. The Plan s normal and optional payment forms are described in the following information. Single Life Only Annuity The Single Life Only Annuity pays you a full monthly benefit for your lifetime, but no benefits are available to your spouse or any beneficiary after your death. If you are married and elect this form of payment, your spouse must agree to this form. Your spouse s agreement must be in writing and be witnessed by a notary public. Qualified Joint and Survivor Annuity The Qualified Joint and Survivor Annuity pays you a reduced monthly benefit during your lifetime that is less than the Single Life Only Annuity, so that upon your death, your spouse will receive continuing monthly benefits. Your spouse s monthly benefit equals 50% or 75% of the reduced monthly benefit that you receive during your lifetime. If your spouse dies after your benefit payments begin, the reduced benefit you are receiving will continue without change during your lifetime, and no payments will be made after your death. Your reduced benefit under the Qualified Joint and Survivor Annuity will be of approximately the same value as the Single Life Only Annuity, taking into account the longer period over which the Qualified Joint and Survivor Annuity is expected to be paid. Joint and 50%, 66 2/3%, 75% and 100% Survivor Annuity The Joint and 50%, 66 2/3%, 75% and 100% Survivor Annuity pays you a reduced monthly benefit during your lifetime that is less than the Single Life Only Annuity, so that upon your death, your beneficiary will receive continuing monthly benefits. Your beneficiary s monthly benefit equals 50%, 66 2/3%, 75% or 100% of the reduced monthly benefit that you receive during your lifetime. If your beneficiary dies after your benefit payments begin, the reduced benefit you are receiving will continue without change during your lifetime, and no payments will be made after your death. Your reduced benefit under the Joint and 50%, 66 2/3%, 75% or 100% Survivor Annuity will be of approximately the same value as the Single Life Only Annuity, taking into account the longer period over which the Joint and 50%, 66 2/3%, 75% and 100% Survivor Annuity is expected to be paid. You may not elect this form of payment if you have a non-spousal beneficiary who is younger than you by more than the maximum number of years (based on your ages on your birth dates in the calendar year in which benefit payments begin), shown in the following table: Annuity Form Joint and 100% Survivor Annuity Joint and 75% Survivor Annuity Joint and 66 2/3% Survivor Annuity Maximum Number of Years* Difference in Ages 10 years 19 years 25 years * Based on ages of participant and non-spouse beneficiary on their birth dates in the calendar year in which benefit payments begin. 8

11 UPS Retirement Plan If you are married and elect this form of payment with a beneficiary other than your spouse, your spouse must agree to this form, as well as to the beneficiary designation. Your spouse s agreement must be in writing and be witnessed by a notary public. Single Life Annuity With 120-, 180- or 240-Month Guarantee The Single Life Annuity With 120-, 180- or 240-Month Guarantee pays you a reduced monthly benefit for your life with a guarantee of payments for periods of 10, 15 or 20 years. If you die before the 120-, 180- or 240-month guarantee period ends, your beneficiary continues to receive the same benefit amount for the remainder of the guarantee period. If you live beyond the guarantee period, you continue to receive payments for your lifetime. However, since you outlived the guarantee period, your beneficiary will not receive a benefit after your death. Your reduced benefit under the Single Life Annuity With 120-, 180- or 240-Month Guarantee will be of approximately the same value as the Single Life Only Annuity. If you are married and elect this form, your spouse must agree to this form, as well as to the beneficiary designation. Your spouse s agreement must be in writing and be witnessed by a notary public. Level Income Benefit You may elect to receive a Level Income Benefit as an optional form of payment prior to your Normal Retirement Date. The purpose of this benefit is to provide approximately level monthly payments to you when taking into consideration the Plan benefit and benefits you may be eligible to receive from Social Security. You may choose either age 62 or age 65 as the date you want your benefit leveled. Under this option, you receive a larger monthly benefit for each month prior to the month in which you reach the selected leveling age, and a reduced amount for months after that age. No benefits are payable after your death. Actual application for and receipt of your Social Security benefits is independent of the Plan s calculation of your benefit under this option. If you choose leveling at age 62, and later decide not to apply for Social Security benefits at age 62, there is no change to the benefits already calculated by the Plan. Note that, based on Social Security rules, it is possible there may be a gap between when your retirement benefit is reduced and when you receive your first Social Security check. You should plan accordingly. Your benefit under the Level Income Benefit option will be approximately the same value as the Single Life Only Annuity. If you are married and elect this form, your spouse must agree to this form. Your spouse s agreement must be in writing and be witnessed by a notary public. UPS cannot offer advice to you regarding the form of payment you should select from the UPS Retirement Plan. Therefore, if you have questions regarding which form of payment is best for your personal circumstances, you should seek advice from a professional advisor (e.g., legal counsel, tax advisor or investment advisor). 9

12 Summary Plan Description for the Independent Pilots Association If You Die Before Your Benefits Begin If you die after you become vested in your Plan benefit or die while actively employed at UPS but before your retirement benefit begins, your surviving spouse (determined as of the date of your death) may receive a monthly benefit from the Plan. Your spouse will be eligible to receive 50% of the benefit you were entitled to receive under the Qualified Joint and Survivor Annuity as if you had terminated employment on the date of your death or actual termination, if earlier. Your spouse s benefit will be based on the Benefit Credit you have earned as of your date of death. If the present value of the benefit payable to your surviving spouse is less than $1,000 when you die, your surviving spouse will automatically receive a lump sum payment of that benefit. When Payments Can Begin Payment of a surviving spouse s benefit may begin on the first day of the month following the date you would have first become eligible for retirement, including Early Retirement, or, if later, the date of your death provided that timely application is made. However, your surviving spouse has the option to defer payment of the monthly benefit but not later than the date that would have been your Normal Retirement Date. If You Die After Your Benefits Begin Remember, if you die after your monthly retirement benefits have started, benefits will be paid to your surviving spouse or other beneficiary only if the payment form you elected provides for such benefits. 10

13 UPS Retirement Plan If You Are Rehired If you leave employment with UPS with a vested benefit and are later rehired as an Eligible Employee, your participation will automatically resume and your prior Service Credit will be restored. However, if you received a lump sum payment when you left, your prior Service Credit will be restored only if you repay that amount with interest within five years of your reemployment. If you leave employment with UPS before you are vested in your Plan benefit and are rehired, the service that you completed before the Break in Service will be restored if the number of consecutive Breaks in Service is less than six. If the number of your consecutive Breaks in Service is six or more, your prior service will be disregarded. If you return to work in Covered Employment after you retire, benefit payments will be suspended while you remain employed in Covered Employment (see the Suspension of Benefits section on page 7). Applying for Plan Benefits You (or your surviving spouse or other beneficiary in the event of your death) must apply for your retirement benefits before payments can begin. If you are an active employee, you may contact your district Human Resources department to request the proper forms. Complete the forms and send them to the Plan Administrator. Your district Human Resources department can assist you with this process. If you are not an active employee, contact the Plan Administrator to obtain the proper forms. You will be asked to provide birth certificates for you and your spouse, marriage certificate or other documents to authenticate your age and marital status. You should apply at least 60 days, but no earlier than 90 days, before the date you expect to retire. Income Tax Withholding Benefits paid from the Plan are subject to federal income tax withholding and, where applicable, state income tax withholding. The Plan is obligated to withhold federal and applicable state income tax from any benefits it pays unless you re eligible to elect not to have taxes withheld. Federal law prescribes the amount of tax to be withheld from your benefit payments. The Plan will notify you of its obligation to withhold federal income taxes. The Plan will also advise participants and beneficiaries how they can choose to have taxes withheld. This notification will be in writing and will be sent with the required information in accordance with applicable tax regulations. If the present value of your Plan benefit is paid to you in a single lump sum (i.e., present value is less than $1,000), you ll receive notice of the Plan s obligation to withhold 20% from your distribution for federal income taxes. However, you may avoid federal income tax withholding if you direct the Plan to transfer all, or a portion, of your lump sum distribution (called a direct rollover) directly to certain kinds of accounts or plans, including: Certain individual retirement accounts (IRAs) or annuities, An annuity plan as described in Internal Revenue Code Section 403(a) or 403(b) or A qualified employer-sponsored retirement plan that accepts rollover contributions. Your rollover election must be timely received by the Plan before the date of your lump sum distribution. 11

14 Summary Plan Description for the Independent Pilots Association Correction of Benefit Payments and Recovery of Overpayments If a benefit is paid by the Plan and it is later determined that the benefit should not have been paid or that the benefit was overpaid (due to a mistake in benefit calculations or other errors), the Plan Administrator will take action to correct the error and take necessary action to recover any overpayments, including deducting the amount from future benefit payments or taking legal action to recover overpayments. The time frame during which the Plan may take action is unlimited. However, if a mistake or other error results in underpayment of a benefit amount, the Plan will recalculate the benefit and pay the amount due, as soon as administratively possible. No interest will be paid on any amounts owed to you. When Benefits Are Not Payable There are some occasions when benefits may not be payable from the Plan, including circumstances when you: Leave UPS with less than one year of Vesting Credit Fail to make a timely, accurate and complete request for benefits Do not keep the Plan Administrator informed of your proper address and you cannot be contacted. Incapacity If the Plan Administrator is informed that a physical or mental ailment prevents you from handling your own financial affairs, your benefits may be paid to your legal guardian or representative. Benefits Cannot Be Assigned Benefits payable by the Plan are for the sole use of Plan participants and their beneficiaries. No one has the right to transfer, withdraw or assign the benefits payable to any other individual(s). However, benefits may be paid according to a valid Qualified Domestic Relations Order (QDRO), if properly served on the Plan. Qualified Domestic Relations Order A domestic relations order or judgment from a state court or agency often may assign all or a portion of a participant s Plan benefits to a former spouse, child or other dependent. If such an order meets certain statutory and Plan requirements, that order will be approved by the Plan Administrator as a valid QDRO. To obtain a copy of the procedures for splitting a retirement benefit through a QDRO and a copy of the Plan s sample QDRO language, contact the Plan Administrator at (800) Protection of Your Retirement Plan Benefit During your employment with UPS or a related employer, you may participate in one or more qualified retirement plans other than the Plan. You should know that your benefit from the Plan is protected even if you begin work in a classification or job status that is covered by another plan. The Plan provides that you ll receive credit for a year of Vesting Credit for your work as an employee of UPS or a related employer, even if you do not work in a job classification for which benefits are provided by the Plan. 12

15 UPS Retirement Plan Administrative Information This section contains information about the administration and funding of the UPS Retirement Plan, certain rights that you have as a Plan participant and contacts you may need in certain situations. You may not need this information on a dayto-day basis, but you should read this section so that you understand your rights. If you have any questions about this information, please contact the Plan Administrator at the street address, address, or telephone number below: UPS Retirement Plan Administrative Committee 55 Glenlake Parkway NE Atlanta, GA (800) Retirementdept@ups.com Official Plan Name The Plan s legal name is the UPS Retirement Plan. Type of Plan The Plan is a defined benefit retirement plan. Plan Sponsor The Employer Identification Number of the Plan Sponsor, United Parcel Service of America, Inc. is The Plan Number is 001. Plan Trustee The Plan Trustee, which is appointed by the Board of Directors of United Parcel Service of America, Inc., may be contacted by writing: BNY Mellon Trust of New England, N.A. (as Trustee for the UPS Retirement Plan Trust) 135 Santali Highway, AIM # Everett, MA Service of legal process may be made on the Plan Trustee or the Plan Administrator. Plan Funding All contributions are made by the UPS participating companies. The contributions are actuarially determined. Contributions are made to a trust. These contributions are held and invested by BNY Mellon Trust of New England, N. A. pursuant to a trust agreement with United Parcel Service of America, Inc. Plan Year The Plan s fiscal year is January 1 through December

16 Summary Plan Description for the Independent Pilots Association Plan Administrator The administration of the UPS Retirement Plan will be under the supervision of the Plan Administrator. The Plan Administrator is: UPS Retirement Plan Administrative Committee 55 Glenlake Parkway, NE Atlanta, GA (800) The Plan Administrator will have the exclusive discretion to determine all matters relating to eligibility, coverage and benefits under the UPS Retirement Plan. The Plan Administrator will also have the exclusive discretion to determine all matters relating to interpretation and operation of the UPS Retirement Plan. Decisions by the Plan Administrator, or any authorized delegate, will be conclusive and binding on all parties. Plan Participation Your participation in the Plan does not guarantee your continued employment with UPS or a related company. If you quit, are discharged or laid off, the Plan does not give you a right to any benefit or interest in the Plan except as specifically provided in the Plan document. Certain Insured Benefits Your retirement benefits under the Plan are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency. If the Plan terminates (ends) without enough money to pay all benefits, the PBGC will step in to pay a portion of your retirement benefits. Most people receive all of the retirement benefits they would have received under their plan, but some people may lose certain benefits. The PBGC guarantee generally covers: 1) Normal and early retirement benefits 2) Certain benefits for your survivors. The PBGC guarantee generally does not cover: 1) Benefits greater than the maximum guaranteed amount set by law for the year in which the Plan terminates 2) Some or all of benefit increases and new benefits based on Plan provisions that have been in place for fewer than five years at the time the Plan terminates 3) Benefits that are not vested because you have not worked long enough for the company 4) Benefits for which you have not met all of the requirements at the time the Plan terminates 5) Certain early retirement payments (such as supplemental benefits that stop when you become eligible for Social Security) that result in an early retirement monthly benefit greater than your monthly benefit at the Plan s Normal Retirement Date and 6) Non-retirement benefits, such as health insurance, life insurance, certain death benefits, vacation pay and severance pay. Even if certain of your benefits are not guaranteed, you still may receive some of those benefits from the PBGC depending on how much money your Plan has and on how much the PBGC collects from employers. 14

17 UPS Retirement Plan For more information about the PBGC and the benefits it guarantees, ask your Plan Administrator or contact the PBGC Technical Assistance Division, 1200 K Street N.W., Suite 930, Washington, D.C or call (202) (not a toll-free number). TTY/TDD users may call the federal relay service toll-free at (800) and ask to be connected to (202) Additional information about the PBGC pension insurance program is available online through the PBGC Web site at Top-Heavy Rules A top-heavy plan means a plan that provides more than 60% of its benefits for key employees. Both top-heavy and key are terms defined by the Internal Revenue Service. In the unlikely event the UPS Retirement Plan becomes a top-heavy plan, you will be informed, and your benefits may be modified to provide more rapid vesting and special minimum benefits. Maximum Benefits Government regulations require the Plan to have maximum benefit limitations that apply to certain highly paid employees. For an employee who retired in 2011 at age 60, the limit on an annual Single Life Only Annuity payable from the Plan is $195,000, or your average compensation for the period of consecutive calendar years (no more than three years) when you participated in the Plan and had the highest compensation. Limitations also apply to other forms of benefit payment. A lower limit applies to an employee who retires at a younger age. Plan Amendment and Termination UPS expects and intends to continue the UPS Retirement Plan indefinitely. But because future conditions can never be fully anticipated, UPS reserves the right at any time to amend, modify, suspend or terminate the Plan in whole or in part (other than with respect to terms and conditions subject to collective bargaining). A Plan change may transfer Plan assets and obligations to another Plan, or split the Plan into two or more parts. If the Plan is amended or merged with another plan, your Accrued Benefit will be at least equal to what you had immediately before the amendment or merger. In the unlikely event that the Plan is terminated or if there is a partial termination affecting you, you will immediately be 100% vested as of the Plan termination date subject to certain limitations. In the case of a complete plan termination, benefits will then be paid according to law. No money in the Plan s trust fund can be returned to the company until all required benefits have been paid. The amount of your benefit will depend on Plan assets, the terms of the Plan, whether the Plan is 100% funded and the benefit guarantee of the PBGC. Military Leaves of Absence The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) provides certain provisions for employees on military duty. You may have additional protections under state laws. If you leave work temporarily for military duty and you are entitled to rights under USERRA, your absence will not be considered a Break in Service for the purposes of the UPS Retirement Plan. If you are reemployed by UPS after your military duty ends and you are entitled to rights under USERRA, you are entitled to all seniority and other rights and benefits you would have received had you not been on leave. Continuation of Participation While on a Family and Medical Leave (FMLA) Under the federal Family and Medical Leave Act (FMLA), if you meet eligible service requirements, you are entitled to take up to 12 weeks of leave for certain family and medical situations. An absence under the FMLA will not constitute a Break in Service for purposes of this Plan. You will continue to earn years of Vesting Credit for vesting purposes during your leave. 15

18 Summary Plan Description for the Independent Pilots Association Claims and Appeals The following claims filing and appeals procedures apply to the Plan. As used in this section, you means the participant or the participant s surviving spouse or other beneficiary. Filing Initial Claims If you have any grievance, complaint or claim concerning any aspect of the operation or administration of the Plan or Trust including a claim for Plan benefits, you must file the appropriate forms with the Plan Administrator. All forms required to take any action under the Plan may be obtained by calling the Plan Administrator toll-free at (800) Contact Information for Claims Filing and Appeals The contact information for filing a claim and appealing an adverse benefit determination is: UPS Retirement Plan Administrative Committee 55 Glenlake Parkway, NE Atlanta, GA (800) Time Frame for Claim Determinations The Plan Administrator will notify you of its adverse determination within a reasonable period of time, but not later than 90 days after receiving the claim. This 90-day period may be extended for up to an additional 30 days, if the Plan Administrator provides you with written notice of the special circumstances requiring the extension of time to process the claim and the date by which the Plan expects to render a decision before the initial 90-day period expires. If a decision cannot be made within the initial 30-day extension, the period may be further extended for up to an additional 30 days, provided that the Plan Administrator provides you with written notice of the circumstances requiring the extension and the date as of which it expects to make a decision prior to the expiration of the initial 30-day extension. If You Receive an Adverse Determination The Plan Administrator will provide you with notification of any adverse determination, which will set forth: The specific reason(s) for the adverse determination Reference to the specific Plan provisions on which the determination is based A description of any additional material or information that is necessary for you to perfect the claim and an explanation of why that material or information is necessary and A description of the Plan s appeals procedures and time limits applicable to such procedures, including a statement of your right to bring civil action under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, after an 16

19 UPS Retirement Plan adverse determination on appeal. Procedures for Appealing an Adverse Determination You, or your authorized representative, have 60 days following the receipt of a notification of an adverse determination within which to appeal the determination. You have the right to: Submit written comments, documents, records and other information relating to your claim A review that takes into account all comments, documents, records and other information submitted by you or your representatives relating to the claim, regardless of whether such information was submitted or considered in the initial determination Request, free of charge, reasonable access to and copies of all documents, records and other information relevant to your claim. For this purpose, a document, record or other information is treated as relevant to your claim if it: Was relied upon in making the adverse determination Was submitted, considered or generated in the course of making the determination, regardless of whether such document, record or other information was relied upon in making the determination or Demonstrates compliance with the administrative processes and safeguards required in making the determination. The Plan Administrator will review appeals of adverse determinations based on its regular meeting schedule. Generally, the review will occur at the first regular meeting that immediately follows the Plan s receipt of a request for review, unless the request for review is received within 30 days of that meeting date. In that case, the review will occur at the second regular meeting following the Plan s receipt of the request for review. If an extension of time for review is required because of special circumstances, the Plan Administrator will provide you with written notice of the extension, describing the special circumstances and the date on which the determination will be made, prior to the commencement of the extension. A determination will be made no later than the third regular meeting following the Plan s receipt of the request for review. The Plan Administrator will notify you of the determination as soon as possible. In the event an extension is necessary due to your failure to submit necessary information, the Plan s time frame for making a determination on a review stops on the date the Plan Administrator sends you the extension notification until the date you respond to the request for additional information. The Plan Administrator s notice of an adverse benefit determination on appeal will contain all of the following information: The specific reason(s) for the adverse determination Reference to the specific Plan provisions on which the determination is based A statement that you or your representative are entitled to copies of all documents, records and other information relevant to your claim and A statement of your right to bring action under ERISA. You must exhaust the Plan s claims and appeals procedures before filing any lawsuit in court. Any legal action regarding a claim for benefits under the Plan must be filed within one year of the final decision on appeal. 17

20 Summary Plan Description for the Independent Pilots Association Your ERISA Rights As a participant in the UPS Retirement Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA), as amended. ERISA provides that all Plan participants shall be entitled to: Examine, without charge, at the Plan Administrator s office and at other specified locations, such as work sites and union halls, all documents governing the Plan, including insurance contracts and collective bargaining agreements and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements and copies of the latest annual report (Form 5500 Series) and an updated Summary Plan Description. The Plan Administrator may assess a reasonable charge for the copies. Receive a summary of the Plan s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report. Obtain a statement telling you whether you have a right to receive a retirement benefit at your Normal Retirement Date and if so, what your benefits would be at your Normal Retirement Date if you stop working under the Plan now. If you do not have a right to a retirement benefit, the statement will tell you how many more years you have to work to get a right to a retirement benefit. This statement must be requested in writing and is not required to be given more than once every 12 months. The Plan must provide the statement free of charge. In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. If your claim for a retirement benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge and to appeal any denial, all within certain time schedules. 18

21 UPS Retirement Plan No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a retirement benefit or exercising your rights under ERISA. Under ERISA, there are steps you can take to enforce these rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a Federal court after you have exhausted the Plan s claims and appeals procedures. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials are not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court, but only after you have exhausted the Plan s claims and appeals procedures. In addition, if you disagree with the Plan s decision, or lack thereof, concerning the qualified status of a domestic relations order, you may file suit in Federal court provided you have exhausted all appeals under the Plan. If it should happen that Plan fiduciaries misuse the Plan s money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court after you have exhausted the Plan s claims and appeals procedures. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. 19

22 Summary Plan Description for the Independent Pilots Association Appendix: Terms You Should Know It s important that you fully understand these terms in order to understand your benefits. These terms are capitalized throughout this SPD. Accrued Benefit is the monthly benefit calculated as a Single Life Only Annuity at Normal Retirement Date, based on your years of Service Credit, rank, and your Final Average Earnings (FAE). Actuarial Equivalent generally is a benefit of equivalent value calculated using the 1983 Group Annuity Mortality Table (male table for participants, female table for beneficiaries) and 7% interest rate. Different mortality tables and interest rates may be used if required by law. Annuity is a payment of a fixed sum of money at regular intervals. In the case of the UPS Retirement Plan, benefits can be taken as one of several monthly annuity options when you leave UPS. See page 8 for descriptions of these options. Break in Service means, for a participant with no vested interest, a calendar year in which you are credited with no more than 501 Hours of Service. Bypassed Captain is a crew member who has been bypassed for a Captain s position and is on the list of bypassed Captains as maintained by UPS. Bypassed Crewmember is a Second Officer who has been bypassed for a First Officer s position and is on the list of bypassed First Officers as maintained by UPS. Captain means a pilot who is in command of the aircraft and its crew while on duty, who is responsible for the manipulation of, or who manipulates the controls of the aircraft, including take-off and landing of such aircraft, and who is properly qualified to serve as such, and holds a current effective airman s certificate authorizing him to serve as such pilot. Collective Bargaining Agreement (CBA) is a collective bargaining agreement(s) identified on pages 1 and 2 of this SPD. Compensation generally means your W-2 income, including amounts you contribute as elective deferrals to a Code Section 401(k), 125, 129 and/or 402(h) Plan (such as the Flexible Spending Accounts available under the UPS Crewmembers Benefit Package). Compensation does not include items such as: Per diem payments Grievance awards, other than the following: Guarantees or bid line credits Premium pay awards for revisions Awards of late arrival pay Workers compensation payments Foreign service differentials Relocation payments or reimbursements The value of fringe benefits and The value of contributions that UPS makes to its various benefit programs. 20