Consequences for Pension Benefits
One of the most significant differences in benefits between Union Pacific management employees and Union Pacific agreement employees is the UP Pension Plan. Management employees hired prior to January 1, 2018 are eligible to participate in the Pension Plan on the first day of nonagreement employment, and they are automatically vested in the Pension Plan upon 5 years of vesting service.
As you are probably aware, agreement employees are not eligible to participate in the Pension Plan. But did you know that benefits you may have accrued as a management employee under the Pension Plan may be reduced or even eliminated if you move to a position that does not participate in the plan?
The following are examples of potential financial consequences of moving from a UP nonagreement position to a position not participating in the UP Pension.
An age 55 employee with 25 years of service ceases participation in the Pension Plan, but continues working for the railroad in an agreement position until age 60:
| Annual Pension at age 60 if remained in UP Pension Plan | $42,300 |
| Annual Pension at age 60 if returned to agreement at age 55 | $34,880 |
| Annual Net Reduction in UP Pension | $7,420 |
| Present Value of Reduction Over Life Expectancy | $133,298 |
| 18% Reduction |
An age 50 employee with 20 years of service ceases participation in the Pension Plan, but continues working for the railroad in an agreement position until age 60:
| Annual Pension at age 60 if remained in UP Pension Plan | $42,300 |
| Annual Pension at age 60 if returned to agreement at age 50 | $24,400 |
| Annual Net Reduction in UP Pension | $17,900 |
| Present Value of Reduction Over Life Expectancy | $321,567 |
| 42% Reduction |
An age 40 employee with 10 years of service ceases participation in the Pension Plan, but continues working for the railroad in an agreement position until age 60:
| Annual Pension at age 60 if remained in UP Pension Plan | $42,300 |
| Annual Pension at age 60 if returned to agreement at age 40 | $6,520 |
| Annual Net Reduction in UP Pension | $35,780 |
| Present Value of Reduction Over Life Expectancy | $642,774 |
| 85% Reduction |
Detailed information on Union Pacific’s Pension Plan is available in the online Pension Guide. For specific information regarding the Pension Plan terms, please refer to the official plan document. If you were a nonagreement employee as of December 31, 2021, you also have a Benefit Statement which provides estimated pension benefits earned as of January 1, 2022, as well as future estimated monthly benefits assuming you work in a nonagreement position until you retire.
Pension benefits are in addition to 401(k) benefits, which provide a match of your 401(k) contributions of 50 cents to the dollar, up to six percent of your salary.
Management employees hired on or after January 1, 2018 are not eligible for the Pension Plan, but are eligible for the Comprehensive 401(k) which provides a match of your 401(k) contributions dollar-for-dollar, up to six percent of their salary, plus an additional 3% annual contribution based on your salary earned.
Note: The preceding examples are illustrations based on current facts and are not intended as a promise about potential pension benefits (or lack thereof) after a union election. Estimated pension reductions shown are based on average dispatcher pay and do not factor in future pay increases. The specific impact on an individual’s pension benefit would vary based on age, years of service to date, future service, compensation, retirement age, and other factors. The examples above are not intended to imply that any specific benefit will be available for any individual management employee. These examples assume no material changes in the Pension Plan, including the provisions that limit its scope to nonagreement employees. Union Pacific has no present plans to amend or terminate the Pension Plan, but reserves the right to amend or terminate the Plan, in whole or in part, at any time for any reason.