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UPS plans to gradually replace its pension program with a 401(k) system for most of its non-union employees.

The decision by the nation's largest parcel carrier, USA Today reports, would affect approximately 70,000 workers.

The transition will take place over the next five years. Beginning in 2023, current pension enrollees that retire would begin receiving payments from a combination of the pension plan and their 401(k).

(AP Photo)

The company attributed the decision to a growing pension deficit, which stood at nearly $10 billion at the end of last year. UPS' pension fund was enough to cover just 76 percent of the roughly $41 billion owed to retirees and current pension participants.

Numerous other large companies previously phased out pensions in favor of the 401(k) model, which relieves rising pension costs but subjects enrollees to more market risk.

UPS reportedly stopped enrolling new employees in the traditional pension plan last summer, and the latest move could foreshadow contentious negotiations over retirement plan funding when the contracts for UPS' approximately 272,000 union workers expire next year.

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