FedEx - Other Retirement Improvement Options
#11
Gets Weekends Off
Joined APC: Oct 2015
Position: Gear slinger
Posts: 2,885
#12
#13
Line Holder
Joined APC: Jul 2007
Position: B767/CPT
Posts: 56
Unfortunately many are missing the point. This is about securing gains for those retiring under this contract. End of discussion. The only thing left to discuss is who pays for those gains.
Fedex would never consider increasing benefits between contracts, unless it benefits them either monetarily or by securing operational stability. What if we as a pilot group simply said to Fedex, please give more to those retiring under this contract. Nothing for anyone else. We would be laughed out of the room.
So how are gains secured. By releasing the company from their obligated debt, yet to be incurred, secured by this contract. These gains are significant and require Fedex to make substantial payments into the retirement fund to fully fund the retirement obligation or pay significantly increased penalties for underfunding. Second, by assuming risks now totally incurred by the company. Third, by creating a Variable Plan, releasing them of any penalty payments due to underfunding. Such a plan would most likely have a hurdle rate in excess of 5.5% to preclude costs and penalties associated with a hybrid plan. That, in addition to lost capital in the form of total fund management costs, estimated at between 2%-4%, requires high rates of return for the plan to meet long term payout projections. Certain stabilizing mechanisms can be put in place to reduce fund volatility. However, those cost money, and who pays these expenses?
If this was just about increasing retirement benefits, we could explore avenues already mentioned in many of the previous posts on retirement. Unfortunately, that does not address the real reason we are pursuing retirement changes at this specific time.
Fedex would never consider increasing benefits between contracts, unless it benefits them either monetarily or by securing operational stability. What if we as a pilot group simply said to Fedex, please give more to those retiring under this contract. Nothing for anyone else. We would be laughed out of the room.
So how are gains secured. By releasing the company from their obligated debt, yet to be incurred, secured by this contract. These gains are significant and require Fedex to make substantial payments into the retirement fund to fully fund the retirement obligation or pay significantly increased penalties for underfunding. Second, by assuming risks now totally incurred by the company. Third, by creating a Variable Plan, releasing them of any penalty payments due to underfunding. Such a plan would most likely have a hurdle rate in excess of 5.5% to preclude costs and penalties associated with a hybrid plan. That, in addition to lost capital in the form of total fund management costs, estimated at between 2%-4%, requires high rates of return for the plan to meet long term payout projections. Certain stabilizing mechanisms can be put in place to reduce fund volatility. However, those cost money, and who pays these expenses?
If this was just about increasing retirement benefits, we could explore avenues already mentioned in many of the previous posts on retirement. Unfortunately, that does not address the real reason we are pursuing retirement changes at this specific time.
#14
Gets Weekends Off
Joined APC: Aug 2006
Posts: 1,820
Also, if there was in fact a 50% downturn, that 9 billion would be 4.5 billion, or 25% lower than the 6 billion dollar amount required to make full payouts.
If that is what the smartest guy in the union is selling, we have a problem.
#17
And should this go to vote, I predict it passes! And I bet with a bigger margin than Boyd mentions; and with a high percentage buying what the Union is selling without a critical analysis!
Whoever said they like the shared risk. A plan-Company/B plan-Me. Couldn't agree more! Shacked
Whoever said they like the shared risk. A plan-Company/B plan-Me. Couldn't agree more! Shacked
#18
What year did the B fund start? @ what percent?
Please correct, but off the top of my head, I believe the B fund increased to 6% in 2006
7% in the “bridge contract”
8% in our latest contract
And will go to 9% in 2019
Once again, those with more knowledge & better memory please correct (e.g. Tony C )
Please correct, but off the top of my head, I believe the B fund increased to 6% in 2006
7% in the “bridge contract”
8% in our latest contract
And will go to 9% in 2019
Once again, those with more knowledge & better memory please correct (e.g. Tony C )
#20
Gets Weekends Off
Joined APC: Jan 2011
Posts: 150
Correct me if I'm wrong, but none of us are anywhere close to the B plan limit of 54k a year, based solely on our 8% plan, limited I believe to 270k income. We would have to have a 20% B plan to hit that limit. Granted, our 401k pretax contributions would be what takes the hit, but we would just get it as taxed income...the full sick bank would still be paid out over and above, just as taxed income...I think there is a lot of room for improvement to the B plan...I may not be accurate on my irs limits, but I believe it's pretty close...
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