Originally Posted by
FamilyATM
[QUOTE Additionally executive management's DB fund is tied with ours. For what it's worth Dave Webb & I discussed it would be akin to cutting off your nose to spite your face, as executive management would have to terminate their own DB fund if they terminated ours. Don't know all the legalities of this, but when Webb was the MEC chair he had crossed thru these scenarios.
I do not believe that is correct. If you look at the annual report put out to stockholders it appears that executive management has a frozen define benefit plan and they are now accruing benefits under a new define contribution plan. The report shows their total compensation, retirement benefits, bonuses, stock options, corporate paid security, travel and corporate paid tax advisors. This coming years report will be an eye opener for the crew force because SVP PC should make it into print and we will all be able to what he takes to the bank. Happy New Year![/QUOTE]
That was from a 2006 conversation with Webb. Can't say what they have now.
Curious as to why you think DB plan can't be in effect 20 years from now @FDX. Corporate America has led the public to believe that DB plans are unaffordable. I would contend that as long as your business can sustain the requisite funding levels iaw ERISA (1974) & Pension Protection act (2006) laws that they are sustainable.
The architects of the 401k publically concede that the 401 k was never meant to be a replacement for a DB plan. Very instructive read from John Bogle (founder of Vanguard): The “Train Wreck” Awaiting American Retirement. Where he specifically discusses corporate America "pushing" off DB to DC plans as a way to increase their own profitability- Not because they are unaffordable.
John Bogle: The “Train Wreck” Awaiting American Retirement | The Retirement Gamble | FRONTLINE | PBS
Corporations, Chamber of Commerce, i.e. Big Business wants us all to believe that they are passé in the new business world. Corporate profits at large have been at record highs for years. Cutting employee compensation has been a factor in the generation of the largess.
The ERISA & Pension Protection laws, mostly enacted after all the airlines & steel businesses used Ch 11 BK as a business tool, provides a barometer to DB health, and also a speedbump for management abuse of the funds. The BK code in 1978 and the 1974 ERISA laws allowed corporations to underfund their pensions, go to BK CH 11 as a strategic tool & terminate pensions. UAL, DAL & USAir & US Steel used the law to "legally" do just this.
Watch Jamie Spaygreen, Lead attorney for UAL & US Steel, state as such at around 7:40 in this very revealing interview.
news + public affairs player: video
This should be a must watch for all airline industry employees.
I was at UAL for the distress termination, it did not happen that fast (several consensual concessionary contracts (in which management outright lied about the intent for the DB plan- held hostage for consensual concessions that they drug out over 2 years --see 10:15 or so in the video where Spaygren specifically concedes this). NWA was the smartest (above UA, DAL, USAir) in freezing the DB value.
Personally, still an advocate based on protections in the ERISA & pension protection laws (corporations legally can't use the shenanigans as UA, DAL & USAir did in the 2000's), where if things begin going south for your employers profitability and thus the requisite DB funding levels -there is ample warning providing option to freeze.