Originally Posted by
SVA402
No. Nope. No way. Direct 401K contribution is the only option I would vote for and almost everyone I talk with agrees. Too much history of pilots losing retirement to have anything that is controlled by someone other than the pilot or could in any situation ever be taken away or lost if that retirement group went out of business. I have yet to hear a valid argument for anything other than what every other airline has.
I recently realized that I have never heard the word "bonds" in cockpit conversation. Plenty of hot stock tips over the years, talk of the current mutual fund fad, lots of leveraged real estate deals and of course various systems for market timing.
My point is that pilots are very, very poor at financial planning.
The "valid argument" for a defined benefit plan is the term "longevity risk". Pooled assets in a defined benefit plan of at least 300 participants solves that problem for the individual. 401k programs can only address it by buying an annuity, which is less efficient than a defined benefit plan and has greater risk.
Defined benefit plans have existed for centuries, and they worked just fine until the 1980s and the pillaging and plundering of any plan that was deemed to be "over funded" during up market periods (and they still work fine in Europe, where the rules were never relaxed). Once upon a time the CFO and CEO who underfunded a retirement plan could be looking at criminal charges. Today they just dump it on the PBGC and get a bonus. So the problem is not the structure, it is the recent practice of lax enforcement.
The Teamster's Central States Pension Fund is in trouble, of that there is no doubt. It is also a bit of a special case, and there are many other Teamster plans -- most of which are on solid ground. Union plans by nature have the advantage of not having company CFOs drooling over them. And thus I offer the argument that the problem with the loss of pilot pension plans was not that they were defined benefit plans, but that ALPA did not pull them into the union when deregulation came to pass.
Any pilot basing his retirement planning on what he hears from other pilots at the breakfast table had better like cat food.