Originally Posted by
742Dash
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.
The problem was deeper than that. Post deregulation, managements were given numerous waivers...despite unions protesting them...to defer scheduled funding payments. Thus when a pilot retired, the "A" plans were able to buy the annuities, but the future retirees funding was at risk over the deferrments. The worst was Lorenzo, who guaranteed the deferrments with junior subordinated stock in Texas Air...not that the senior preferred was worth anything either.
The government (read Republican Administrations) turned a blind eye and then when the bankruptcies hit, the "A" plans were broke...and the airlines got bankruptcy judges to let them dump the underfunded pensions on the PBGC (read taxpayers)
The "B" plans, controlled by the pilots Pension committees at the individual airlines took the same hits. One; Eastern, owned almost every prime piece of commercial real estate for about 3-4 miles around O'Hare...they bought it when it was farmland. Problem was everyone needed to cash out now when the airline went through Ch. 11, and the real estate market was dead, so they took another hit.
Central States is not in good shape, others are in ridiculously good shape, well overfunded and strong. You have to meet their standards to get in. And they get the funding payments directly from the company, no arguments.
Same thing with TeamCare, their health insurance plan. Outstanding, relatively inexpensive and very few, if any games. Go to any doctor, they pay.
It would do the group very well for the incoming officers to look at them and report back. I'll bet that the fact sare vastly different than information that was "leaked" a few months back.
Any pilot basing his retirement planning on what he hears from other pilots at the breakfast table had better like cat food
WHAT?????????? Now what am I gonna do with that garage full of water purifiers and Acai juice I told would make me a gadzillionare??
