Originally Posted by
SONORA PASS
Baseball,
If I understood the issue right, it is the variable aspect of paying LTD benefits that is the issue. Those unknowns either require maintaining a buffer, or paying a fee to a third party company to handle the risks versus rewards of taking that obligation.
Knowing exactly how much money they need to hold back is not a blue v.s. black and not a company vs. union the way I understand it. The R&I will have to do an awesome job predicting the future or pay "insurance" to cover that variable for the old CAL plan.
V/R
SP
To the contrary Sonora, the cost of the payouts are the only factor that is a known entity; it's known to the penny how much the LTD guys will take from the fund until they reach retirement age and the benefit expires. The tricky part is negotiating a commercial insurance policy. And we are in a very good position; as with most plans, the Continental was contractually mandated to keep the plan fully funded with a 3 year buffer; conversely, the A-Plan funding was legally changed from 7 to 17 years post 9/11 (Continental kept the 7 years funding). They also went to 7 year funding on the LTD trust, instead of the mandated 3.
In short, the plan is severely "overfunded"; the Tower Actuarial firm estimates overfunding by $38Mil, the Company and R&I Committee took a far more conservative view at approx $15Mil overfunding. Whatever the case might be, the estimates have significantly fallen, and 171, with ALL it's moxy
, decided that it was time to farm the fund out and see what we could sell it for. That resolution passed 171 unanimously, and with minor modification passed the MEC unanimously as well.
The overwhelming majority of our Pilot group supports our obligation to the ltd Pilots, then returning the rest to the plan participants.
Thanks for being rational in your line of questioning.
Frats,
Ben