Fellow pilots are you reading the information available? Who is guaranteed more in retirement if a new plan is put into place? Who assumes the risk? Why now, instead of next contract?
Who is guaranteed gains? Pilots with 25 years of service and a maximum high 5 earnings. Watch the MEC video where the MEC Chairman states we must do something to provide for those retiring who have already maxed out their retirements, it is a “moral obligation”.
Who pays for this increase? Certainly not Fedex. Fedex has already proven, many times, they give nothing away. So where does it come from? It is not hard to figure out. Any change in current retirement benefits prior to the implementation of a new contract will result in significant cost savings to Fedex. Unfulfilled gains in high 5 averages and longevity toward retirement are voluntarily frozen, an Accumulated Benefit Option (ABO) is then calculated. It has already been demonstrated in a previous post that accumulated retirement benefits will increase substantially for most individuals, if thing are simply not changed prior to next contract. Second, payments into a new plan, according to Variable Benefit Consultants, will almost never be underfunded, so monies now paid, or future penalties, if incurred, in the form of variable rate premiums to the PBGC are negated. These penalties are set to increase substantially. Investment risk is now transferred from Fedex to the individual pilot and retiree. How much is that worth?
Examples set forth by proponents of these plans demonstrates significant fluctuations in retirement income due to plan performance. A link to soa.org in a previous post shows a difference of 48% in retirement payout volatility , for the same estimated value, due to timing. To paraphrase, an 2003 retiree with an estimated $1000 monthly benefit received the following, 2008 $1358, 2009 $966 and 2012 $1121. Conversely, a person retiring in 2008 with the same $1000 monthly benefit received the following, 2009 $711 and in 2012. $825. So if you base your retirement on $10000 a month, can you accept $7100 in the hopes that you might make $13580? Also notice an individual who retired 5 years earlier than you, with the same estimated benefit is making 27% more than you in 2012. One must very aware that many groups under these plans have no regulated retirement age and can elect to work through market turmoil. For us, the merry go round stops at 65, good or bad economy.
A previous poster referred to the PowerPoint presentation and referenced how risk was pictorially depicted, it was particularly telling, when the company assumes risk, it is large and burdensome, but when we as pilots assume risk it is small and balanced. Doesn’t seem that way in the previous paragraph.
This needs to be stopped, Fedex estimates approximately 780 pilot will reach the regulated retirement age by the end of 2022, an optimistic date for a new contract to be ratified. Is it really necessary that 4000 pilots put their retirement security in jeopardy to finance an even greater benefit to the most financially rewarded group of pilots to ever work at Fedex.