Originally Posted by
pinseeker
FXLAX,
Let's put this another way.
Let's say it take $2.3M to get $130K for life. At a 6% rate of return for 25 years, it takes an investment of about $40K per year to reach that total.
Now let's change the time frame to 20 years with the same target amount and rate of return. Now you need to invest $60K per year to reach that $2.3M total that is requires to get $130K for life. That is a 50% increase in funding.
So what you are asking is that if I got hired at 30, the company now increases its yearly contribution to retirement by 50% so that I don't get any increase so a guy who got hired at 45 can get the same retirement as I get. That guy works 20 years to age 65 and gets the same A plan retirement as the guy who has to work 30 years or take a penalty and get less. How is that fair for everyone?
So to answer your question above, NO, your idea isn't better for everyone.
I think I’m starting to understand. But I have some questions since I’m a little slow sometimes. Does it cost the company less per year to fund a pilot’s pension for each year he is on property, over than 25 years? In other words, does it cost the company less to hire a 30 year old versus a 40 year old pilot, in terms of funding their pension? Is it fair to the younger pilots in general. Maybe it would be more fair to eliminate the max YOS and lowering the multiplier instead of increasing the cap?
These ideas are just me thinking out loud on here without figuring out every ramification, like training costs, etc. I was looking at it from the perspective of trying not to incentivize going beyond the lawful age though. Maybe that isn’t as important as I was perceiving it to be? Increasing max YOS or increasing the multiplier past 25 years will incentivize staying longer and it would seemingly increase company costs.