Old 12-04-2017, 03:27 PM
  #45  
Fdxlag2
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Joined APC: Nov 2016
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Originally Posted by FXLAX View Post
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.
Assuming YOS and max cap for both of your hypothetical pilots, the only difference for funding a pension is essentially the age at which they retire. The 40 year old has to retire at 65 to max his out but the 30 year old can retire at 60. Buying an annuity for a 60 year old is about 10 to 20% more expensive than buying one for a 65 year old. It must not be important to tell us how much it cost the company to fund our pension, it remains a secret. The cost of funding an annuity that pays $130K is between 1.9 (65 years old) and 2.2 million (60 years old). Obviously the company makes money (at least on the pension) if guys stay past 25. But if he goes out at 60 it is probably a wash as his pension will payout more.
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