pinseeker

Flying Boxes,

I highly encourage you to review all of the information put out by the union. I also request that you look at the following areas.

First, there is no guaranteed floor benefit. There is no government regulation that requires it. That needs to be negotiated. In the communications, the union states that in the absence of a floor benefit, a stabilization fund could be established. The company pays for a floor benefit, we pay for a stabilization fund. Which one do you think the company will opt for?

Second, a DB plan has minimum funding requirement per the PBGC. A variable plan has no defined payout, it is strictly stock market dependent. Without a floor benefit, the only risk that the company assumes is the longevity risk. The union even says that a VB plan can not be underfunded because there is no guaranteed payout.

Third, the company still controls the investments. Currently, the company has a vested interest in how the investments perform because if the plan becomes underfunded, they have to make an increased payment or pay PBGC penalties until the plan becomes properly funded. With the VB plan, it can't be underfunded, so there is no vested interest in how the investment perform. Actually, there may be an incentive to place most of the money in very low yielding, safe investments to help mitigate the longevity risk. The union model used a 50/50 securities to income investment portfolio. What if the company decided to use a 20/80 percent security to income investment portfolio? Our potential upside would be greatly reduced as well as the companies longevity risk. That solves the companies problems, but what about ours. Don't think it will happen? Triple 7 pay rates and lie flat seat arbitrations are just two of the many lost arbitrations that were give aways in past contracts. Why wouldn't the company try to find loose language to save money on our backs again?