Originally Posted by
pinseeker
Tuck,
First of all, what happens to upgrade progression when your retirement is now calculated on career earnings vs. the current high 5 model? I would think that the historic upgrade model would be thrown out the window due to the fact that more pilots would try to upgrade sooner to try to increase their average salary and increase their retirement.!
Not going to be much of an issue down the line. The absolutist highest current VB benefits based on is $260k. With pay rates increasing along with the 401a17 limits, this is not going to be much of a factor. I'm a WB FO. If this were to pass, by the time it does I will be able to easily make $275/280 at my current seat for example. In addition, you more than make up for it on the backside.
Originally Posted by
pinseeker
Another assumption in the VB plan is that the company is going to agree to increase their contributions every year, IE. it is more expensive, in order to eliminate their risk. I have asked the union several times how much more would it cost to raise our A plan vs the increase in the cost of the VB plan. So far the answers have been it's proprietary information, and the calculation is harder to make than you think. Hmm, they can't say that raising the A plan to say a high 5 of $340K would be 30% more expensive than the same benefit under the VB plan? I think that the costs aren't significantly different, or they would be including that it the sales campaign.
Costs to raise the current VB plan just to $300k (resulting in a benefit increase of $130k up to $150k) are huge. I asked that question at a small group meeting and got a good answer. The model, if passed would have to have an absolute % of pilot salary Company would pay out for year - they would have to agree to it. Why would they pay more in the out years? I suppose it comes down to trying to quantify the value of the pension benefit obligations they would be ridding themselves of.
Originally Posted by
pinseeker
Also, what would the asset mix be in the VB plan. The company would still control the investments. And how about how a floor benefit effects the plan. The NC has stated that the floor may be less than $130K, that would have to be negotiated.
Everything has to be negotiated. The asset mix would probably be similar to how the Company invests now - most private pension plans are very similar - ours would be typically conservative. Attend the meetings, look at the model and as the Cheiron reps those questions. Yes, of course, the final product is most important and it has to be negotiated. A floor of 2% is great but that might not be possible - still worth looking at though right?
Originally Posted by
pinseeker
The problem with the comparisons that the union has been putting out between the A plan and the VB plan is that they are assuming that the A plan contributions are fixed and that the VB plan contributions are greater than the current A plan and will increase infinitely.
I've never heard anyone say that. Who told you that? The A plan contributions are roughly a percentage of pilot salary (varies based on market returns) and that number will go down over time since the cap on benefits is static. Under the VB plan the contributions would be a straight % and that number will increase with pilot salary - 15 years out I imagine the VB plan would cost the company more in pension than the current A plan but they will immediately rid themselves of the PBO which is huge and difficult to quantify.