Originally Posted by
Tuck
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.
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.
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?
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.
Tuck,
To reply to your first response, what do you mean when you say that the VB contribution is capped at $260k? In the model presentation the union stated that the 401(a)(17) limit was increase annually based on their historic prediction. Also, if your retirement benefit is based on lifetime earnings, don't you think that guys will try to upgrade quicker to increase those earnings. We only have a little over 1500 WB captains and the top 1500 on the seniority list were all hired prior to 2000.
To answer your last question, the NC and several reps have told me that the VB plan with a floor benefit and insuring that no pilot is disadvantaged by freezing the A plan will cost more than the current A plan. I have no idea what you mean by PBO, but the company will still have to pay the same PBGC premiums that they currently pay. The benefit to the company is if the market goes down, they don't have to make a large contribution to the plan to make up the underfunded amount. The PBGC funding requirements are there to help insure that our A plan stays funded. That is a good thing.