Originally Posted by
kwri10s
I think we are doing exactly that, splitting a pie. You will not get a percentage of your earnings, you will get a percentage of the total input from the company based on your earnings.
Then I'm glad I spoke up, because I think your are incorrect.
Originally Posted by
kwri10s
The companies portion of this plan is to allow for a FIXED amount they have every year. We are asking for a possible variable of a "floor" to earning where they might have an additional expense if our ROI doe not meet the floor return. If they never have a need to plus up for the floor earnings, then their cost per year is static. (perhaps there is an annual COL increase but the details are unknown)
I'm reticent to use the "Whiteboard" video as reference, as it is so filled with omissions, misleading statements, and outright lies, but since you've cited it below, I'll point you back at it for a more careful listen. Begin at 4:50 (I think this link should help:
Retirement Education: Variable Benefit Plan (Whiteboard Video) beginning at 4:50) and follow along with my transcription. I've taken the liberty of highlighting a few spots.
"The variable benefit is calculated each year by the actuaries who determine a share value that ultimately gets converted to a dollar value. The biggest difference to FedEx is that the Variable Benefit Plan ensures that the contributions are stable and that FedEx will contribute a flat percentage of pay to the plan each year. It removes most of the funding volatility inherent in the A Plan.
"Under the current 'A' Plan, FedEx bears the risk of the stock market and does not have the certainty of how much it will need to contribute each year. This is what we believe FedEx will like about the Variable Plan. Contributions are consistent and predictable and would be a fixed percentage of payroll every year. The Variable Benefit Plan would also minimize the unfunded accounting liability associated with the plan.
"In the Variable Benefit Plan, FedEx is still the plan sponsor. The Company would contribute a percentage of payroll to fund a trust for all current and new pilots. Just as it's done now in our 'A' Plan, this trust would be managed by professional plan managers. ALPA will not be managing your money in the trust. We are, however, asking for a seat at the table to ensure the new plan will be fully transparent.
"Under the new plan, each pilot's total benefit will vary, depending on the pensionable earnings for each year. This will produce a different benefit for each pilot based on their career compensation, without being subject to the $260,000 cap."
Funny, you could say the same things about our 'B' Fund, otherwise known as our Defined Contribution Plan. That's because The Company is only responsible for what goes in the fund each year, and not so concerned about what should come out on the retirement end. The have a bit more liability than the B Fund because they have the Longevity Risk -- we may live too long. They
might have the responsibility for funding an underperformance of the fund, i.e., performance below the Floor value. (Color me surprised if they agree to assume that responsibility, though. It would be far more likely they would only agree to a scheme with a Cap Rate to fund a Stabilization Reserve.) Since The Company would no longer be responsible for guaranteeing any benefit, the pilot would have to be ready to accept whatever outcome the market might produce.
But I digress.
Originally Posted by
kwri10s
IF you were getting a percentage of your earnings, then we would never use the term "pancake" to describe what you get. Instead, there would be a percentage being used as an example, with a max cap of earnings being shown.
Never ever have I ever heard anyone explaining this say we get a percentage of our earnings. They've always said we get a percentage of the total or a pancake. In this video they say FedEx pays a percentage of payroll each year (5:45)
https://www.youtube.com/watch?v=mm_K3B_Xbws That percentage of payroll is what is then divided out based on how much you earn. So yes, the payroll percentage is the pie and you get a portion of the pie. If you earn more you earn it at the expense of those with less earnings.
Listen to Greg Reardon. He says exactly that.
January 2018 Joint Council Meeting: Greg Reardon (Begin at 18:38)
Start with Salary, compare with IRS Salary limit.
Take the lower of the 2, multiply by 2%, that's your Annual Floor Accrual.
Divide Annual Floor Accrual by Beginning of Year Share Value, that's your number of pancakes.
Go through another step or two (looking at the performance of the fund (Actual Investment Return), the Floor Accrual Rate, and the Cap Rate) to determine the new share value. Multiply that by the number of new pancakes to determine the End of Year Annual Benefit, which is only significant if and when you're retiring. Until then, its ... ahem ... variable.
Nowhere does Mr. Reardon mention that any pilot's benefit is affected in any way by how much any other pilot works or earns. If you make $150K and your buddy makes $300K, your benefit is based on $150K, and his benefit is based on the IRS Salary limit ($275K in 2918, increasing in future years.) So, in 2018, The Company would contribute to the fund a fixed percentage of your $150K and his $275K and then they'd be done. Like the old Ron Popiel RONCO Showtime Rotisserie ...
If it winds up being undercooked, they won't care. It must be your fault for not following the instructions.
.