Originally Posted by kwri10s

Another thing to remember with the VBP; is the main selling point to the company is that they can "fix" their costs as much as possible for their projections. In order to do that, the company will be "investing" a set amount each year. Now while the pro-PBS folks like to say that amount will be negotiated. The big problem is that it is a SET amount. You do not get a retirement pancake based on the amount that you earn that year, rather you get a pancake based upon the percentage of the total that you earned. It will not be a "set" amount that you earn. For example, if you earn $200k this year and $300k the next you will not get 1.5 more pancakes this year than last year. You do not earn one pancake for every $XXX. If a FO in HKG earns 8 times what you earn, then he/she gets 8 times the pancakes that you do. It's is all about your earnings compared to everyone else. Unlike everything else we do now, where you earn a percentage of your earnings towards your retirement. I hate to use this year as an example since we'll never see this again. IF we had this plan in 2015, then your pancakes this year would be based upon your total earnings with the "same" amount contributed towards the plan by the company as last year. So everyone flying AVA/Draft will out pancake those that are not doing Draft/AVA, since it's a percentage. So they are taking your pancakes. The total number of pancakes available to be divided up each year remains mostly constant.

If you are a BLG flyer and the average pilot (including training flex/instructors, management, ALPA buy up, etc) is BLG plus 30% then the BLG flyer will get credit for 30% less towards his/her retirement. You will not earn the "estimated", "example", "forecast" or "proposed" credit that you modeled for. The modeler cannot take that into account. The modeler only assumes everyone earns average BLG and then you input how much you say you will make. There's just no way to model forward projections of over earners. Ask yourself based on your day in, day out conversations with others; are you an average earnings pilot or above or below. If the average is 6 months of carryover and you do zero than you are a huge below average, so you will get fewer pancakes. In our current system, your earning compared to others do not matter. You either get a good year or not and you get 9% on what you earn. You either hit your max contribution limit or not. But it's all about what you earn, not what you earn compared to others. Right now, you decide your quality of life vs monetary income and you don't really worry about your retirement being funded other than your B fund and 401k. But they are your decisions, not based upon what someone else decided to make. That's what makes it a Variable Benefit Plan, your benefit varies from year to year, otherwise it would just be a group B fund.

Fund returns are fund returns. We will be 45-50 percentage in stocks, then some % bonds, reinsurance, T-bills, etc. The fund will have to have a large "cash" position since payout will begin almost immediately as pilots retire. The fund will not return 15% in a year nor should it lose 15% in a year. That's the job of the risk assessors. I'd be surprised if we are even near 40% in stocks. The huge portion of the funds will begin to payout within the next 10 years. (about a third of the pilots are over 50) There are actual laws that govern the financial management of retirement funds and percentages that must in available in cash, etc.