Originally Posted by
kronan
No, I don't want you to back anything without knowing the hurdle rate, the Salary Cap rate, the accumulation rate.
The Hurdle rate only functions as a share the weatlh\secret sauce filter. With returns above it, the notional value of your shares would increase. So, a Hurdle rate of 5 means you only see gains if the Trust returns above 5. As FastBurner has posted, Current Pension trust fund has consistently returned above that. Current predictions are at 6.5% for the future, but that was pre-COVID. I do know our Trust took a $794M bookkeeping loss in the last quarter, but have to think that rapidly recovered over the past few months and will be interesting to see what our next quarter's results brings.
Pension Trust at or below the 5% hurdle for your entire career would just mean the value of your Pension, brick by brick would only equal the 2% accumulation you input
There are so many variable to the Variable plan! Seriously, not to be pessimistic, but contract language is not our strong point. There is just too much left to chance here.
I’d like to concentrate on simple, tried and true ideas. Of course, increasing the multiplier or FAE are the easy way to go (if have the resolve to see this through). Even a FAE tied to IRS limits ($285k now) would be an improvement and give a minimal cola that wouldn’t necessarily need to be renegotiated.
The FDA is another simple, hard to screw up plan. Tailor it to our needs, $6.000/year. Tie it to FAE of 300K for a 100% benefit, without regard to seat position. There are certainly other methods as well that would work.
Of course, if all else fails, we could hope for significant B fund improvements. Higher percentage and/or cash over cap. Best of both worlds, increase A and B.
The variable plan, despite the union’s efforts, isn’t popular with most of us. Let’s pivot (finally) and focus on simple solutions. I think we could all be on board with that.