Tony - great to read your thoughts on here again - you are a book of knowledge. Glad you are starting this discussion as there hasn't been much of it in a while and we area month away from early openers.
I definitely believe that most pilots are either a) unaware of the PSPP or b) against it. That doesn't it's a bad plan though. There hasn't been a good job in explaining what it is in the last 2 years or so and that's pretty problematic at this time.
Let me apologize for not being able to use the multi quote system - for whatever reason I can't get it to work.
Indexing the FAE Cap would be great, but I'm not even asking for that -- THIS time. Including a cost of living multiplier for the Defined Benefit would be great, too, but I'm not asking for that, either. I realize that getting the FAE cap back to a level that provides a 50% replacement ratio is a big step, and I'd be happy with that first big step. As I've observed before, some will say it's too big of a step, it will cost The Company too much money. I look at it from the other side -- The Company has saved a lot of money by failing to raise the FAE cap all these years. They have the money to fix it now.
I don't believe it matters if the Company has the money or not - that's really irrelevant in negotiations. My back of the napkin math shows that asking for an additional $100k/yr per pilot for about 20 + years in retirement is worth more than the entire cost of our 2015 CBA. I would love to have that but there's a reason why you don't offer $10K on a house listed for $1million - you won't even get a response.
We will likely end up at the NMB with a mediator on this round as we have in all others. I think any mediator would laugh with our proposal when compared to industry standard - which is what mediators do. The response would not be good. Heck I'd like to get a 30% increase in book rates on day 1 and there's no doubt the Company can afford it but I wouldn't ask for something that has zero chance in passing - as a $100k increase to the DB would.
The beauty of the PSPP, among some other things, is that it is actually doable - it is possible from both ends. The Company has been very firm in saying they will not improve our DB plan (now there may be a little wiggle room there as there is in all things) but the PSPP, in theory, can provide a "win" to the Company as it reduces its PBO even as it costs them more cash. So it does have a potential to pass.
We spent at least 18 months during the 2015 CBA passing language that would call for an improvement to the DB plan and in the end it got us nowhere. Yes, yes, I know - we haven't "tried" hard enough - we haven't negotiated hard enough. But there is a bit of a reality check here. We have said there's no touching our vacation plan - I believe the crew force when we say that. The Company may be thinking THEY haven't tried hard enough to diminish the industry leading vacation plan but I doubt it - just like I doubt we will get an extra $100K in DB improvements. Based on our history, I'd rather not waste another 18 months getting us nowhere. Yes, the Company has to consider anything we pass but there's no requirement beyond that. They can merely counter with current or, as they have done in the past, counter with freezing DB and increasing DC.
That dynamic wasn't even considered in trying to determine which pilots would fall into the "donut hole." We have pilots whose combination of years of service and age will not permit them to see any benefit from the PSPP, even if they work a full schedule. Those pilots would be "made whole" in some way (not specified) so that they will not be any worse off than if we had never changed to the PSPP. In other words, they will see no harm, but also NO BENEFIT from the change. Or, in OTHER words, they will be left behind -- no improvements. That violates another tenant of negotiations: Nobody gets a pass, and nobody gets left behind.
Disagree - there absolutely is a benefit to even those in the donut hole. There are three big advantages to the PSPP as I see it.
a) no limit on years of service
b) ceiling is indexed to IRS limits
c) ability to let your money grow in retirement
Now the donut hole people are guaranteed no less than they would get under the legacy plan but there's a good chance they will end up with more just based on market returns. The PSPP calculator that we all got to use a few years ago had assumptions based on the stock market returns - much like our fuel reserve can be viewed today. There is a chance that the return will be poor than models predict in which case the donut pilot would end up the same as legacy but there is a GREATER chance that the pilot would benefit from market returns and end up with more than the legacy plan. Now a lot of this depends on where exactly the pilot is in his career - if he chose to never upgrade as a senior pilot or to wait on his upgrade until his last five years he has a higher chance of just getting those legacy numbers.
In addition, benefit (c) above is huge. The ability to let your money remain in the market and adjust for inflation is a huge benefit. Say you have 20 years in retirement - during that time you don't make your 401K invest in nothing but money markets - you likely invest it in low risk options to still capture a small gain and offset inflation - that's why the old 4% rule lasts for longer than a straight pay out. This would be similar - most pilots would likely let their PSPP money remain in the market - there would be some dips, just like there is now in your 401K, but models tell us that your benefit would overall increase. That's huge - how great would it be NOT to have a DB payout in retirement that decreases in value annually? As far as adding a COLA to the legacy plan? I don't believe that's ever been done in any private pension - so the chance of getting that as well is low. The PSPP gives you that option though.
That's all I'm asking, is for everyone to tell their Block Reps what they meant when they said (in the polls and surveys), "Improve the 'A' Plan." For me, it's simple -- increase the FAE cap to twice the IRS limit.
Definitely agree here - we need to be a lot more involved and active. Call your rep - give them your thoughts. Ask them questions about how to improve the A plan. The reps should all have a good understanding of the PSPP. This is a huge part of the next negotiations and we will be better off with more people understanding the options, our history in bargaining for pension improvements, expectations from both sides and then decide what is best in our interest.
Good discussion.