Originally Posted by
Tuck
Originally Posted by
TonyC
Originally Posted by
Tuck
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. ... there is a GREATER chance that the pilot would benefit from market returns and end up with more than the legacy plan.
I don't think you understand who the "donut hole" people will be. If the pilot under the Variable Benefit Plan receives a larger benefit than he would have had under the CURRENT (not legacy) Defined Benefit Plan, he's not in the "donut hole," and will receive no "make whole" benefit. Whether they fall into the "donut hole" or not is only determined at retirement. If the fund performs well, there will be fewer pilots who will fall into that hole; if the fund performs poorly, there will be more pilots who will have to be "made whole."
No, I do. When the plan was built the entire donut hole was about 200 people - and those were absolutely not certain donut holes because market returns COULD impact them positively.
I still think you misunderstand. The donut hole refers not to a specific list of people, or even a list of people who meet specific age and longevity criteria. There is no way of knowing exactly who will be in the donut hole because it refers to a specific outcome of transitioning from one plan, one paradigm, one method of accruing retirement benefits, to another plan, a new paradigm, a completely different method of accruing retirement benefits. It is true that pilots in certain circumstances of age and longevity are more likely to wind up in that circumstance, but it is impossible to predict how those people will bid for seats, monthly schedules, or vacation, or how the stock market will treat the variable benefit fund from year to year. It is therefore impossible to exactly predict whether those pilots will benefit from the change, or whether they will be harmed.
The "Make Whole" concept (although never discussed in detail) was only to ensure that no pilot will be harmed by switching plans, but it does not guarantee any pilot will benefit. Thus, some will do better than $130k per year (still, far short of 50% income replacement) while some will be left behind. Sadly, if we agree to any plan where pilots get less than 50% income replacement from their pension for 25 years of service, we'll all be left behind.
.