Originally Posted by
kronan
Originally Posted by
TonyC
Originally Posted by
kronan
580 shares is a Year 1 calculation only, ...
Where'd you come up with 580?
It was a response to another poster for a year 1 transition. Assumes the 2% times 290 with the notional $10 starting point for share value. A value that has absolutely no correlation with the underlying value of the Pension Trust. It’s a notional value. Just as in the video, if the Investment Returns in our Pension Trust is 2% for the year, the notional value of that $10 per share decreases 3% so the original $10 value is $9.70 in year 2.
OK, gotcha. So you're just rehashing the process described in the video but using the current IRS Defined Contribution Compensation Limit instead of the 2018 value. Of course, that value may or may not increase or decrease from year to year.
Originally Posted by
kronan
Even though the underlying value of Assets in our Pension Trust would increase and there'd be another contribution as well.
Careful with your conjunctions there. In a year where the value of shares decreases, the total value of the Pension Trust would only increase if the amount of The Company's contributions exceeds the payments made to retired pilots. Naturally, this will be the case in the infancy of such a program. That doesn't guarantee that it will always be the case. So, initially the value of assets in the Variable Benefit fund would increase BECAUSE the Company's annual contributions to the fund will exceed the payments to retirees.
Or will they? That has not been described, and it would have to be negotiated. If the Company only has to worry about a $5,800 annual benefit for -- what did you say, how many pilots will retire the first year? -- "
(roughly 120-150 people retire each year)" -- what's to say their initial contribution won't be correspondingly small? That's less than a million dollars the first year. The lint in Mr. Smith's jacket pocket is probably worth more.
I don't know how much cash The Company will have to contribute to the fund any year any more than you do -- unless you're getting secret information from the Negotiating Committee (which wouldn't surprise me). You are making a pretty big assumption, then, to claim that the value of the Variable Pension fund would increase even when the market decreases.
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