Originally Posted by
Lewbronski
I'm not an expert on this subject so I'd like to understand it better. My understanding is that during the airline bankruptcies of the mid-2000's, courts decided that airlines could terminate their pension plans and hand them over to the government's Pension Benefit Guaranty Corporation (PBGC). Since the PBGC only guaranteed pensions up to a certain amount, many pilots at bankrupt carriers lost a substantial amount of their pension. Largely in response to what happened to employees' pensions following bankruptcies in the airline and steel industries, in 2006 Congress passed the Pension Protection Act of 2006 (PPA) which was intended, among other things, to minimize the danger posed to employees' pensions by bankrupt employers with underfunded pension funds. I don't know how successful the PPA has been in minimizing that danger.
Serious question, after the PPA, how much danger is there now vs before the PPA in employees losing much of their pensions if the pension ends up being administered by the PBGC? One thing I found that concerns me comes
from this study by the PBGC in 2008, after the PPA was enacted, that said, "Recent changes in law will likely result in somewhat larger benefit reductions for some participants whose plans terminate while their employers are in bankruptcy proceedings." That doesn't make sense to me if the PPA was designed by Congress to accomplish the opposite of that. Again, I'm nowhere near an expert on this subject and am trying to understand it better. I'd appreciate any insight you can offer.
First off you need to understand how the PBGC works. I have flown with many pilots telling me how the PBGC is in the red and underfunded. I then tell them that is simply false. There are two groups of plans that the PBGC admintors,, single employer and muti employer plans. Airline pensions are held in the single employer plan. These two plans are totally different and the single plan is very well funded and solidly in the black and infact has quite a large surplus. Multi employer plans is in the red. Many pilots started drawing funds early not knowing the difference and of course are receiving much smaller amounts. I usually get a blank stare when I bring this basic fact to light. The PPA will make it almost impossible for an employer to underfund a pension plan. It also makes it almost impossible to just pass those assets on to the PBGC. Those funds in the plan would be frozen and distributed to the employees if a company no longer made contributions. Bottom line it's your money at the end of the day. PBGC is an insurance company that would step in as a last resort ie illegal activity. Even the market cash balance plan falls under PBGC protection. To recap single employer plans are very healthy and totally fully funded at the PBGC. Market cash balance plans are typically funded by employers with employees able to make additional contributions ( except for in this steaming pile TA ). Demand that the company fund the MBCBP in TA2 rather than it be solely self funded. The money will be safe and no reason to bargain away anything regarding the B FUND. Also don't buy this CAL pilots frozen plan BS excuse for funding timelines. United could fund it right now for the pilots and those with a frozen plan ( a few hundred CAL pilots) can participate when their funding limit expires 12/23. Step up and demand that passenger carrier pilots should enjoy the same retirement protections as our brothers and sisters at FedEx and UPS. NO EXCUSES!