Originally Posted by
RJSAviator76
I like it!
I would caution you on the A-plan as that's the promised money, not the actual money. In previous life, because our A-plan was terminated in bankruptcy and pawned off to PBGC, I'm literally set to get enough from PBGC to buy a case of beer a week at current prices when I retire. I would much rather take a substantially higher NEC and when I max it out, I'll do my own investments or take it as cash. During hard times, think it's bad now with Pollyannas? Wait until people sell everything in the contract to protect the A-plan only to have it terminated anyway. Because our pension numbers would be substantially higher, the PBGC will simply cap it off. To give you an idea, guys hitting the retirement age at that time were literally retiring with about 20% of what they were counting on as their A-plan payments.
I'm not a fan on A-plans for that reason. Lived it once.
Over on the United forum, a couple of their guys are pointing out changes since the big airline bankruptcies of the mid-2000’s that they’re saying make the situation you’re describing much less likely, maybe even near-impossible, to occur again.
First, the Pension Protection Act of 2006 changed the requirements for the way companies fund their pensions. I’m not claiming to have a firm grasp on this subject, but apparently it’s much more conservative now, making the possibility of underfunded pensions that end up in the hands of the PBGC much less likely. And then, the law changed some things about the PBGC to make it less likely that pensions that end up being taken over by them less likely to take a hit.
Second, the 2007 changes to chapter 11 bankruptcy law significantly reduce the incentive for airlines to enter into bankruptcy compared to before. My understanding is that all of the big airlines entered bankruptcy prior to the new changes became effective and that they wouldn’t have fared nearly as well after the changes. But regardless, the Pension Protection Act still would have likely resulted in pensions remaining preserved.
I definitely don’t have my mind wrapped very firmly around how these two changes impact the situation other than a little bit of my own research that I’ve done and what is being said by the guys over on the United forum.
I’d appreciate it if you could offer your two cents on how these two changes do or don’t change the situation for pensions.