Originally Posted by
kwri10s
The current A plan has cost the company ZERO for the last 4 years. They've put ZERO contributions into the Big Pool. (I cannot remember what it's called) But the pot of money that has the pilots, the managers, the old employee retirement money, etc. How much of that fund is the pilots? No one seems to actually know or be willing to share. But if the last 4 years have cost the company ZERO, how do you know increasing the annuity payout will even cost them anything? Just for giggles I searched some Schwab annuity pricing. If I do a $15k monthly payout at 60 then a $15k payout at 65 is about $500k less. A $11k monthly payout at 60 roughly costs the same as a 15k payout at 65. Since the fund is funded to IRS mandates for age 60 when our retirement triggers, it seems to my quick math that it costs the company ZERO to raise the A plan to 180k if every pilot went to 65. I'm not sure it would take too much negotiating capital to get a cost zero improvement.
Since we "know" that the company fund makes at least 6.5% per year in ROI because that is the amount our NC said we would make in the company run CBP. Then it's not too hard to project forward how much the big fund will allow to provided increases for the A plan going forward. Now we have no real idea what the company numbers are since ALPA won't tell us, or they don't know. But all the union saying the company cannot afford to increase the A plan really does not make sense at least to my simple math. It's not costing them anything now.
A quick google search of "why companies don't like pensions" is enlightening. It's more than just cost. This is from the first link that showed up:
"Pension plan administration is complicated compared to other retirement vehicles."
"With a defined benefit plan, risk lies with the employer, not the employee."
"To guarantee this benefit, an employer must consider investment returns, aggregate plan participant benefits, and even actuarial projections, then contribute according to estimates. With significantly simpler administration, it is no wonder that private employers are ditching defined benefit plans, including pensions.
With defined benefit plans, employees don't need to worry about market volatility and investment returns. However, for employers seeking to fund benefits for potentially tens of thousands of employees and their families, investing is a must. Typically, pension plans invest conservatively, in ways that hedge losses in the event of a downturn in an asset class. However, today's market conditions show why that can be a risky move, with both equities and bonds slipping. Overall, when millions of dollars in pension assets are at stake, market risk is a serious consideration for pension plan administrators.
Defined contribution plans, however, put the risk in the hands of the employee. By giving a matching contribution, an employer can help fund their employees' retirement without playing in the market. Meanwhile, the employee's benefit increases or decreases with their investments, over which the employer has zero control or interest."
https://www.fool.com/the-ascent/buyi...the%20employer.