We had two retirement options with the failed TA. Option 1 improved upon the pension by 30% and left the DC of 9% capped unchanged. For anyone retiring in the next ten years, this is a no brainer. Best in class among all airlines.



Option 2, when viewed through the lens of history as well as contrasting with other existing retirement schemes, is not as cut and dry. Option 2 was a split between MBCBP and DC into the 401(k), 11% and 9%, respectively. Both of these contributions are capped at IRS Compensation Limits ($345,000 in 2024). In addition, the fiduciary would be FedEx with a target rate of 6.5%.



Before we look at other airlines, some questions are worth raising.

• The first is the value of the A-Plan in option 1 compared with the value of the MBCBP in Option 2. With a conservative investment portfolio in the MBCBP, is 11% capped contributions equivalent to a pension that is valued at $169K? Not from my perspective.
• The second question is allocation of company funds. Is it more beneficial to put a higher percentage of contributions into the MBCBP as opposed to a DC into your 401(k)? If the goal is to take advantage of tax advantaged accounts, would it not be better to have more going into the 401(k)? The company would still contribute 20% of until IRS limits. But if the higher contributions were to the 401(k), you would ultimately be able to max out your 401(k) with less of your personal dollars, resulting in more discretionary income. Not to mention the fact that returns in the MBCBP are likely more conservative for younger investors given the proposed portfolio mix.
• The third question highlights the fiduciary. I see no benefit to having FedEx serve as the fiduciary. It’s just that simple. Any fiduciary should be third party.

(Sidebar: I can’t remember this last highlight exactly, but the allowance of an annual transfer from the MBCBP to the 401(k) must also be available starting at 59 ½ ).



The next phase of this discussion concerns the existing retirement schemes and how they came to be. As a result of the turmoil in the early 2000’s, the pension plans for the legacy carriers were largely decimated and used to pay off bankruptcy debts. Seeing the large expenses associated with pensions, the legacies decided to choose non-diversified DC into the 401(k) leaving the brunt of risk onto the employee. In order to bridge the gap, the carriers also offered to throw profit sharing into the mix (also happens to be pensionable). Recently, all legacy carriers and SWA (Big 4) added the MBCBP as another offering for further diversification of their retirement achieved in negotiations (SWA has not been ratified yet). As it stands today, the Big 4 all have a mix of DC, MBCBP, and Profit Sharing. In addition, they all have cash over IRS contribution and compensation limits.



Below is a snapshot of the retirement offerings for the Big 4 in 2026:



DAL, AAL, and UAL

DC: 18% Cash over Cap

MBCBP: Excess Spillover Cash directed here

PS: 18% of Profit Sharing pensionable into 401(k)



SWA

DC: 18% Cash over Cap

MBCBP: Two Funding Mechanisms

#1 - Excess Spill Cash from NEC (Non-Elective Contribution) is directed here.

#2 - 2% of Income will be directly deposited in the MBCBP

Note: Contributions stop at IRS Limits and the remainder is paid out as cash.

PS: Not Pensionable.



The first item that should jump out at you is that every single carrier is paid cash over the IRS limits. Even now with our current 9% DC, every December we have to monitor our after tax contributions to make sure we don’t miss out on free money from the company into our DC. Meanwhile, the other carriers have been cash over cap for the better part of a decade. This becomes a major issue considering the climbing pay rates. Next year, the top WB CA rate is $447 for the legacies. If 1000 credit hours are earned, that means their companies will contribute $80,450. This does not include profit sharing which has averaged another 1.8% retirement contributions at Delta. That’s nearly 20% uncapped. If FedEx ALPA achieves that same pay rate with our current capped setup, that means a total contribution of $69,000. That’s 16.5% more for in tax advantaged retirement for the legacies. That difference will only be exacerbated anytime inflation is less than their 4% raises over the next three years.

We had the best retirement in 2015, bar none. BOTH of our retirement options should be the best going forward considering retirement is our primary focus. Handling it during this set of negotiations will ensure that we can focus on QOL the next time around.



The next point I’d like to highlight is Profit Sharing. Part of the price the companies were willing to pay for the loss of the pensions in bankruptcy was profit sharing. Delta’s was famously the most generous and now the legacies all share this plan. Not only is it pensionable, but it ultimately boosts the hourly rate. I’m not necessarily saying that we should aim for profit sharing, but it is a value that came by way of those airlines losing their pensions to make up for that loss. We are sunsetting our pensions by only valuing it at a capped 11%. That is insanely low for the value it brings to the company by getting rid of it.


To bring all this minutiae to a close, I would say that the market average right now is:

DC: 20% Cash Over Cap (when you include pensionable profit sharing)

MBCBP: Spillover cash

Profit Sharing: Yes



SWA added a nice nice automatic 2% into the MBCBP. Something to consider.



To accept anything less is to fall behind our peers and undervalue the sunsetting of our Traditional A-Plan.