Originally Posted by Typhoonpilot
Okay, fair enough. This topic gets me a little agitated because I personally lost a lot of money as a result of the pension termination. Sorry if I jumped to the wrong conclusion.
401Ks in and of themselves are not really a good investment vehicle and most people don't a clue how to invest properly, especially airline pilots. To give them control of their money, in most cases, means they will invest it poorly and not have enough to retire on. The nice thing about pensions was that individuals didn't get a say in their investment, but they knew what they would have at retirement based on their years of service and final average earnings. It isn't too much to ask a company to provide for someone who has been loyal to them for 30 years. That is not an entitlement mentality either, it is just a point of view based on honor, loyalty, and integrity.
When you add company matching to a 401K it becomes slightly more attractive, but the individual will still find a way to lose most of their money by taking too much risk. The far better method to resolve this crisis is to move to a European style of regulation where pensions are concerned.
When I fist came overseas again after 9-11 and was telling people how my pension had been terminated they were incredulous. They couldn't understand how that could happen because with the rules in their country it would not have been possible. Companies are forced by law to keep the pensions funded enough to cover all obligations. That is what is necessary in the USA, not a downgrading of retirement to a pure 401K system.
TP
This is another one of your insightful responses. I couldn't agree more. If you take the pensions we were promised and "convert" them to a 401k match, the obligation to the airlines would be a hell of a lot more than a wimpy 5% match. The 401k match contributions in place at the airlines in the U.S. today don't even come close to what they would have to contribute if they were to match the pensions we were promised but robbed of! I am no accountant but in order to match a pension benefit plan such as the ones that were in place at USAirways and United a 20%+ employer contribution would be required. You will not see that happening ever! The 401k is just a huge scam to make you think that you are "getting" a retirement from your airline. Believe me, a 401k plan is better for the employer than the employee.
Any serious replacement of the defined benefit plans would have to be at least close in monetary value to the "old" defined benefit plans, and no airline is even getting close to that yet.