A-fund Lump-Sum payout
#11
That is one of the saddest stories I have heard in a very long time. To see ones life work and promises swept away.
I hope we all remember these things when we vote. Promises made that are unrealistic by the D and anti worker attitudes by R must be challenged. Why do managers get to walk away with juice and the thousands who make the system work have to suck it.
It just ain't right.
It has to end now!
I hope we all remember these things when we vote. Promises made that are unrealistic by the D and anti worker attitudes by R must be challenged. Why do managers get to walk away with juice and the thousands who make the system work have to suck it.
It just ain't right.
It has to end now!
#12
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,539
That is one of the saddest stories I have heard in a very long time. To see ones life work and promises swept away.
I hope we all remember these things when we vote. Promises made that are unrealistic by the D and anti worker attitudes by R must be challenged. Why do managers get to walk away with juice and the thousands who make the system work have to suck it.
It just ain't right.
It has to end now!
I hope we all remember these things when we vote. Promises made that are unrealistic by the D and anti worker attitudes by R must be challenged. Why do managers get to walk away with juice and the thousands who make the system work have to suck it.
It just ain't right.
It has to end now!
The 24 year employee who retired/unretired lost his ability to take his A plan in a lump sum. As long as his full benefit was "qualified", he will get every penny owed to him in the form of an annuity UNLESS AMR is successful in terminating the pension plan. I view that as unlikely, as the last report I saw showed it about 80% funded. The analysts I follow are suggesting it's more likely that AMR will be able to freeze their pension plans (no more accruals, no new participants), and pension law changed in 2006 to make termination more difficult.
So far it appears AMR November and later retirees have lost a form of payment, not any earned benefit.
Anybody have different info?
#13
Gets Weekends Off
Joined APC: Apr 2008
Posts: 581
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
#14
I believe the story is incomplete.
The 24 year employee who retired/unretired lost his ability to take his A plan in a lump sum. As long as his full benefit was "qualified", he will get every penny owed to him in the form of an annuity UNLESS AMR is successful in terminating the pension plan. I view that as unlikely, as the last report I saw showed it about 80% funded. The analysts I follow are suggesting it's more likely that AMR will be able to freeze their pension plans (no more accruals, no new participants), and pension law changed in 2006 to make termination more difficult.
So far it appears AMR November and later retirees have lost a form of payment, not any earned benefit.
Anybody have different info?
The 24 year employee who retired/unretired lost his ability to take his A plan in a lump sum. As long as his full benefit was "qualified", he will get every penny owed to him in the form of an annuity UNLESS AMR is successful in terminating the pension plan. I view that as unlikely, as the last report I saw showed it about 80% funded. The analysts I follow are suggesting it's more likely that AMR will be able to freeze their pension plans (no more accruals, no new participants), and pension law changed in 2006 to make termination more difficult.
So far it appears AMR November and later retirees have lost a form of payment, not any earned benefit.
Anybody have different info?
#15
Slow,
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
That's essentially correct. The "unqualified" portion simply disappeared. Lump sums had been deducted from the "qualified" portion, and therefore reduced the annuity amount, if any, that a retired pilot would otherwise receive. In many cases, the annuity went to nearly zero. A PBGC attempt to recapture any lump sum overpayments is theoretically possible, but I haven't heard of any such cases yet.
#16
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
I believe this is only the case if the plan is able to be TERMINATED.
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
I believe this is only the case if the plan is able to be TERMINATED.
#17
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,539
Slow,
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
You know more about this than I, but my recollection is the IRS sets limits on pension contributions. The idea is that a hugely generous pension plan shouldn't be completely tax deductible, so they divide the income into "qualified" (meaning it is below the threshold of "hugely generous") and "unqualified" (meaning it falls above that threshold).
My recollection in the case of Delta's bankruptcy is virtually all the retirees had a significant portion of their retirement classified as unqualified. I suspect that may be the case with American's retirees.
Please correct me if I'm wrong...
In the Delta retirees case, C2K rates and greenslips triggered huge FAE increases for some participants, making much of their remaining benefit after lump sum payout non-qualified. By comparison, a C2K Delta Captain payrate was north of $300 per hour, in general only $200 per hour of which was considered by the qualified plan. That left the pension benefit for that last $100 per hour as a non-qualified promise to pay from the corporation.
The only way any non-qualified earned pension can be eliminated is through the APA contract and retiree committee (1113c/1114 or negotiation). The only way I'm aware that qualified pension benefits can be reduced is through plan termination.
FWIW.
#19
Gets Weekends Off
Joined APC: Feb 2008
Position: 330Fo
Posts: 215
#20
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,539
My pension got terminated a few years back, so I've seen this movie. It will either end with a plan freeze or management proving to the court that they can't reorganize without its termination. That'll be a tough row to hoe, as APA, TWU, APFA, and PBGC are 4 of the 9 members of the creditors committee.
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