As in previous posts, the best way for everyone to get a handle on this is google immediate annuity and play the numbers.

A DC plan is NOT a good deal for the fedex pilot demographic. majority.

A 65 year old would need to have accumulated about $1.8M to have a payout of $10k per month.

To accumulate $1.8M, one would have to save at least $2500/month, AND earn 7% EACH AND EVERY year for 25 years.

This would equate to having an employer contribution north of 20%.

All market risk would be on the pilot. (no bad investments, selling at the bottom, too conservative, too aggressive, etc- and still earning 7% EACH AND EVERY year).

Rebalancing your portfolio approaching retirement could arrest that 7%- thereby making that $1.8M a more elusive goal.

Our demographic (51-52 year olds) does not work well, as the compounding over time is not there.

Our hiring demograhic over the past 8 years or so has an average new hire in his 40's. So hitting the early years of compounding (2500/month + 7% every year) would be very very difficult.

Guys hired in the mid 2000's will likely not see WB captain until approaching the 18-20 year point, so a % of WB cap pay is a long way off- maybe his last 5-7 years (if he's willing to be in the bottom 20%tile).

If i was a finacially astute new hire less than 30 years old- maybe I'd consider a DC plan >20%. We don't have many of those guys, and we haven't hired much if any of that demographic in the past 5-6 years.

The companies' profitability (we're well managed from a corporate financial aspect {maybe not so much in a flight ops management}), and the ERISA laws provide a much better assurance for our DB plan, contrasted to market risk, of a DC plan. If things go south in a horrible way, the DB plan can be frozen (aka Northwest) vs. a distress termination (aka- UAL, US, DAL- getting PBCG mins).

If we expend ANY negotiating capital on retirement, IMHO, is to have an inflation adjustment, for all, as of signing. Or, kick up the current DC plan % to counter inflation. (UAL had a DB plan and 11% DC plan for a while- and contrary to many in the financial cognoscenti- this did NOT cause UAL BK).

Additionally, IMHO, we should not expend negotiating capital to feather the nests of the near term potential retiree's at the expense of the majority.
- Every proposal I've heard would only make guys stay longer-disproportianatley benefiting that small segment of the list.
- This demographic (over the vast majority of fedex pilots) has rode the wave of rapid ascensions, (doubling WB fleet-WB cap in 10-12 years), and benefited from the extension of the 65 age extension.
- The rest of the crew force has experienced stagnation, and excesses.

Not suggesting that they be penalized for timing and events that are beyond their control.

But just my humble opinion, negotiating capital should be spent on what will enhance the renumeration and QoL for all (or at least the VAST majority) of pilots. Thus the inflation index, everyone benefits, not just the few.

Also- it seems like this proposal could be just another "distraction".

 

The one thing I don't want in our next contract is an A plan COLA (see Warren Buffets latest letter regarding pension promises).

IMO- a cola would increase the probability that my pension goes away. (The same 10k annuity with a 2% cola is 2.6M. Or 800k greater than the non-cola option posted above....so, that wag vs the 100+ retirees over the next few years is a huge chunk of money)

Even if we decided that a COLA was the only gain we want from our next contract, it's something that could totally go away should Amazon, God forbid, really start shipping everything via drones and FedEx Express division needs to restructure in 10 or 15 or 30 years from now. And it would really suck to think back to 2014 when we went for a COLA vs an increase in the B plan when we contemplate our PBGCC monthly pension of 5,000$ a month

My, and my wife's, IRAs are my families COLA plans

 

+1 Olly

...Unfortunately, I think this one is real

...and is the ultimate goal, of the other distractions put forth to date

 

Well summarized olly.

Any type of concession to our DB plan, is as bad as PBS to me. In my view, if guys currently on property, or those who will be on property in the future, are cut out of the DB plan there will in fact be a B-scale = haves and have nots.

It is incredible to think we are having these hypothetical discussions when the company has been as profitable as it has been. Their tactics in negotiating psychology in distraction, confusion, and division, unfortunately work to a certain degree. Our NC should be able to see past all this, and stick to our plan of no concessions being ratifiable.

 

What did we get in the 2006 CBA in regards to the A plan? I remember getting a 1% increase to the B plan after 1 year.

Thanks.

 

Correct, plus we got:

1. increased pension multiplier for those with over 10 years of longevity.
2. 25K health care account for those over age 53.

We should learn from that 2006 CBA that changes that affect only a particular demographic are divisive, even well intentioned ones. However that does not mean that many of us would not like to see new options going forward in the next contract.

I would like to see the chance to make a re-balance of pension vs. money in my name. The world is a changing place and if we fail to look into the possibility of change or restructuring our retirement savings options we are being closed minded in the face of real concerns by those currently employed and those to be employed as FDX pilots.

Those already employed have too many scenarios to change to a one size fits all plan and certainly would require options, pilot selected ones, which include status quo going forward. New pilots can not be sold down the river either but that does not mean you cannot have a plan that does not include A fund options for them, as long as the end game money looks equal or better. For many the better part, and worth some risk BTW, is the fact that the new world order is defined contribution plans and the money is YOURS, no promise or PBGC to worry about.

 

Call me a skeptic or glass half full, but I've been around long enough to have seen how the dance goes between ALPA & Fdx CBA negotiators and the voting ALPA member. What comes to mind is FDA 1.0 & 1.1. The FDA was a deal breaker. Yet the majority either didn't read it or AT&T he time, focused on the COLA 3% raise and voted the CBA in (only to pay for it later).

Yesterday, while taking to a WB CA, it was obvious he was unaware of current discussion of changing the R&I section and possible creating a B scale divisive retirement debacle. Anecdotal, but my fear is how many others have their head in this sand on this issue?

My thoughts are FDX MGMT may occasionally beat themselves on issues like Zap mail and common FLT Deck MD-11/MD-10. But they've rarely lost a chess match on CBA issues. I doubt they will pony up on a B plan that is equitable to an A plan and structure the deal where a pilot gets to chose what's best for his situation. Thereby opening the can o worms.

Count me as this is a likely deal breaker and the first section of TA to be read.

It would be wise to ask fellow pilots if they are aware that a movement is afoot on this R&I issue. Let's not repeat FDA 1.0 & 1.1.

 

As part of the history lesson, it should be pointed out that FDA 1.0 was a stand alone vote and not part of the CBA ratification.