NC Update
 

Perhaps I have missed some information recently....but I am confused (and concerned) about the language in, and tone of, today's NC update.

To be more specific....the last sentence of the third paragraph where they mention "already employed".

Have I missed something or is this a new stance from our side?:eek:

The Association is seeking an increase to the $260K cap on the A Fund high five limitation

The company is seeking to replace the A Fund with a larger B fund for new hires

UPS and Fedex are the only major companies with active A funds

A larger, portable B fund is the new industry standard at other major carriers

Clearly, switching to an All B fund retirement is a cost reduction/win for the company

Again, I thought our (the union) position was no B-scale type retirement. This update very specifically talks of benefits for folks already on property making me think they have accepted (or are willing to accept) a different retirement package for future hires.

Did I miss something?

For a 30-something hired a DC plan with an 18-20% (ala United/American post bk) might be attractive. Why? Accumulate enough in 20-25 years and can walk as desired…no requirement to wait until 60 or take a hit if you go at 55. Any DB plan, however faces some pretty serious risks too:

1. You have to make enough income to make that 18% mean something. Furloughs or LOAs (not mil) could cost you…

2. The Government's 415-c limits on retirement savings. Right now it is about 52k. There have been initiatives in the past to limit those to 20%/20k per year, which would put a major dent in any benefit those DC plans would accrue.

3. Interest/investment risk. Obviously--if you put your DC plan into an investment that fails, you lose big time.

IMHO, its # 2 that is the biggest unknown. With our disability plans and time on your side, I think 1 and 3 can be mitigated. 2 is just too murky….

Alaska and a few other places offered their pilots a rebalance option. If a pilot at FDX was lucky enough to get a high 5 early in his career (good timing, flex instructor, FEPP winner, etc) freezing your current pension (ala American or NW) and taking a much higher DC plan might make you more in the long run. It would certainly be more beneficial to your family if you pass away before you retire or shortly thereafter. I"m not an R&I guru but you can run your own calculations. The guy who is going to get his high 5 his last 6-7 years probably isn't interested. That guy who got hired at 32 in the mid 90s and has been a WB captain since 2001 just might.

In the past apparently FDX offered a rebalance, but the calculations showed it was worth about 25 cents on the dollar to the current plan. There probably is a formula to make a DC plan (B plan) worth what a DB plan (A plan) is currently worth, but I have no idea what the numbers are. Fortunately, its just math and someone can figure it out.

This is going to get interesting as the information of the positions comes out….

So what you are saying is it ain't a B scale? If so I concur.

I have no idea on any of it. I have my popcorn bag out for this.... Also got a hat and another job if required...

I think there are a lot of us intended consequences with an A plan. I like mine, wouldn't trade it, but times change. Listening to offers should never be discouraged, I would hate to have Fred hire some Harvard grad with the sole mission of figuring a way to screw us out of ours.

If we vote in a B-scale retirement, how long before the "killer B's" do to us what they did at American?

To be more blunt:

If we screw the young, someday they will out number us, and screw us in return.

How would you like to have your A plan taken away because the majority doesn't have one, and they negotiate it away because they don't care if you lose it?

A B-scale retirement will eventually divide the crew force.

We have enough problems already, without creating more.

Amen to that
 

A fundamental change in R&i for those not on property is very dangerous territory long term.

Be careful what you ask for/ratify.

And the congregation said, AMEN!







.

I'm a little scared right now because I agree with Tony.


Some at both ends of the spectrum are pushing for no or a smaller A plan. Those at the top will be gone in 5 years or less and won't have to deal with the consequences. Those at the bottom will have a long time to accumulate wealth under a revised system.

The A plan will NEVER be paid anywhere near 100 cents on the dollar during a conversion. Those with little invested don't care anywhere near as much the middle 70-80%.

I don't think 4,600 of us will ever agree on what the ideal retirement plan would look like. There are pros and cons to every proposal I've ever heard, including the proposal to pay us in gold. Currently our A plan exceeds what would be protected by the PBGC if FedEx were to ever go bankrupt and dump the A plan. Currently there is no way under tax schemes to completely replace the value of an A plan with B plan contributions. I am in favor of rebalancing to the extent that it can be done, and I am in favor of offering options. For example, some people would opt for lump sum payouts, some would not.

What I strongly believe, though, is that we should ALL -- senior to junior to not-yet-been-hired -- have the same plans, or at least the same options. The day we show The Company it's OK to discriminate against one minority group is the same day we show The Company it's OK to discriminate against ANY minority group, and that's were we begin the slide from unity of one large group to fighting amongst many sub-groups. DON'T give The Company that wedge.






.

Uhh, Alaska Airlines…. "A" fund?, and they're a "legacy"…
Plus, they can retire with 30 yrs of service, regardless of age… at least that's
what my buds that fly there have told me? oh and they have instantaneous trip trading…

just saying.

Z

Well said Tony C.......

I am concerned about my retirement but I am more concerned with creating a sub class within our group......which is what this is all about.

.............
+1

It will only be a B-scale if we allow it. There is a number out there that would make us A-scalers envious. Let's see where it takes us.

My guess current hiring trends, 35 years.

See paragraphs 4 & 5 below...the retirement benefits for new hires changed in 2009

Alaska Airlines Pilots Approve New Four-Year Contract

5/19/2009 12:05 p.m.

SEATTLE. The pilots of Alaska Airlines, represented by the Air Line Pilots Association, Int'l (ALPA), have voted to approve a new four-year contract.

Of the 95 percent of pilots who voted, 84 percent did so in favor of the agreement.

Effective April 1, 2009, the new contract for Alaska's 1,455 pilots includes pay increases, retirement options for current employees, and work rules that provide increased flexibility for pilots and improved productivity for the airline.

The company's defined benefit pension plan will be closed to pilots hired after ratification, reducing retirement funding risk.

Pilots hired post ratification will instead participate in a 401(k) program.

Additionally, pilots will participate in the same performance incentive program as the airline's non-union employees, executives, dispatchers and flight attendants, and will share equitably in health care costs.

"This pilot group, and pilots across our industry, have watched our pay, benefits, job security and quality of life erode since 9/11," said Capt. Bill Shivers, chairman of the Alaska Master Executive Council.

"While this contract doesn't restore everything, it does provide increases in pay and improvements in our work schedule and retirement flexibility while allowing our company to remain poised for success.

We believe this is a positive step toward repairing the relationship between this pilot group and our management so that we can work together to achieve a company culture where everyone succeeds and prospers together."

"We appreciate the hard work by everyone involved in helping us achieve this multi-year agreement, which provides the right foundation for our pilots and airline to succeed long term," Alaska Airlines President Brad Tilden said. "I'd like to thank our pilots for maintaining their focus on safety and providing great customer service throughout a long negotiation process."

ALPA and Alaska Airlines began contract negotiations in January 2007 and reached a tentative agreement last month.

The pilots' last contract, awarded by an arbitrator in May 2005, cut pilot pay by 21 percent to 35 percent.

ALPA represents nearly 54,000 pilots at 36 airlines in the U.S. and Canada, among them the 1,455 pilots of Alaska Airlines, including the 60 pilots currently on furlough.

For more information, visit www.alaPilots.com.

NC Update
 

Unlike PBS, I've not yet heard anybody say it would be a "deal breaker" for them.

Unless we all have the same plan, or at least the same options, a B-scale group would be a deal breaker for me.

Not yet they haven't. Partly because most don't know how a conversion would only yield 10-20 cents on the dollar.

An ethical MEC will not go down this road of screwing the middle 70-85%

No Concessions
 

No Concessions Period. Consider the latest press release below:

"FedEx Corp. reported the following consolidated results for the second quarter:

Revenue of $11.4 billion, up 3% from $11.1 billion the previous year
Operating income of $827 million, up 15% from $718 million last year
Operating margin of 7.3%, up from 6.5% the previous year
Net income of $500 million, up 14% from last year's $438 million"

This company makes a ton of money...always has as far back as I remember. We cannot allow ANY concessions in this contract. Not only is it unwarranted, WE HAVE CONTRIBUTED to the success of the corporation in immeasurable ways. While some in mgt would love to stick it to the new guys then ride off into the sunset streaming a golden parachute only WE can say no. I will vote no to ANY attempt to screw a pilot on the property now or a kid that is building time with dreams of flying here. We simply can't allow this. I don't give a hoot what "Legacy" carriers have or do. It's apples to oranges.

teNot to worry we will never see a "conversion" of our current A Fund Pension. The Company loves having the plan in place and it will always stay that way as it remains a good place to stash money for profitable company's. So a viable pension fund is a good thing, what is not liked by the Company is continued accrual of new plan members as this yields balance sheet problems in the eye of the investment world.

What could happen is a change via some new options. In no way would I expect a sell out of new hires, but the vehicle used to get a retirement pay out that is equal to our current plan could look different for them and I am sure many on the property would love to have an option to balance their exposure to so much DB money in exchange for more DC money going forward. Make no mistake, a retirement plan weighted more or all on DC has issues like Albie talked about but it also can be a more costly option for the Company as they have to actually pay that money now but once that money is out the door it is off the books.

Flexibility and the support of our R and I experts is critical in covering our six and the six of any new pilots so that we do not create a disparate benefit.

I would suggest that all read the book Retirement Heist. I can guarantee you two things as you read it. You will say to yourself "This can't be legal?". You will also get angry.

This link is a short YouTube review of the book.

Politics Book Review: Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of Am... - YouTube

Concur on all counts. However, "B Plan" is not equal to "B scale".

If new hires got 100% match in a B plan, that would certainly NOT be a B scale. If we could freeze our pension and get a 100% B plan (better defined as defined contribution plan), that would be huge.

On the other hand, giving up a pension for the existing 7 % defined contribution would be a loser.

So--is there a number that actually makes a defined contribution plan worth what our current defined benefit (A plan, or pension) is worth? I dunno.

But here is what we agree on--new hires do not need to placed on a B SCALE. B SCALE is a no go. But don't confuse your Bs…..

Fact is, a 30 something hired in 2016 might prefer a larger DC plan over our current DB plan for portability and risk management. It just comes down to a math problem if we are in fact offered such a plan.

Good news is everyone has a vote. If its not a good plan, it shouldn't pass. Reviewing my own finances, with a military pension already secure and some good earning years behind me, a rebalance might help my family. Your situation may be different.

But again--nobody gets left behind. That will haunt us for years if that occurs.

There is a debate for sure.

But you also need to be aware of relatively recent legislation that places new restrictions on management in this area. It's no accident laws were changed after PBGC liabilities went thru the roof. I wish tens of thousands didn't have to feel needless pain before changes were made.

This may be good for those hired 2001-2005 with years of widebody CA passover pay under their belt. At conversion your high five up to that date will probably yield a good conversion lump sum and you're still young enough to work a nice B fund.

How many of us fall into that demographic?

Do the Math
 

For those interested go to
Inflation Calculator: Bureau of Labor Statistics
Type in $120K and use 1994 as your base year. The result is $189k
$110k = $173k or maybe use $100k = $158k
I'm using different retirement numbers for that year because I am unsure of the exact A plan limit we had in 1994 but I'm pretty sure it wasn't less than $200k for your high 5. The point is this is an issue for even the youngest pilot here at FedEx. The A Plan must be fixed or when you younger guys retire it will be worth next to nothing. The only enhancement we have had to our retirement since 1994 is a B Fund. Not sure that makes up for the above erosion of our A Fund purchasing power. Will the retirement math gurus please chime in.

There will never be a lump sum conversion. It would be a freeze and most likely only by your choice if you wanted a new dc number going forward. There will never be enough money on the table for that to occur.

Sirs:

The FedEx defined benefit plan is just a bit behind when compared to the current IRS limits. When our $260,000 x 2% x 25 years was established for a cap of $130,000 annually over 20 years ago, the amount was probably appropriate and valid. As you can see below, the 415 plan cap has increased just a little. If our MEC and the NC aren’t targeting substantial increases in our retirement plans, I doubt there’s little chance a T/A will be ratified. I’m not sure about [your] thoughts, but I think a $70,000 retirement pay raise is deserved and appropriate! Increase the 2% multiple to 3% and we’re essentially there.

From the IRS code: “Effective Jan. 1, 2013, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $200,000 to $205,000.”

It’s time for a LOT of CBA improvements. Scheduling (accepted fares, real time trip trades, deviation policy), health care, scope, pay, retirement … are just a few. We also need to lose the reference to "accepted practice", the Flight Crew Handbook, and "that's the way we've always done it". The CBA is the rule book, and I could care less how things were done in 1994.

Very Respectfully,
Nakazawa

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.

NC Update
 

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.

History lesson
 

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.