No pension.

I actually would expect something like this to happen soon.

Bring back DB, eliminate DC, company saves a ton of cash for a few years.

The old guys would rejoice, pension and all those years of DC “youre welcome kids!”

Then, once the costs got too high, sorry. We have to cut it to save the company again. Guess you guys are SOL.

Here’s the thing…..where do you think pension boards invest pension money?

IN THE MARKET

The diff though is that if an individual hasn’t diversified accordingly, a 22% market decline affects only themselves.

If every employee is in a pension and the market drops 22%, it puts the entire pension plan under duress which affects everyone.

A well diversified, properly allocated 401K plan is light years better than a pension due to the lack of systemic problems in a market down turn.

It’s as simple as putting your 401K in a target date fund and checking back in 30 years.

Heck, with a 30 year timeframe you can just leave it in an index 500 fund. Thirty years will tame a $hitload of stock market volatility. Besides, you aren’t going to take any out of a 401k until you are 72 and 1/2 and then only the required minimum distribution (~4% per year to start) because it’s more tax advantaged than your other investments.

Not if it is done properly.

Kind of, but it's a bit more nuanced than that. You're on the right track though.

There have been decades where international and small cap / value outperforms the S&P 500. So you really need a proper mix of everything if you want the most return for the lowest risk. Just being in the S&P 500 can be risky too in the fact that you wouldn't have made as much as you would if you were globally diversified among all asset classes. You won't lose money over the long term in the S&P 500, but it isn't always the best performer in and of itself.

Also, the closer your time horizon draws, the more you should be putting into bonds instead of stocks so that you are less subject to volatility when you are going to need to start drawing off of the portfolio.

I’m actually shocked that a civil, thoughtful discussion about bringing back the pension has ensued on this thread.

The 2nd Amendment is what stops the Feds from doing that.

yes I’m sure your fantasy of an armed uprising will happen when the tax laws change

And here we go again…….

(Not directed specifically at you OOfff, just the argument in general).

What do the stats say? Most people have less than 45k in their 401k if anything at all?

Don’t see those folks lighting the torches.

You were saying....

The government will/is inflating away our buying power indirectly. Accepting 4% inflation now, reinventing inflation indexes means they don’t have to do anything to tax citizen’s retirement savings.

Why do you want an inferior retirement plan?

Once a super majority has next to nothing, and what little they did have has been inflated out of existence, the progressive train of thought will go to making retirement equitable for all by seizing retirement assets and allowing the govt to dole them out more equitably.

Guns won't stop a mob or when the govt just seizes the assets and a majority of the public is fine with that.

Well, it has already happened here in the late 1700s and again in the mid 1800's. You should study some history.

Any proof of this? People say this all the time as if it's a fact. Is this just one of the fear-mongering talking points Tucker and the gang shout at you while you're on your Laz-ZBoy?

No more than your fantasy of the government confiscating retirement funds.

can you point me to the post in which I advocated for this? Or hoped for it?

or are you just making things up about me again?

The Delta MEC has actually asked this question several times, and fully costed out the answer in 2016. Step up for ALPA work, sign an NDA, and you can read it yourself.

-and-

Fun fact, the PBGC regards the Market Based Cash Balance Plan as a defined benefit plan.

Oh, so only you are allowed to do that?

so, is that a no? You cannot show me where I said what you accused me of?

stay weird.

So decent social security that ensures a financially secure and enjoyable retirement instead of a barely adequate one is as terrible as deleting student loan debt? Oh no..please. No. Stop. don't.

You mean the same SS that is completely underfunded and the government has no idea how to make it back? Show me anything the gov has touched that fiscally hasn’t turned into a disaster. No thanks, ill pay my taxes that both parties can F away, and I’ll keep my own $$. Same with pensions, to bring it back full circle. No matter what happens to Mother D in the future, that $$ is mine.

So let me get this straight.... somehow it is MY responsibility to provide for YOUR retirement as well as YOUR college loans?

Well then why am I working at all? I can sit home and let someone else provide for my 'needs'. Social Security is not supposed to provide a comfortable retirement. Social Security is a supplement at best, a safety net at worst. Nevermind that it is the biggest Ponzi scheme in history, but nonetheless it was never intended for that.

Pensions are investested in the stock market. The middleman has proven to be the problem.

I agree with you in regards to social security. However, your post is a little bit humourous as you seem to want younger pilots to pay for YOUR retirement.

That is where you are completely wrong. I don't want ANYTHING from you. You have run with the mantra that I want you to pony up monies to me and that couldn't be further from the truth. But since you are against having the company doing anything that would have righted the wrong, now I am praying that I can keep your seat warm for you for an extra two years.

If you don't want junior guys to pay for your retirement, who does then?

Im still pretty impressed though, we got through a full 5 1/2 pages of civil discussion before it devolved into another mud slinger.

Just to be the devil's advocate...
Didn't the senior guys pay for your higher pay rates? Or your profit sharing? Or your QOL to date?

​​​​​​
Mine or ours?

Even still, that isn't the argument. 007 even admitted he doesn't want junior guys to give up anything for his retirement. So, the question I asked was, if we aren't giving up anything, who is paying for it?

the difference being they also benefitted from all those things, it’s not like they did that out of altruism for us. And most those things minus PS were negotiated during a contract as improvements not something that was necessarily “paid for”.

A min balance would likely not benefit anyone who retires more than 7-10 years from now, which is 2/3-3/4 our list. It would also disproportionately benefit those with only a couple years or less to go. Conversely it would take away the ability for pilots to invest and get decent returns and lock in a VERY low rate of return, taking actual retirement money away from others.

The same people that write our checks.

Yes, because if guys soon to be retired were going to get $2B worth of an investment in the next 5 years, the company would have never given it to the other pilot groups in any other form like compensation, medical or QOL That's just not how negotiating a contract works and to believe otherwise is a pretty thinly veiled gaslight.

wow. You are something else.

Well then how about the government just pays every senior 100k a year in social security benefits? It's the government paying for it anyway, not younger tax payers, right???

I'm not the one making the claim that "I'm not asking junior guys to pay for my retirement." You are. And, by definition, any targeted gain with that substantial of a sum is paid for by not giving monetary gains anywhere else.

Ehhhh, this is only partially true, and fails to tell the whole convoluted story.

Yes, pension funds are invested in the market. However, the assumptions used to calculate fund liabilities are extremely restricted. You can have the ace of aces investing your fund, but if interest rates are very low, as they have been, your forward looking liability is based on 30+ years (or whatever actuarial model they're using) of essentially zero interest. THAT number, minus what's essentially in your current day fund, is what drives contributions. Compounding liabilities year after year with near zero assumed return is a crushing load that no market gains can recover.

Think of it like this: The pension is your mortgage. You have a good rate, you have a good job, and you make your payments on time. One day, through no fault of your own, you lose your job. The bank says "you lost your ability to pay, so we're calling your mortgage". You say "well, wait, I'm a smart person, I have money in the bank, I can make my payments while I look for another job". Bank says "we don't care. You don't have a job NOW, which is what we're basing our decision on. Besides, the economy is bad, even if you hadn't lost your job, we're expecting you will, so even if we don't call your loan, we're jacking your payments up 400%, which you could't pay anyway, so we're calling in your loan".

"Ah ha!" you think to yourself, "I'd never get myself into this predicament, because I'd be paying my loan off early". Nope, IRS forbids you to do so, because they consider that a tax dodge.

ERISA is designed to protect pensions, but it does so in the most convoluted way possible (I know, big surprise, right?). It does this by preventing wild-ass assumptions on fund performance, which is fine, but only to an extent. The problem is, when the economy goes south, the first thing that happens is the value of the fund decreases because the value of the assets generally decrease. But those things recover, even if it takes time, and only a certain number of beneficiaries are taking funds at any one time. But along with the decrease in the fund value, interest rates usually also go down, which jacks that forward looking liability number WAY up. Put -2 and -2 together, and you can winding up with a pension fund that is grossly underfunded...on paper. This number actually bares little relation to the actual ability of the fund to pay.

The truth is that fund value recovers with the economy, as do interest rates, at least usually. But ERISA requires that funding to be made NOW. And if the economy is bad, well, chances are your business doesn't have a spare billy to toss in the pension fund because the math sucks today.

A couple of other Baby Ruths in the pool at the club:

The IRS actually prohibits over funding of pensions. Pension contributions have tax advantages, and the IRS does't want pension overfunding used as a tax dodge. So one potential avenue to prevent this kind of thing from happening is actually prohibited by essentially the same entity that is charged with protecting pensions.

There is a fundamental disconnect with long term interest rates and the economy. This number, baring some peaks and valleys, has been pretty stable over the years. People are losing their minds over interest rates right now, and they really haven't approached even the low side of historically normal. Some of you are really into waving red flags, so here's one for you....an economy that needs near zero interest rates to operate is not fundamentally healthy. This has been going on for the last 15 or so years, since the crash of '08. I get that paying more than 3% for a mortgage or the note on my new Miata stinks, but yea, not healthy.

So you ask yourself "well, what if the opposite happens?". Good question, and we're seeing this play out now. A lot of pension funds have had forced contributions to them over the past decade, based on a stupid high liability generated by zero interest rates. Fund values have been generally going up, but without the boat anchor of low interest, the new calculations get...very weird. A pension that is nominally funded, say between 90-100% of what the previous liabilities calculated, suddenly find themselves very overfunded.

Things happen at this point...the plan sponsor could voluntarily terminate the fund. I strongly suspect this will be done wherever possible where it is not otherwise restricted. This is usually done by paying out to the beneficiaries the current dollar value of their benefit. Adding in some admin costs, that number is usually 105-110% funded. They get to keep the rest.

That's your opinion Chief.

Is this how you see it going? "Okay, now that we've agreed on all the sections, we'd like you to set aside a few Bil for pensions for guys who are about to retire."

JB, honest question.

Do you honestly believe the company will ever just pony up billions by “making the pie bigger?” Or do you think it more likely they will never agree to that without reducing other areas of the contract?

Even if it’s somewhere between the two, is that not taking from the masses to fund a major liability to a few? NH uniforms, hotels, PS commuting, etc are budget dust by comparison, so that doesn’t factor in.