Fedex Pilots proposed retirement plan
#131
Gets Weekends Off
Joined APC: Nov 2016
Posts: 936
I'd like to know if this is true. I'd also like to know if Fedex is returned the remaining funds left in the annuity after death. Hopefully ALPA will edumacte us on all this. I'd actually prefer a check for 2.4 million at age 60 and I'd be long gone. But the company would never do this because the majority of pilots would leave at age 60 imho.
I'd also support ALPA taking over the pension if I could get a 2.4 million check at age 60 and forego and pension payment.
I'd also support ALPA taking over the pension if I could get a 2.4 million check at age 60 and forego and pension payment.
#132
Gets Weekends Off
Joined APC: Dec 2007
Position: Retired
Posts: 404
I'd like to know if this is true. I'd also like to know if Fedex is returned the remaining funds left in the annuity after death. Hopefully ALPA will edumacte us on all this. I'd actually prefer a check for 2.4 million at age 60 and I'd be long gone. But the company would never do this because the majority of pilots would leave at age 60 imho.
I'd also support ALPA taking over the pension if I could get a 2.4 million check at age 60 and forego and pension payment.
I'd also support ALPA taking over the pension if I could get a 2.4 million check at age 60 and forego and pension payment.
#133
You do understand the concept of an annuity, right? The money is paid over time into a fund and is paid out over time based on the type of payment option you select. It is all based on actuarial data. If you chose not to have a survivor option and elected not to have a "refund" option and die at age 68, the excess funds remain in the account to pay benefits to someone who is fortunate enough to live to 93. There is no refund to FedEx.
Of course the main factors are:
1. Assumed # of payments "paid into the fund" for each pilot (Assumed retirement age minus assumed hire age)
2. Assumed fund yield
(Which we have insight via published financial statements. This appears to currently be in the 4.5%-5.0% range)
3. Assumed # of payments "paid out to the retire"
(Assumed life expectancy minus assumed age at retirement. I believe the IRS assumes approximately 85 years; meaning the company has anywhere from 20-30 years of payouts, on average, given possible retirement ages from 55-65. I feel this distribution is nowhere near uniform; as few pilots retire early, and more and more are going close to 65.)
Given these assumptions, they can model/determine the cost of providing an additional $1 of pay out in retirement
Over the past 10 years a number of factors has changed:
Historical rates of return have dropped, mainly due to a decrease in US bond yields --- which make up approximately 50% of the funds investment portfolio
But, I'll suggest the # of assumed "payments in" has increased, while the # of assumed "payments out" has decreased --- due to the change in the regulated age, and a majority of our pilots choosing to work beyond 60
The big question is then --- how much have each of these changes affected the model?
Has funding the A fund truly become more expensive?
If so, by how much?
Haven't the lower investment return rates been somewhat offset by longer periods to pay in, and shorter periods to pay out?
I sincerely hope the union discloses the data, model, and underlying assumptions they ultimately utilize
Transparency is needed for trust....and we're paying for it.
Of course, it's easy to see why the company bean counters would prefer a straight B fund --- it's far simpler, and eliminates their investment & actuarial risk
#134
The union is paying for consultants to "model" Fedex's A fund to determine the true cost to FEDEX --- i.e. Does it really cost them $3 to $4 to increase the benefit $1?
Of course the main factors are:
1. Assumed # of payments "paid into the fund" for each pilot (Assumed retirement age minus assumed hire age)
2. Assumed fund yield
(Which we have insight via published financial statements. This appears to currently be in the 4.5%-5.0% range)
3. Assumed # of payments "paid out to the retire"
(Assumed life expectancy minus assumed age at retirement. I believe the IRS assumes approximately 85 years; meaning the company has anywhere from 20-30 years of payouts, on average, given possible retirement ages from 55-65. I feel this distribution is nowhere near uniform; as few pilots retire early, and more and more are going close to 65.)
Given these assumptions, they can model/determine the cost of providing an additional $1 of pay out in retirement
Over the past 10 years a number of factors has changed:
Historical rates of return have dropped, mainly due to a decrease in US bond yields --- which make up approximately 50% of the funds investment portfolio
But, I'll suggest the # of assumed "payments in" has increased, while the # of assumed "payments out" has decreased --- due to the change in the regulated age, and a majority of our pilots choosing to work beyond 60
The big question is then --- how much have each of these changes affected the model?
Has funding the A fund truly become more expensive?
If so, by how much?
Haven't the lower investment return rates been somewhat offset by longer periods to pay in, and shorter periods to pay out?
I sincerely hope the union discloses the data, model, and underlying assumptions they ultimately utilize
Transparency is needed for trust....and we're paying for it.
Of course, it's easy to see why the company bean counters would prefer a straight B fund --- it's far simpler, and eliminates their investment & actuarial risk
Of course the main factors are:
1. Assumed # of payments "paid into the fund" for each pilot (Assumed retirement age minus assumed hire age)
2. Assumed fund yield
(Which we have insight via published financial statements. This appears to currently be in the 4.5%-5.0% range)
3. Assumed # of payments "paid out to the retire"
(Assumed life expectancy minus assumed age at retirement. I believe the IRS assumes approximately 85 years; meaning the company has anywhere from 20-30 years of payouts, on average, given possible retirement ages from 55-65. I feel this distribution is nowhere near uniform; as few pilots retire early, and more and more are going close to 65.)
Given these assumptions, they can model/determine the cost of providing an additional $1 of pay out in retirement
Over the past 10 years a number of factors has changed:
Historical rates of return have dropped, mainly due to a decrease in US bond yields --- which make up approximately 50% of the funds investment portfolio
But, I'll suggest the # of assumed "payments in" has increased, while the # of assumed "payments out" has decreased --- due to the change in the regulated age, and a majority of our pilots choosing to work beyond 60
The big question is then --- how much have each of these changes affected the model?
Has funding the A fund truly become more expensive?
If so, by how much?
Haven't the lower investment return rates been somewhat offset by longer periods to pay in, and shorter periods to pay out?
I sincerely hope the union discloses the data, model, and underlying assumptions they ultimately utilize
Transparency is needed for trust....and we're paying for it.
Of course, it's easy to see why the company bean counters would prefer a straight B fund --- it's far simpler, and eliminates their investment & actuarial risk
#135
I believe one of the significant changes in the pension funding legislation was a decrease in the allowable "assumed rate of return"
The values they must use today are far less than those allowed in the 80s and 90s --- which immediately forces them to contribute more
However, the company cannot deny guys are retiring later and that has benefited the A fund in two ways
I'm highly confident, flying 5 more years doesn't increase your longevity 5 years
#136
Not a reason to kill the whole A fund --- keep our hybrid approach with increased B fund benefits
#137
Retirement proposal
First off ....... Anything passed along on the crew bus is BS
Second ...... Why would ALPA do such a thing ? Who here is crazy enough to trust this Union with this fiscal responsibility ?
Third ....... Hell No
Second ...... Why would ALPA do such a thing ? Who here is crazy enough to trust this Union with this fiscal responsibility ?
Third ....... Hell No
#138
Gets Weekends Off
Joined APC: May 2016
Position: 757
Posts: 146
Any changes that negatively impact the A fund will definitely force me to retire before the current contract is amended. I can't believe people are actually considering any reduction of the A plan, I don't care how high you make the B fund. Very short sighted in my opinion.
#139
Any changes that negatively impact the A fund will definitely force me to retire before the current contract is amended. I can't believe people are actually considering any reduction of the A plan, I don't care how high you make the B fund. Very short sighted in my opinion.
#140
No change made to our retirement system outside of section 6 negotiations will benefit the crew force more than it does the company. The only motivation the company has is to increase their bottom line. We had the upper hand before we caved on the current contract, that horse is now out of the barn. I will also take my money and run before any changes take effect.
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