fly2ski

I'm sure the master spinner, CD will talk about how great a deal this is. I hope he gets the pulse of the crew force in the hub turn meetings tomorrow

DLax85

I'm struggling to understand this post.

You close by saying there is no "free lunch" (...I agree)

But earlier you state there may exist a "cost neutral solution" (...I assume you mean from the company's perspective), that the majority see as a "personal win" (...I assume you mean from the pilots perspective) --- But then state "it will not be without cost"..???

Who's paying this "cost"?

Certainly not the company ( see "cost nuetral" above)

I'm sensing this will be a trade off between --- let's raise the cap quick, even if we have to accept greater long term risk my changing to a variable A plan

Am I reading your post correctly?

Adlerdriver

I hope those in attendance can squash this. Report please.

It's truly unbelievable to me that time and our money is being spent on this. The line is the sand drawn by the company was in part due to the now somewhat draconian funding requirements put on any company that still operates a classic pension. The US gov doesn't want to end up getting saddled with that bill as it has in the past and I can understand why.

FedEx doesn't want that bill either and they sure as hell don't want it to increase.... hence the line in the sand. I'm not going to attempt to argue that they could have paid to increase.... we all know they could have. They just didn't want to. That ship has sailed. The company got their essentially cost neutral contract they readily admitted was going to be funded by savings realized via the same contract and other cost cutting measures.

If we do nothing, the A-fund remains... funded, out of ALPA's control (and potential to eff it up), 100% the responsibility of the company who cannot out lawyer the US government or wriggle out from under their responsibilities.

There is ONE AND ONLY ONE, single possible reason why the company would even entertain the idea of "improving" our retirement beyond the pittance resulting from CBA 2015. That is to craft the situation so that they are no longer subject to the current pension funding rules and can reduce the current, non-negotiable, line item they currently have no choice but to pay. The perfect storm of conditions that would have to result in order for them to legally avoid this is simply not a realistic possibility based on the current situation. So, it can only happen if we agree to do it to ourselves.

The end result may result in some sort of actual monetary benefit over and above our current A-plan. It will be the equivalent of cents on the dollar when compared to what the company will manage to save themselves (so why wouldn't they agree). It's highly likely that this improvement will be subject to market forces and will have the potential to be diminished, possibly below the current level of a maxed out A-fund (i.e. risk, that doesn't exist now).

But the biggest thing to consider isn't what the checks look like a year or two after we do this. Once this A-fund has been lifted out of the safety of the kiddie pool monitored by the strapping lifeguard known as the US government, all bets are off. The company will give us what looks like a worthy life preserver and push out into the open ocean with a pat on our head. Now will we now be subject to the potential storms of the market, industry and bad management of our company. In addition, the company will now have the option to attack and weaken what they just crafted with each and every contract negotiation cycle. They will play the long game and anyone who thinks whatever temporary improvements might be gained will last is a fool. We will be out maneuvered in the end and our life preserver will be in shreds.

If this happens, the amazing thing will be, that we agreed to do it to ourselves.

dckozak

Feeling rushed (right before I posted) doesn't help when you try to articulate complex thoughts. A lot of people posting seem to be "in the know" regarding what the union may be proposing. I am neither "in the know" nor read up on the opinions about what may be proposed; I'll wait for Chuck to present whatever they are thinking about.


This is just a presumption. Based on other parts of my post, I assume there will be some give if we get an improvement in retirement. That give, in my estimation will be risk, as others have alluded. Is additional risk worth changing the plan?? I don't know, I haven't heard the terms, but I am willing to be open minded about it. Keep this in mind; the way we are going with a decreasing value A plan and a larger B plan (as a future % of one's retirement income) we are already on the path to carrying more personal risk. If we do nothing, junior pilots retiring 30 years from now will probably need their B portion of their retirement income to be upwards of 70% of their portfolio . So anyone who thinks staying with the status quo doesn't increase investment risk is deluding themselves.

Agreed, we can expect to get no better than cost neutral and may wind up with less. I think the increased risk is a given. I will be up to the union to assure we don't pay for this improvement, as in cost negative to the crew force. My guess is no matter what the union preposes there will be plenty nay sayers who will see the glass not half empty but totally so. I'll wait to hear and judge for myself.

Yes

We accepted the terms when we voted in the contract. There was plenty of discussion about this issue. Anything we do now will involve some give and take. We are not in a power position. Junior guys I was flying with before the vote (who were yes votes) took the position that they would make up the shortfall though the B plan. Good for them (if 20-30 years from now, they invested wisely) and sucks for the older pilot more dependent on the fixed income portion. We all vote what is in our best interest. Many I have spoken to in the past wanted all the money under their control. Well, one way or another, I think they got their wish. Let's hope we don't fall into a trap and make things worse for (some??) at the expense of all.

mempurpleflyer

Exactly. Everyone needs to read the above post a few times. This isn't that hard. The only reason the company will be interested in playing ball is because it will give them relief on their current funding obligations. That is why they were not willing to budge on A Plan improvements during contract negotiations.

So, the question is...is there an option that (1) relieves the company of their funding obligations, without (2) shifting those obligations to the pilots and (3) provides a guaranteed benefit, better than what we currently have, that is not subject to market conditions?

If you can't meet all 3 of those qualifiers, we lose. We lose because more of the expense risk is shifted to us and we lose because the benefit is subject to fluctuations in the market.

It was mentioned before..."there is no free lunch". That is a true statement in all endeavors of life. If we are going to walk away with a retirement package that is better than what we currently have, somebody is going to pay for it. And if the company if jumping at the chance to pay, you better ask yourself why.

DLax85

A hybrid approach with the current (non-variable) A Fund and an increased B fund (with cash over cap) is a better approach

The variable A fund puts our (your) benefits at risk without our (your) control

Under a variable A plan, a third party makes the investment decisions, and they are not held accountable if they don't meet the hurdle rate --- we (you) are!!

We (your) retirement benefit decreases!

I'd rather see this increase in our B fund, under each pilots individual control

Each pilot then makes the best decisions for themselves

No pilot on property has to accept increased risk just to benefit another pilot who desires to do so

DLax85

All great points --- and an excellent conclusion.

The union wants to improve retirement --- great!! --- but there are many ways to do it.

Are they truly exploring and talking with the company about all options?

mempurpleflyer

100% agree and that's my point. Why are we going down this road of exploring other types of plans when, in fact, they shift more risk and cost to us.

I like our A Plan. I realize that eventually it will die by inflation but that is many years down the road. A better B Plan with "Cash Over the Cap" would help offset the diminishing buying power of the A Plan benefit.

This was done with our last contract through the small B Plan bumps. The problem is the bumps are too small and, with no "Cash Over the Cap" provision, there is really no additional benefit to pilots once they hit the IRS limits. We need our current A Plan and a bigger B Plan with "Cash Over the Cap" to "fill the A Plan gap" created by inflation.

Job stability, vacation and retirement are the real incentives for working at FedEx. If our retirement is going to be no better than the pax carriers, why would someone come here for 20+ years of backside of the clock flying when you could go to a pax carrier and fly during the day...and get a 18% B Plan with "Cash Over the Cap"...and get profit sharing.

DLax85

Everyone, please take the time to read this --- its very important we all understand some new terms associated with variable retirement plans

Here's a passage that really jumped out at me..,

"The first questions that most people familiar with pension plans ask is, “Is that legal? Can an accrued benefit decrease?”

The answer is yes, it is legal.

While not widespread, this plan design is already being used in the US with approved Determination Letters from the IRS.

It is also important to note that as long as the hurdle rate is at least 5%, the plan is not considered a “statutory hybrid plan” per final IRS regulations and thus would be exempt for those special rules."

Hmmm --- "Dont worry, it's legal"

As pilots, where have we heard that before?

Typically, from whom?

Let's apply FOM guidance

1 Safe?
2 Legal?
3 Reliable?

1 out of 3 not good enough for me

DLax85

And note this paper only gives an example of a "bad year" with a zero percent return

What happens when the fund has a "really bad year" --- a negative return!

The decrease in benefit will be much greater. (Remember, this is exactly the risk companies don't want to take)

Even with a positive return that falls below the agreed upon hurdle rate, the benefit decreases (...and note, a 5% hurdle rate is the statutory minimum)

Given the current A fund investment allocation should return about 4.5-5.0%, the potential upside to these plans may be inflated