Fedex Pilots proposed retirement plan
07-10-2017, 04:07 AM
#21
Gets Weekends Off
Joined APC: Mar 2012
Position: Two Wheeler FrontSeat
Posts: 1,162
Originally Posted by kronan
Yes,
greater returns as discussed in the link posted.
Few months ago CD held an AOC meeting, pretty fired up about some of the ideas being researched to potentially improve our A plan (need mgt agreement).
Ideas that wouldn't reduce or change the funding component, but reduce the administrative costs and pass those savings onto US.
For a newhire (or a retiree) the value of our A plan is going to decrease. Assuming a relative constant inflation our A plan's current value of 130k per year is cut in half in 28-30 years (sooner if Inflation spikes)
For comparison, over the same time NB Captain salary of 260'sh K will grow to 520'sh k...so what is currently a 50'sh % A plan for NB Captains (and FO's) will be a 25'sh % A plan (would be a higher percentage for FO's, just as you'd currently have to be a pretty hard working FO to wind up with an A plan that's less than 50%. But we do have FO's who make 260+ currently)
greater returns as discussed in the link posted.
Few months ago CD held an AOC meeting, pretty fired up about some of the ideas being researched to potentially improve our A plan (need mgt agreement).
Ideas that wouldn't reduce or change the funding component, but reduce the administrative costs and pass those savings onto US.
For a newhire (or a retiree) the value of our A plan is going to decrease. Assuming a relative constant inflation our A plan's current value of 130k per year is cut in half in 28-30 years (sooner if Inflation spikes)
For comparison, over the same time NB Captain salary of 260'sh K will grow to 520'sh k...so what is currently a 50'sh % A plan for NB Captains (and FO's) will be a 25'sh % A plan (would be a higher percentage for FO's, just as you'd currently have to be a pretty hard working FO to wind up with an A plan that's less than 50%. But we do have FO's who make 260+ currently)
Yeah you trust ALPA and the company that much huh? Believe what you want. Did they break down the risk involved and how the company benefits from such a brilliant idea.
07-10-2017, 06:02 AM
#23
Gets Weekends Off
Joined APC: Aug 2006
Posts: 1,820
Originally Posted by CompetentFool
So evidently FedEx owes our pension a couple billion dollars to meet this requirement in 2018. It's cheaper for the company to hand off the plan to ALPA and then allow ALPA to administer the plan outside of the PPA 2006 funding requirements. Thus the VAPP. FedEx continues to make monthly funding payments to ALPA but avoid the 2 billion cash payment due next year.
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The company wanted and got higher medical payments from the pilots because ObamaCare was going to cost more. They offered and got 50 cents on the dollar for not using sick leave. They offered 60 cents on the dollar to freeze the DB plan, but we rejected that idea.
Based on the 5% rate of return mentioned by Blitzstein, our current DB plan is worth a little over $30,000 per year if you retire with 25 years and are age 60 or older and the floor benefit being $130,000/year, matching our current DB benefit.
07-10-2017, 09:29 AM
#24
Gets Weekends Off
Joined APC: Nov 2005
Position: 757 Capt
Posts: 2,418
Yes,
I do believe the Federally mandated pension funding letters that much. The ones that indicate our Pension is fully funded.
This is a hypothetical discussion. And nothing can/will change without a pilot vote. If the hypothetical is a hybrid with benchmarks inline with the scenarios discussed in the link, hard to come up with a rationale reason for not switching.
Real easy to come up with an emotional one.
Better question than ALPA involvement would be is whether it's still guaranteed by PBGCC.
Guess What, if FedEx went TU and was given permission to hand over our Pension funds to the PBGCC our 130k A plan goes to a 60-40k A plan depending upon whether you retire at 65 or "early" at 60
I do believe the Federally mandated pension funding letters that much. The ones that indicate our Pension is fully funded.
This is a hypothetical discussion. And nothing can/will change without a pilot vote. If the hypothetical is a hybrid with benchmarks inline with the scenarios discussed in the link, hard to come up with a rationale reason for not switching.
Real easy to come up with an emotional one.
Better question than ALPA involvement would be is whether it's still guaranteed by PBGCC.
Guess What, if FedEx went TU and was given permission to hand over our Pension funds to the PBGCC our 130k A plan goes to a 60-40k A plan depending upon whether you retire at 65 or "early" at 60
07-10-2017, 12:36 PM
#25
Gets Weekends Off
Joined APC: Aug 2006
Posts: 1,820
Originally Posted by kronan
Yes,
I do believe the Federally mandated pension funding letters that much. The ones that indicate our Pension is fully funded.
This is a hypothetical discussion. And nothing can/will change without a pilot vote. If the hypothetical is a hybrid with benchmarks inline with the scenarios discussed in the link, hard to come up with a rationale reason for not switching.
Real easy to come up with an emotional one.
Better question than ALPA involvement would be is whether it's still guaranteed by PBGCC.
Guess What, if FedEx went TU and was given permission to hand over our Pension funds to the PBGCC our 130k A plan goes to a 60-40k A plan depending upon whether you retire at 65 or "early" at 60
I do believe the Federally mandated pension funding letters that much. The ones that indicate our Pension is fully funded.
This is a hypothetical discussion. And nothing can/will change without a pilot vote. If the hypothetical is a hybrid with benchmarks inline with the scenarios discussed in the link, hard to come up with a rationale reason for not switching.
Real easy to come up with an emotional one.
Better question than ALPA involvement would be is whether it's still guaranteed by PBGCC.
Guess What, if FedEx went TU and was given permission to hand over our Pension funds to the PBGCC our 130k A plan goes to a 60-40k A plan depending upon whether you retire at 65 or "early" at 60
07-11-2017, 07:07 AM
#26
Gets Weekends Off
Joined APC: Nov 2005
Position: 757 Capt
Posts: 2,418
Benefits would flux from year to year. Good years, benefits flex up for everyone drawing a pension. Bad years, benefits flex down for everyone drawing a pension.
How much flux depends upon the gates.
The nice thing about FedEx's management of our pension fund has been the realistic rate of returns and the continued contributions even when our plan met ERISA required levels. Way back in the dot.com days some of our pax brethren had companies predicting 10% or higher returns so no contributions needed and just got slammed in the financial tsunami.
Don't remember the timing, but FedEx recently reduced the expected rate of return. (think it's at 6% now)
It's something investors kinda pay attention to because excess profits on Pension funds can be used to artificially inflate company profitability and prop up stock prices
How much flux depends upon the gates.
The nice thing about FedEx's management of our pension fund has been the realistic rate of returns and the continued contributions even when our plan met ERISA required levels. Way back in the dot.com days some of our pax brethren had companies predicting 10% or higher returns so no contributions needed and just got slammed in the financial tsunami.
Don't remember the timing, but FedEx recently reduced the expected rate of return. (think it's at 6% now)
It's something investors kinda pay attention to because excess profits on Pension funds can be used to artificially inflate company profitability and prop up stock prices
07-13-2017, 09:55 AM
#27
Line Holder
Joined APC: Jul 2006
Position: MD11FO
Posts: 47
07-14-2017, 07:05 PM
#28
Gets Weekends Off
Joined APC: Jul 2006
Posts: 498
I'm sure this Blitzstein guy is a very smart guy. Way smarter than I am.
But....when we asked an expert (Blitzstein) for his analysis of our plan and his determination was that we would be better served by using the Variable plan that he has developed; I'm not sure that's a truly independent decision. When he teaches and publishes a "new solution" to DB plans, we should have assumed he was going to decide that our plan would best be served by adopting "his" type of plan. Maybe more than one "advisor" would give the MEC some additional avenues to pursue. Where are Fidelity and Vanguard in this process? They have huge teams of advisors that can project and actualize. I'm sure they would love to jump into this process with the hopes that they get full pie or keep the pieces of the pie that they have.
I have a big problem when one of the core reasons the MEC is declaring we must at least look at other options is because "we cannot get an improvement to our current plan." WTF. We didn't even try.
We were told repeatedly in the roadshows that we were finally shown the FDX "books" and we now understood why FDX could not afford any improvement, so we did not push harder. Then after we ratified, we are told that the MEC has NOW gotten some real good analysis of our pension plans and we need to look at other options. In the current videos they even expand on how much better they understand our pension plan now compared to before we ratified. So what the negotiation committee keeps saying is that they didn't understand the pension position while we were negotiating. But now that they "really" understand the pension, we must do something different in order to improve. They believe so deeply that we cannot improve our current plan, the MEC is making it a core position that there is no way to improve what we have. That's a big faulty logic position.
Just because what we have is not what the company would prefer, does not mean we have to give it up or change it to something else. WE can always negotiate for improvements to the Cap or cash over, etc. Giving up without really trying is what we did with the latest contract.
I don't mind the look around method. Maybe we'll find a better mousetrap. But the MEC cannot go into any deliberation with the expressed mindset that we can never improve what we have. What did the negotiation team expect the company to tell them? "We can afford more, but we really don't want to." No, of course the company said there is no way to improve the A plan. It's up to us to make them improve it.
But....when we asked an expert (Blitzstein) for his analysis of our plan and his determination was that we would be better served by using the Variable plan that he has developed; I'm not sure that's a truly independent decision. When he teaches and publishes a "new solution" to DB plans, we should have assumed he was going to decide that our plan would best be served by adopting "his" type of plan. Maybe more than one "advisor" would give the MEC some additional avenues to pursue. Where are Fidelity and Vanguard in this process? They have huge teams of advisors that can project and actualize. I'm sure they would love to jump into this process with the hopes that they get full pie or keep the pieces of the pie that they have.
I have a big problem when one of the core reasons the MEC is declaring we must at least look at other options is because "we cannot get an improvement to our current plan." WTF. We didn't even try.
We were told repeatedly in the roadshows that we were finally shown the FDX "books" and we now understood why FDX could not afford any improvement, so we did not push harder. Then after we ratified, we are told that the MEC has NOW gotten some real good analysis of our pension plans and we need to look at other options. In the current videos they even expand on how much better they understand our pension plan now compared to before we ratified. So what the negotiation committee keeps saying is that they didn't understand the pension position while we were negotiating. But now that they "really" understand the pension, we must do something different in order to improve. They believe so deeply that we cannot improve our current plan, the MEC is making it a core position that there is no way to improve what we have. That's a big faulty logic position.
Just because what we have is not what the company would prefer, does not mean we have to give it up or change it to something else. WE can always negotiate for improvements to the Cap or cash over, etc. Giving up without really trying is what we did with the latest contract.
I don't mind the look around method. Maybe we'll find a better mousetrap. But the MEC cannot go into any deliberation with the expressed mindset that we can never improve what we have. What did the negotiation team expect the company to tell them? "We can afford more, but we really don't want to." No, of course the company said there is no way to improve the A plan. It's up to us to make them improve it.
07-15-2017, 06:09 AM
#29
Gets Weekends Off
Joined APC: Sep 2007
Position: 777 Captain in Training
Posts: 1,457
Originally Posted by kwri10s
I'm sure this Blitzstein guy is a very smart guy. Way smarter than I am.
But....when we asked an expert (Blitzstein) for his analysis of our plan and his determination was that we would be better served by using the Variable plan that he has developed; I'm not sure that's a truly independent decision. When he teaches and publishes a "new solution" to DB plans, we should have assumed he was going to decide that our plan would best be served by adopting "his" type of plan. Maybe more than one "advisor" would give the MEC some additional avenues to pursue. Where are Fidelity and Vanguard in this process? They have huge teams of advisors that can project and actualize. I'm sure they would love to jump into this process with the hopes that they get full pie or keep the pieces of the pie that they have.
I have a big problem when one of the core reasons the MEC is declaring we must at least look at other options is because "we cannot get an improvement to our current plan." WTF. We didn't even try.
We were told repeatedly in the roadshows that we were finally shown the FDX "books" and we now understood why FDX could not afford any improvement, so we did not push harder. Then after we ratified, we are told that the MEC has NOW gotten some real good analysis of our pension plans and we need to look at other options. In the current videos they even expand on how much better they understand our pension plan now compared to before we ratified. So what the negotiation committee keeps saying is that they didn't understand the pension position while we were negotiating. But now that they "really" understand the pension, we must do something different in order to improve. They believe so deeply that we cannot improve our current plan, the MEC is making it a core position that there is no way to improve what we have. That's a big faulty logic position.
Just because what we have is not what the company would prefer, does not mean we have to give it up or change it to something else. WE can always negotiate for improvements to the Cap or cash over, etc. Giving up without really trying is what we did with the latest contract.
I don't mind the look around method. Maybe we'll find a better mousetrap. But the MEC cannot go into any deliberation with the expressed mindset that we can never improve what we have. What did the negotiation team expect the company to tell them? "We can afford more, but we really don't want to." No, of course the company said there is no way to improve the A plan. It's up to us to make them improve it.
But....when we asked an expert (Blitzstein) for his analysis of our plan and his determination was that we would be better served by using the Variable plan that he has developed; I'm not sure that's a truly independent decision. When he teaches and publishes a "new solution" to DB plans, we should have assumed he was going to decide that our plan would best be served by adopting "his" type of plan. Maybe more than one "advisor" would give the MEC some additional avenues to pursue. Where are Fidelity and Vanguard in this process? They have huge teams of advisors that can project and actualize. I'm sure they would love to jump into this process with the hopes that they get full pie or keep the pieces of the pie that they have.
I have a big problem when one of the core reasons the MEC is declaring we must at least look at other options is because "we cannot get an improvement to our current plan." WTF. We didn't even try.
We were told repeatedly in the roadshows that we were finally shown the FDX "books" and we now understood why FDX could not afford any improvement, so we did not push harder. Then after we ratified, we are told that the MEC has NOW gotten some real good analysis of our pension plans and we need to look at other options. In the current videos they even expand on how much better they understand our pension plan now compared to before we ratified. So what the negotiation committee keeps saying is that they didn't understand the pension position while we were negotiating. But now that they "really" understand the pension, we must do something different in order to improve. They believe so deeply that we cannot improve our current plan, the MEC is making it a core position that there is no way to improve what we have. That's a big faulty logic position.
Just because what we have is not what the company would prefer, does not mean we have to give it up or change it to something else. WE can always negotiate for improvements to the Cap or cash over, etc. Giving up without really trying is what we did with the latest contract.
I don't mind the look around method. Maybe we'll find a better mousetrap. But the MEC cannot go into any deliberation with the expressed mindset that we can never improve what we have. What did the negotiation team expect the company to tell them? "We can afford more, but we really don't want to." No, of course the company said there is no way to improve the A plan. It's up to us to make them improve it.
"if it sounds too good to be true it probably is"
Couple of things to think about:
how many times has a union messed up or flat out stolen from a retirement fund.
How many times have we been out lawyer-ed by the company in our contracts? The current lay flat seating issue comes to mind. No way ALPA can say they did not see that one coming as it was specifically asked during road shows and input was given to simply add a statement like. under no circumstances will it be less than first class etc. but no our Lawyers have vetted it and this will never be a problem. Just do a simple statistical look at the grievance record and then look at the supposed wins and ask yourself if they were really wins.
How about simply removing the 265ish limit on the Bfund and get cash over cap to full earnings etc. with a percentage increase "yes some tax implications but that can be factored in to the percentage increase etc"
I am glad we have a Union and support the effort and am a volunteer, I am not throwing stones just pointing out our past shortcomings. This comes to mind also "Those who cannot remember the past are condemned to repeat it."
07-15-2017, 01:09 PM
#30
Gets Weekends Off
Joined APC: Nov 2005
Position: 757 Capt
Posts: 2,418
Oh look, a squirrel.
In no particular order.
It's certainly possible that my negotiation team folded like Biff when Mgt said no friggin way are we willing to entertain the idea of improving our A plan (now Biff don't con me)
But I think it went more like this
NC-We want to improve the A plan. Mgt-No. not willing to discuss it. NC-We want to improve the A plan. Mgt-No. not willing to discuss it. NC-We want to improve the A plan. Mgt-No. Not willing to discuss it.
NC-huddle up boys, starting to get the idea that Mgt's not willing to improve the A plan. What do you think? Keep asking? Or try and sell them on paying us for our sick leave? Maybe we can work wring some $$ out in exchange for that advance retirement notice thing they want (Absolutely no insider knowledge on my part, purely a hypothetical)
FedEx can, and I expect will be able to in the future, afford to improve the A plan. But there's a reason that Warren Buffet recommended against creating a pension plan in the 70s, and a reason Fortune 500 companies have been kiboshing pensions for a couple decades now.
Think back to summer of 2015, FedEx was parking jets and having service failures almost nightly due to insufficient crewmembers...and even with that pressure, Mgt wasn't willing to adjust our earnings cap. Not even a smidgen of an offer came across the table. Not even an we'll tie it to the IRS cap. Or index it for inflation starting as of some future date.
Pension funds. In order for a Union to Steal Pension funds the Union needs to be in control of said money. Anyone think FedEx is willing to concede Control?
Fortune 500 companies have a Love\Hate relationship with DB pension plans. Love them because they retain the $$ and can use earnings on those funds to artificially prop up their returns. Hate them because if they don't kick in enough $$ or generate enough $$ then the Feds will be calling and requiring them to pony up some of their cashflow thanks to ERISA laws passed, and improved on over the years to protect Us-the workers.
One of the big drivers of our pax brethren's pension failures was unrealistic return assumptions by Mgt---hey, if we keep getting this 15% return on our pension plan we don't have to add any money. We can use that money to go mano-a-mano with Southwest only we'll charge 10$ less than their fares. (well, until they give up on expanding to that airport). And those unrealistic returns didn't seem so unrealistic during the dot.com era. Just by JDSU, my money's doubled. No, buy the QQQ. Buy a whole lot of stocks those old Fuddy Duddies like Warren Buffet avoided because they just couldn't understand how they'd make $$. Forget that, I'm putting all my money on AOL. Buy GOOGLE, that's just a search engine. What idiot would want to buy that? Apple, that's so old school they fired their founder. Apple's a sucker's bet.
And just after everything collapsed...9-11. What an economic one two punch.
And everything's on here so far is Internet speculation.
So the simple question for the future is-stick with our current A plan or at least entertain the possibility of change.
Our A plan future value is simple math. And I wouldn't be too surprised to extrapolate hourly raises into the future and find that a 777 FO is going to be able to meet the earnings cap, all too soon.
Maybe this hybrid option, well, creates opportunities for something better. Maybe the FDA method UPS has creates opportunities for something better,
Don't know. But I'm at least willing to listen, and read, and pontificate from time to time on the internet about what I think
In no particular order.
It's certainly possible that my negotiation team folded like Biff when Mgt said no friggin way are we willing to entertain the idea of improving our A plan (now Biff don't con me)
But I think it went more like this
NC-We want to improve the A plan. Mgt-No. not willing to discuss it. NC-We want to improve the A plan. Mgt-No. not willing to discuss it. NC-We want to improve the A plan. Mgt-No. Not willing to discuss it.
NC-huddle up boys, starting to get the idea that Mgt's not willing to improve the A plan. What do you think? Keep asking? Or try and sell them on paying us for our sick leave? Maybe we can work wring some $$ out in exchange for that advance retirement notice thing they want (Absolutely no insider knowledge on my part, purely a hypothetical)
FedEx can, and I expect will be able to in the future, afford to improve the A plan. But there's a reason that Warren Buffet recommended against creating a pension plan in the 70s, and a reason Fortune 500 companies have been kiboshing pensions for a couple decades now.
Think back to summer of 2015, FedEx was parking jets and having service failures almost nightly due to insufficient crewmembers...and even with that pressure, Mgt wasn't willing to adjust our earnings cap. Not even a smidgen of an offer came across the table. Not even an we'll tie it to the IRS cap. Or index it for inflation starting as of some future date.
Pension funds. In order for a Union to Steal Pension funds the Union needs to be in control of said money. Anyone think FedEx is willing to concede Control?
Fortune 500 companies have a Love\Hate relationship with DB pension plans. Love them because they retain the $$ and can use earnings on those funds to artificially prop up their returns. Hate them because if they don't kick in enough $$ or generate enough $$ then the Feds will be calling and requiring them to pony up some of their cashflow thanks to ERISA laws passed, and improved on over the years to protect Us-the workers.
One of the big drivers of our pax brethren's pension failures was unrealistic return assumptions by Mgt---hey, if we keep getting this 15% return on our pension plan we don't have to add any money. We can use that money to go mano-a-mano with Southwest only we'll charge 10$ less than their fares. (well, until they give up on expanding to that airport). And those unrealistic returns didn't seem so unrealistic during the dot.com era. Just by JDSU, my money's doubled. No, buy the QQQ. Buy a whole lot of stocks those old Fuddy Duddies like Warren Buffet avoided because they just couldn't understand how they'd make $$. Forget that, I'm putting all my money on AOL. Buy GOOGLE, that's just a search engine. What idiot would want to buy that? Apple, that's so old school they fired their founder. Apple's a sucker's bet.
And just after everything collapsed...9-11. What an economic one two punch.
And everything's on here so far is Internet speculation.
So the simple question for the future is-stick with our current A plan or at least entertain the possibility of change.
Our A plan future value is simple math. And I wouldn't be too surprised to extrapolate hourly raises into the future and find that a 777 FO is going to be able to meet the earnings cap, all too soon.
Maybe this hybrid option, well, creates opportunities for something better. Maybe the FDA method UPS has creates opportunities for something better,
Don't know. But I'm at least willing to listen, and read, and pontificate from time to time on the internet about what I think
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