TonyC

It already is. The Defined Benefit fund is the same for both.



Overfunded, in fact.


That's not set in stone. The Company doesn't want to improve it. The Company would also prefer to have us work to FAR limits and be paid nothing, but they want pilots. Therefore, we negotiate.

The very definition of negotiate requires give and take by both parties.


True. See above regarding negotiate.



If you assume the NEGOTIATED earnings cap (I repeat, not an IRS cap, but the Collective Bargaining Agreement cap) ... and again, if you ASSUME the NEGOTIATED earnings cap remains the same, the future value of the Defined Benefit Plan will decline with inflation.

That is the VERY reason why ESPECIALLY the younger guys should be the strongest supporters of raising that NEGOTIATED cap, and establishing a COLA.




They are "crystal clear they are not willing to budge on"? Is that all it takes to halt negotiations?

What if they're "crystal clear they are not willing to budge on" increasing hourly pay rates?

What if they're "crystal clear they are not willing to budge on" improving health insurance?

What if they're "crystal clear they are not willing to budge on" addressing aircraft environmental risks?

What other items can they take off the table by being "crystal clear they are not willing to budge"?

When will WE ever be crystal clear we're not going to accept "No"?




That's just what The Company wanted us to do, just give up on raising the earnings cap on the Defined Benefit Plan. The plan was established and intended to provide 50% of the pilot's Final Average Earnings from retirement until death, and The Company's Labor Attorneys promised to raise the FAE cap to keep up with increasing hourly pay rates. They reneged, and we're supposed to cave?

Why don't we make it crystal clear we don't like liars and we are holding The Company responsible for previous promises and we will not accept anything less than 50% of Final Average Earnings as the starting point for the Defined Benefit?

It's simple, but it would require leadership and unity.






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DLax85

Tony - I enjoy reading your posts and agree with many of your points; however, can you please expand upon this statement...

"The Company's Labor Attorneys promised to raise the FAE cap to keep up with increasing hourly pay rates."

I think we all know that the only "promises" which matter are those written in the CBA

The company wants to freeze/eliminate/buy out our A plan

They'd prefer a straight B plan model, like the pax carriers now enjoy

It's cheaper, and has less risk --- especially in the economic environment of the past 10 years

My posts are geared towards the new idea that a "variable defined benefit" is the answer.

To me, it's a "defined contribution" plan in disguise.

They contribute a fixed amount which will hypothetically pay out a defined amount based on an assumed rate of return. If that doesn't work out, well that's a risk the pilots now take.

Sounds a lot like the B fund I already have, but without some of the B fund benefits --- i.e. In my name & my control

If we are successful in increasing the A fund FAE limit, I think we should tie it to other portions of our contract rates.

Perhaps, WB Capt or NB Capt x 1,000 hours --- then fill in the missing value with B fund enhancements

I don't think the company will agree to an A fund cap that captures our highest earners, and all the extra hours & various payments they may strive for in their final years --- that era won't return

DLax85

....additionally, I agree with many of your sentiments regarding our lack of situational awareness, unity and leadership when we agreed to conclude the last round of CBA negotiations

The idea we will now extract an improved retirement plan, outside of Section 6, is not realistic to me.

In fact, I find this approach very worrisome.

Even with leadership and unity, I don't see any leverage

Fdxlag2

I think the argument is: If it costs $4 to improve pensions $1 than let's find out the best way to spend the $4. Maybe an option that only costs the company $3 but nets us $2 is worth listening to.

DLax85

That's a nice story/tag line, but seems a bit magical to me.

I'm listening, but let me see ALL the assumptions, let me see ALL the math; because the "variable" defined benefit plan might also yield us 90 cents on the dollar. That's what they call it variable. The risk shifts to the employee, that's why it's cheaper for the employer.

Please Explain FULLY. Please Don't sell.

In marketing: The BIG PRINT GIVETH, but the small print taketh away.

MD11HOG

It still "cost" the company $3 in your example. Why would they do that vs 0 cost to do nothing? We're still going to have to pay for or negotiate for improvements. Or, perhaps propose some inventive accounting to SAVE the company money. In my simple terms, I think that's what this exercise is about.

TonyC

Unless the promises are written in the CBA, we don't have legal recourse to grieve promises broken. However, in my opinion, all promises matter. I would like to believe that honorable parties would honor their word.

I am certain I have discussed this on APC several times before, but I couldn't find any of those discussions with a quick search of APC. During the 2006 CBA Roadshows, Negotiating Committee Chairman Chementi talked about the FAE cap. When established with the 2000 CBA, it represented twice the IRS cap. Based on the formula of a Maximum of 25 Years of Service times 2% per year, a pilot at the CBA max could collect the IRS max. However, with hourly rates as they were, it was difficult to reach that limit without a lot of extra work.

When 2006 rolled around, hourly rates had climbed and were continuing to climb, and it was getting easier to achieve the cap with less extra work. The Company's head negotiator acknowledged that the FAE cap needed to be raised to keep up with the rising IRS cap, but explained that doing so would require them to go through the process of requalifying the retirement plan, and that would be an involved and time-consuming process. He observed that actually very few pilots would be affected by the cap at that time, but rising hourly rates would mean many pilots would be affected in years to come. Therefore, the agreement was made between the ostensibly honorable parties that they would raise the cap the "Next" time.

The "Next" time rolled around, and somebody got the brilliant idea to build a bridge contract. When the "next, next" time rolled around, The Company's head negotiator was enjoying retirement, and all we heard was The Company can't afford it.

Here's where that previous discussion about the PSIT culture comes into play. Rather than call The Company out about reneging, our Negotiating Committee was apparently afraid of offending them, and instead decided to accept No as the answer.



The Company has wants. We have wants. I'm only interested in advancing OUR wants, not the wants of The Company. They pay people to do that. Right now we're spending hundreds of thousands of dollars to figure out a way to save them money on our retirement. Maybe we should be putting that money in a strike fund instead.

"variable defined benefit"


variable


defined


Let that sink in for a minute.


Aren't those two opposites?

temporary permanent?

upright inverted?

Emperor's clothes?




I think it's fair to correlate the benefit to that which a 25-year Wide-body Captain would earn in a year of Bid Line Guarantee. That works out to 884 CH for 52 weeks. I'd settle for 1,000 CH. Maybe we should start the bidding at 1,200.







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TonyC

It's an interesting narrative -- it costs The Company $3 for every $1 in Defined Benefit -- and even more interesting how it was planted and propagated.

The question is, is it true? I hope a few pennies of the retirement research effort have been directed towards validating or discounting this claim. I suspect it is a dubious claim.





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The Walrus

The only way the company would negotiate outside of section 6 is if we offered to negate the A plan for future hired pilots, and it won't be with enhancements to our current A plan.

Fdxlag2

I think they will negotiate outside of Section 6, I just don't think they will give up anymore money. That said, no time like the present to start working on the retirement section for the next contract.