Check6Viper

You speak with a great deal of authority on a lot of this stuff. The way you describe the Purple HSA plan reveals a level of ignorance that makes me question every post you've made on both subjects. I think I'll let the experts fill me in on the benefits and risks, as you now appear to be a questionable source.

Fdxlag2

I am with you, do you think we will hear from these experts before or after we vote?

kronan

I'll play, at least a little bit.

But you DO realize that our Pension plan isn't funded like a checkbook? It's not a Pay as You Go scheme. But a big pot of $$ distributed over time, with most of it being held in reserve. Just as insurance companies hold big reserves (Think Berkshire Hathaway and a huge pot of $$ they use to buy various companies from time to time)

When the next Economic downturn happens, or FedEx operations are severely impacted via Drones...then I'd venture a guess that our pension will last longer if FedEx could reduce the obligations. Our notional, and that's all they are at this point, conjectures have our 130k being reduced the odd 15% to 110k.

And if our Pension plan can't meet it's obligations, options are the same. FedEx management will either pony up huge sums of $$ to provide adequate funding or petition for relief in hopes of turning it over to the PBGCC...which guts our pension to the odd 60k (on the iPad so not looking up the current numbers) and the big pot of $$ that was FedEx Pension Reserves gets turned over to The Man.

Whether the floor adjusts over time, risk premium, a whole slew of things are still pending.
Whatever gets announced, either in the near future or during Section 6 negotiations in a few years, will be have the details debated here and in JF. Whether it passes or not will depend on the middles segment of folks deciding whether it's worth it or not. There'll be the 10-20% of people who accept every deal, the 10-20% of people who reject every deal, and that'll leave the folks in the middle who'd like a better deal but have to decide whether the deals good enough

pinseeker

With the VB plan, if the plan can't meet its obligations, the company doesn't have to do a thing because they already agreed to a set amount to contribute. That is the risk.

With our current plan, if the plan can't meet its obligations, the company by law has to pony up huge sums of money or pay the PBGC penalties. The other option is to declare bankruptcy to get rid of all of the pensions, but if that happens, we have bigger worries.

DLax85

A “questionable source”, or a “source who questions”?

Please reread my posts, and look at my bottom line advice.

Ask who these “experts” are and who they’ve advised in the past?

Why did a VB Plan make sense in those cases?

Ask if a VB is truly a defined benefit plan or a defined contribution plan?

Ask how it’s funded each year and how your benefits actually accrue?

Ask about how any transition will occur - if your current high 5 and current years of service will transfer, will be frozen or continue to accrue?

The devil is always in the details. Let’s be sure to get all the details...and then think critically.

In Unity,

DLax

Shaman

This pretty much sums up my feelings on these discussions

"Sometimes when I try to understand a person's motives, I play a little game. I assume the worst. What's the worst reason they could possibly have for saying what they say and doing what they do? Then I ask myself, "How well does that reason explain what they say and what they do?""

urinmyseat

Everyone talks about what $130,000 a year is going to be worth when they retire. Of course because of inflation it will be worth less and less every year. I've never heard anyone talk about the engine required to provide $130,000 year after year.

At a 6% rate of return (not possible in any guaranteed fund we have available to us now) it takes a $2.16 Million nest egg. Again this is only to generate what we have guaranteed now. My finance guy wants me to have another $2 million of my own, only he figures it earning around 3% by retirement to be conservative. Of course this figure is not possible, since my kids cost me about $2 mil every quarter

Is the company going to fund us with a lump sum needed to generate what our individual A plan would pay out at the switch over? I find it hard to believe they are going to pony up that much cash at the switch over.

Fdxlag2

2.16 is probably a little high for an annuity that generates 130k a year for the average FDX pilot but it is in the ball park. I would bet the company would like to pay out that lump sum to reduce the PBGC funding obligation for as many people as possible. I think one of the advantages for the proposed plan is that the funding obligations for a new hire under the VB plan on day one would be a lot less than the current system.

pinseeker

Two questions. First, what PBGC funding obligation are you talking about, the premiums, or the money required to maintain a fully funded plan?

Second, if the VB plan is going to raise the payout, including the floor according to PM, how would the funding obligation be less?

I haven't seen any information provided by the union to support either of these items. If you have that info, could you please provide it and the source?

Fdxlag2

I haven’t seen any numbers from the union, doubt we will until it is time to vote. It seems to be the MO. But it is my understanding that the company must pay into the PBGC guarantee and fund the pension for a new hire as if he will get the maximum payout regardless of how much he is actually entitled to. Since the VB has a defined contribution one would assume it is would be more realistic.

I think what you are missing is the VB Plan isn’t obligated to make payouts in perpetuity, when a dude retires the fund buys an annuity and the obligation gets transferred to Aetna or MetLife or the Russian Mafia. This kind of avoids the death spiral of plans like Delta when the fund gets into trouble forcing pilots to retire to get their share of the benefits which further undermines the fund (particularly since they had a cash out provision). The funding of the VB Plan would be less susceptible to this problems because the risk is transferred from management to us.

I am not an advocate.