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Pension Plans: Qualified vs Non-Qualified

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Pension Plans: Qualified vs Non-Qualified

Old 11-12-2017, 06:15 AM
  #1  
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Default Pension Plans: Qualified vs Non-Qualified

We are a Qualified plan. Thats HUGE!! Pilot Benefit book page 274

" Among the protections provided by qualified plans is the requirement that contributions be held in a trust, SEPARATE and APART from the employers assets, and protected from the employer's or employee's creditors."

Simple and how I understand it.
No PBGC, No FedEx, No ALPA, No risk and still get my $130 until i die.
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Old 11-12-2017, 06:32 AM
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It's not that simple. Ask a pilot from DL, USAir, UAL, EAL, etc.
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Old 11-12-2017, 08:43 AM
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Originally Posted by Busboy View Post
It's not that simple. Ask a pilot from DL, USAir, UAL, EAL, etc.
Correct.. And significantly different business models.. Just cause we fly airplanes doesn't make us Delta, United, pick your people hauler.
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Old 11-13-2017, 09:42 AM
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Those airlines pensions were non-qualified plans. Funded primarily with company stock. Their stock tanked, the pension was under funded and broke. If Fedex goes "man down" our pension will be fully funded with no ties to the company.

$130 til I die.
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Old 11-13-2017, 10:11 AM
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I mean't correct it's not simple. But I disagree with comparing us with people haulers. I am in the 130k for life club. I'll take my depreciated guarantee with my risk in the B plan and 401k
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Old 11-13-2017, 11:03 AM
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Originally Posted by FrankTheTank View Post
I'll take my depreciated guarantee with my risk in the B plan and 401k
This ^^^^^^^
The best chance the salesmen have of making their legacy come to pass is giving us all an individual option to opt out and keep exactly what we have right now.

I have a plan and I'm confident it will work for me and my family. I'm not able to retire next year with it all wrapped up in a bow ready to pile on whatever gravy comes of this effort. Nor do I have a 20-30 year investment horizon to take advantage of whatever potential long term benefits this proposal MAY offer.

It doesn't seem possible that a 30 year WB captain, a 53 year-old WB FO who always planned to go at 60 and a 30-year old new hire can all be served equally by whatever comes of this. I don't begrudge anyone the opportunity to improve their situation but expecting others to sacrifice (or at least risk) what they already have to make that happen doesn't seem right.
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Old 11-13-2017, 12:14 PM
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Originally Posted by Going In View Post
Those airlines pensions were non-qualified plans. Funded primarily with company stock. Their stock tanked, the pension was under funded and broke. If Fedex goes "man down" our pension will be fully funded with no ties to the company.

$130 til I die.


Lots of alternative facts there.

A "qualified" plan does not mean it's a guaranteed plan.

The PBGC basically only covers "qualified" plans. Like all the bankrupt PAX carrier's plans. The non qualified portions of their plans were not covered by the PBGC. The non qualified portions were fought out in bankruptcy court with creditors and parent airline.

I'm not trying to compare risks of PAX vs Cargo carriers pensions. I'm just trying to shed a little truth about "qualified plans".

I'm thinking that "$130 til you die" is setting the bar pretty low. Even for the PBGC.

Last edited by Busboy; 11-13-2017 at 12:27 PM.
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Old 11-14-2017, 02:00 AM
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Originally Posted by Busboy View Post
Lots of alternative facts there.

A "qualified" plan does not mean it's a guaranteed plan.

The PBGC basically only covers "qualified" plans. Like all the bankrupt PAX carrier's plans. The non qualified portions of their plans were not covered by the PBGC. The non qualified portions were fought out in bankruptcy court with creditors and parent airline.

I'm not trying to compare risks of PAX vs Cargo carriers pensions. I'm just trying to shed a little truth about "qualified plans".

I'm thinking that "$130 til you die" is setting the bar pretty low. Even for the PBGC.
True. The main difference between a qualified and non-qualified plan is tax treatment. Qualified plans must be funded, reported, distributed, and distressed terminated in accordance with ERISA, which also established the PBGC, and applicable bankruptcy law if needed. Qualified plans must benefit employees equally where non-qualified plans can be built around specific types of employees or special circumstances. Non-qualified plans have minimal reporting requirements, receive no PBGC protection (because they are not 401(a) plans), and are often used to get around caps and limits since they are taxable funds.

Non-qualified plans do not have to be held in trusts and vary greatly with plan design. Participants find themselves in a long line of creditors when a company goes south and often get nothing. Participants in ERISA/PBGC covered plans have some significant protections, both in terms of the consideration provided in bankruptcy and the resultant financial outcomes based on the funded status of a given trust.

Pensions are still a promise to pay. Qualified pensions have some protections under ERISA and the PBGC, but nothing guarantees the level of benefits promised. The maximum benefit the PBGC offers employees of terminated plans in 2017 is $3,490.06 per month at Age 60 and $5,369.32 per month at Age 65. Maximum benefit levels are periodically increased based on a Social Security Index.
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Old 11-15-2017, 04:10 PM
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While receiving their "A" plan money, there are guys at DAL who knock down $80.00 a month from the PBGC.
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