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Old 11-13-2017, 01:31 PM   #1
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Default FedEx - Other Retirement Improvement Options

While addressed in some posts in other threads, I’m starting this thread to (hopefully) generate thoughts, ideas and proposals on how we, and our elected representatives, could work on all pilots behalf to improve our total retirement compensation

Instead of freezing our current DB Plan and switching to a “yet-to-be-fully-defined, riskier” Variable Benefit Plan, what improvements can we make to our current A fund (DB Plan) and B fund (DC Plan)?

These improvements may be broader than just “increasing the $260K” cap

The idea the current A fund/DB is now at some “significant default risk” seems disingenuous to me, given our representatives first choice in the last negotiations was “raising the cap” based on “inflation” or a “COLA”.

Our representatives did not proclaim our desire to raise the $260K was somehow risky or dangerous during the last negotiations.

The ideas generated in this thread can address multiple issues:

- Those pilots above 25 YOS & current High 5 maxed at $260K

- Those pilots below 25 YOS, without High 5 maxed

- Those pilots who prefer a fixed/known Defined Benefit vs a Variable Benefit which may go up or down

- Those pilots who’d prefer to personally control any additional retirement funds put at “market risk” vs more funds with greater risk, but no control

- How do we ensure retiring with full benefits at 60 is still an option, without indirectly making or overly incentivizing pilots to work until 65?

Instead of abandoning our current, and well known, DB and DC structure, what enhancements can be made in each, without disadvantaging and dividing certain pilot cohorts?

What long term, structural changes can be made so we won’t have to readdress this issue every negotiation cycle, and avoid the seemingly constant conflict between pilots at the beginning, middle, and the end of their careers?

I have a few ideas, but I’ll pause to see what other ideas are out there

The unions decision to only focus on improving the A fund by making a fundamental change from a DB to a VB is very worrisome

There are other ways to improve the A fund and the B fund that will increase each of our total retirement compensation.

Let’s get creative!
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Old 11-13-2017, 06:06 PM   #2
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There is no doubt that the A Plan is extremely expensive for the company...and through no fault of their own. Due to the effects of inflation, it will eventually go away. But that is down the road quite a bit. Definitely not now!

It is no secret that the new VB plan being proposed by the union shifts significant risk from the company to the pilots. Of course, we have not seen any details, but there would have to been some pretty good incentives for us to accept that risk.

Here is my recommendation:

Leave the A Plan intact as is and slowly increase the B Plan over time to offset the effects of inflation on it. Institute a new "cash-over-the-cap" provision (like everyone else has) so guys are not penalized just because they hit the IRS limits.

Like I said, eventually the A Plan's $130k benefit will offer so little purchasing power that the union will agree to freeze it and it will die. We will then have made the transition to an all B Plan retirement...just like everyone else. But we will have done it slowly.
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Old 11-13-2017, 06:18 PM   #3
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Not exactly like everyone else, UPS has a one percent A Plan that they supplement contract to contract to bring up close to parity with our A Plan. One would assume supplementing their A Plan contract to contract is cheaper than just matching our A Plan. That would be a good education factor that we will never be educated on.
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Old 11-14-2017, 12:40 AM   #4
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Here's a few things I know so far, after reviewing everything on the FDX ALPA website and attending a briefing from PM and KB recently.

1. No one can TAKE your A plan.
2. The VB plan doesn't do anything to the DC plan.
3. The VB plan will have a 50% buffer to absorb severe market downturns. In other words, the stock market would have to decrease in aggregate value 50% for us not to receive 100% payments.
4. We would receive two checks in retirement- your vested A plan earnings and your VB earnings.

The current max value of the A plan is $89,000/yr in 2017 dollars. In 20 years it'll be worth 2/3 of that, or roughly $60,000. Less than half the original purchasing power.

Our NC and R&I committee (including arguably the smartest guy in ALPA on R&I- KB) has received advice from an industry expert and 3 actuary companies have studied the numbers to arrive at the VB plan. It'll be difficult for any of us to do that kind of research to provide viable options. Just saying.
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Old 11-14-2017, 03:05 AM   #5
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Originally Posted by BlackKnight View Post

The current max value of the A plan is $89,000/yr in 2017 dollars. In 20 years it'll be worth 2/3 of that, or roughly $60,000. Less than half the original purchasing power.

Our NC and R&I committee (including arguably the smartest guy in ALPA on R&I- KB) has received advice from an industry expert and 3 actuary companies have studied the numbers to arrive at the VB plan. It'll be difficult for any of us to do that kind of research to provide viable options. Just saying.
The last time I checked, you still got $130K/yr if you maxed out the A plan. So that is still $130K in 2017.

The industry expert and the actuary companies all make a living selling these VB plans. I want to hear what the 5th dentist has to say about a VB plan.
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Old 11-14-2017, 04:47 AM   #6
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Don't touch my A Fund. Keep adding to the B Fund and get the cash over cap. Throw in some profit sharing or other incentive, and don't settle for 6 year contract durations.
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Old 11-14-2017, 05:07 AM   #7
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Quote:
Originally Posted by BlackKnight View Post
Here's a few things I know so far, after reviewing everything on the FDX ALPA website and attending a briefing from PM and KB recently.

1. No one can TAKE your A plan.
2. The VB plan doesn't do anything to the DC plan.
3. The VB plan will have a 50% buffer to absorb severe market downturns. In other words, the stock market would have to decrease in aggregate value 50% for us not to receive 100% payments.
4. We would receive two checks in retirement- your vested A plan earnings and your VB earnings.

The current max value of the A plan is $89,000/yr in 2017 dollars. In 20 years it'll be worth 2/3 of that, or roughly $60,000. Less than half the original purchasing power.

Our NC and R&I committee (including arguably the smartest guy in ALPA on R&I- KB) has received advice from an industry expert and 3 actuary companies have studied the numbers to arrive at the VB plan. It'll be difficult for any of us to do that kind of research to provide viable options. Just saying.
1. Unfortunately, I don’t agree with your first point. It’s become pretty clear that keeping “your/our” A plan will be a collective decision, not an individual decision - thus somebody can take your/our/my current A plan (...to include the Years of Service a pilot has accrued)

2. Correct, the VB doesn’t do anything to the DC plan. Though our total retirement is based on both. Improving our total retirement plan can involve improving the DC plan as well

3. Please state source to this claim, and provide link to the video, Power point presentation or association document which makes this claim. It appears to be common knowledge that if a VB return does not meet the plans “hurdle rate” then the benefit will adjust downward. Even a positive return that fails to meet the hurdle rate causes a downward adjustment. The idea the fund can drop 49% without reducing the paid benefits is.....???

4. Yes - however, without a transfer/or credit of “Years of Service” between the two plans, those who haven’t maximized their “high 5” won’t be getting the maximum benefit from the current A plan or the future VB plan.

KB is very smart and very well respected, however, that should not preclude other ideas and concepts from coming forward.

It’s not unreasonable for dues paying association members to expect our association to diligently research, and publicly present, other reasonable options which work to increase total retirement benefits.

These other options may have less risk, increased individual control, without disadvantaging certain pilot cohorts.

Let’s keep the ideas coming - and critically examine each.

Last edited by DLax85; 11-14-2017 at 05:23 AM.
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Old 11-14-2017, 05:12 AM   #8
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Don't touch my A Fund. Keep adding to the B Fund and get the cash over cap. Throw in some profit sharing or other incentive, and don't settle for 6 year contract durations.
Also ask yourself why we are doing this. We are not being forced into this...this whole idea was our (the union's idea).

I would like to see the results when the polling starts but if this forum is any indication, I think there are more than 50% of the folks who don't want their A Fund touched.

It is just one pillar of my retirement package and it is a pillar that I lean on because it is guaranteed. Zero risk to me short of the company going bankrupt. Yes that could happen and yes it is losing purchasing power year after year but, in exchange for that, it is a guarantee.
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Old 11-14-2017, 05:20 AM   #9
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What year did the B fund start? @ what percent?

Please correct, but off the top of my head, I believe the B fund increased to 6% in 2006

7% in the “bridge contract”

8% in our latest contract

And will go to 9% in 2019

Once again, those with more knowledge & better memory please correct (e.g. Tony C )
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Old 11-14-2017, 05:22 AM   #10
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Quote:
Originally Posted by BlackKnight View Post
Here's a few things I know so far, after reviewing everything on the FDX ALPA website and attending a briefing from PM and KB recently.

1. No one can TAKE your A plan.
2. The VB plan doesn't do anything to the DC plan.
3. The VB plan will have a 50% buffer to absorb severe market downturns. In other words, the stock market would have to decrease in aggregate value 50% for us not to receive 100% payments.
4. We would receive two checks in retirement- your vested A plan earnings and your VB earnings.

The current max value of the A plan is $89,000/yr in 2017 dollars. In 20 years it'll be worth 2/3 of that, or roughly $60,000. Less than half the original purchasing power.

Our NC and R&I committee (including arguably the smartest guy in ALPA on R&I- KB) has received advice from an industry expert and 3 actuary companies have studied the numbers to arrive at the VB plan. It'll be difficult for any of us to do that kind of research to provide viable options. Just saying.
As to Point 3, I am skeptical. Wow, this VB concept must be the greatest thing since sliced bread. Why are all companies not doing this? Sounds like a win-win for everyone...saves companies billions of dollars and it would take a 50% decrease in the buffer for you to lose any benefit. Hmmm.

Have you heard the saying..."If something seems to good to be true it probably is?" Or how about, "there ain't no free lunch"?

There will be a cost associated with this new plan and it appears that it is in the form of risk. No doubt it is a win for the company...less risk and billions saved in required governmental funding requirements. For us, there is the potential to do better than $130k, but with an increased associated risk.

I like the risk sharing concept...it is what we have now. I accept 100% of the risk for my B Plan and the company accepts 100% of the risk for my A Plan.
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