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Old 12-02-2017, 05:57 AM   #21  
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One of biggest concern is what happens if someone goes on medical for a while? With the current system, you can come back from medical with 5yrs till retirement and still get you high five. What will happen under this VB plan or even an all B plan?
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Old 12-02-2017, 07:41 PM   #22  
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Originally Posted by DLax85 View Post
Of course, that would be great for all pilots as youíd maximize the A fund percentage more quickly; but thatís only going to be more expensive for the company

I donít see the company realistically agreeing to that

Rather, a 1% credit for each year over 25 - to a max of 30 or 35 years, merely recognizes the fact pilots (on average) are staying almost 5 more years

That means the company has 5 more years to contribute to their A fund...and 5 less years of A fund payouts

Doesnít that increase cost for the company as well, but just targeted to benefit a different demographic than what I was referring to?
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Old 12-02-2017, 11:03 PM   #23  
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Doesn’t that increase cost for the company as well, but just targeted to benefit a different demographic than what I was referring to?
Let’s back up, first the entire debate is on how to improve the retirement given the company’s refusal during the last negotiations to increase the A fund cap above $260k

In fact, the company wanted to eliminate the A fund for new hires and only provide a larger B fund, like the pax carriers

Given that, I’ve always been a proponent of keeping our current A fund in a DB format, and adding an increased B fund 12-13%, with cash over cap. This is one reason I voted “no” on the last contract.

The B fund Bump from 7% to 8% to 9% still wasn’t big enough for me. We should have negotiated for more while in formal Section Six negotiations.

I believe we wasted an opportunity to use leverage given the clear undermanning, and pending mass retirements the company was worried about

But many want to sweeten the A fund - and the union is only focusing on a switch to a VB plan to do it.

My contention is there are other options, which will aid the “soon to retire” demographic that feels they don’t have time to benefit from an increased B fund

The current company will want something in return. An additional 1% multiplier for years of service over 25 years strikes a comprise between recognizing pilots are staying longer without overly incentivizing it. It could be extended out to 30 or 35 years.

Earning the current 50% max benefit more quickly (in only 20 years) won’t benefit the company at all. They just incur the same cost more quickly, and perhaps, with greater pilot turnover and replacement/training costs.

I don’t see why they would entertain it

But yes, this whole discussion puts different pilot demographics in different positions

That’s clearly expressed and explained in other threads. It’s very disconcerting.

Last edited by DLax85; 12-02-2017 at 11:24 PM.
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Old 12-02-2017, 11:12 PM   #24  
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One of biggest concern is what happens if someone goes on medical for a while? With the current system, you can come back from medical with 5yrs till retirement and still get you high five. What will happen under this VB plan or even an all B plan?
An all B fund would be a significant concession for many, many reasons, and that’s why the union wouldn’t consider it, even for new hires

Unfortunately, they are considering another version of a “defined contribution” plan - that’s precisely what a Variable Benefit Plan is from the company’s perspective

After making their annual contributions, the market risk is on the pilots

Given the current market highs, this would be both a strategic and tactical mistake for our pilot group
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Old 12-03-2017, 04:26 AM   #25  
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But for those in who are hired over the age of 40, it allows a maximum pension without having to go all the way to 65.
And it penalizes those who were hired younger than 40. Now they have even more years of work without any pension gain. I.E. someone hire at 30 has to work 30 years before they can retire without penalty under the current plan. That's 5 years of work without any gain. Under your plan, they would have to work 10 years without any gain just to retire with the same benefits.
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Old 12-03-2017, 06:38 AM   #26  
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They may not gain any more on the A plan, but they would have a longer period of time to accumulate their B fund...I think this is where the balance comes in.
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Old 12-03-2017, 12:32 PM   #27  
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Sirs:

I'm not sure I have a dog in this fight or not - I'm retired. What you need to consider is what YOU have to invest in the defined benefit plan to receive your $130,000 a year. NOTHING. Show up to work, do your job, it's there. There is no matching. There is no negative. You work, you get paid. FOREVER!

Depending on how you set up your SBP, this retirement might even take the place of an insurance plan. Find me a good term life plan that'll pay your spouse $6,000 a month forever and not terminate when either of you turn 85 and maybe you'll opt for it. I doubt it.

NOW, think about how much your 401K, B plan - what ever needs to be worth to draw an additional $130,000 per year forever. I'd say around $4,000,000 to draw the interest and not touch the principal. If FDX Corp is willing to deposit $4,000,000 into ALL crew members bank account, plus pay the tax obligation on that deposit, then and only then would I have considered eliminating or changing the 'A' plan.

If you have a financial advisor advocating eliminating the DBP, you might want to go shopping for a new one. Worst case, get a second opinion. If you have a pilot (MEC) advocating eliminating the DBP, same thing - you might want to go shopping for a new MEC. I was told years ago - do you know how to make a pilot a millionaire? Give him $7,000,000. We're pilots. Unless you've got a decree in accounting and/or finance, stick to what you know. If your DBP goes away, I can guarantee you'll be sorry.

V/R,
Nakazawa

Note: Tell the MEC to increase the multiple from 2% to 3%. The annual distribution will still be less than the IRS limit on a DBP.
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Old 12-03-2017, 01:10 PM   #28  
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It's just that simple. It's time to start looking for a new MEC!


Quote:
Originally Posted by nakazawa View Post
Sirs:

I'm not sure I have a dog in this fight or not - I'm retired. What you need to consider is what YOU have to invest in the defined benefit plan to receive your $130,000 a year. NOTHING. Show up to work, do your job, it's there. There is no matching. There is no negative. You work, you get paid. FOREVER!

Depending on how you set up your SBP, this retirement might even take the place of an insurance plan. Find me a good term life plan that'll pay your spouse $6,000 a month forever and not terminate when either of you turn 85 and maybe you'll opt for it. I doubt it.

NOW, think about how much your 401K, B plan - what ever needs to be worth to draw an additional $130,000 per year forever. I'd say around $4,000,000 to draw the interest and not touch the principal. If FDX Corp is willing to deposit $4,000,000 into ALL crew members bank account, plus pay the tax obligation on that deposit, then and only then would I have considered eliminating or changing the 'A' plan.

If you have a financial advisor advocating eliminating the DBP, you might want to go shopping for a new one. Worst case, get a second opinion. If you have a pilot (MEC) advocating eliminating the DBP, same thing - you might want to go shopping for a new MEC. I was told years ago - do you know how to make a pilot a millionaire? Give him $7,000,000. We're pilots. Unless you've got a decree in accounting and/or finance, stick to what you know. If your DBP goes away, I can guarantee you'll be sorry.

V/R,
Nakazawa

Note: Tell the MEC to increase the multiple from 2% to 3%. The annual distribution will still be less than the IRS limit on a DBP.
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Old 12-03-2017, 01:55 PM   #29  
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Well said, Nakazawa!!
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Old 12-03-2017, 05:36 PM   #30  
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An additional 1% multiplier for years of service over 25 years strikes a comprise between recognizing pilots are staying longer without overly incentivizing it. It could be extended out to 30 or 35 years.

An overarching axiom observed by the MEC for quite some time, and especially emphasized in the immediate wake of the regulated age change, was to protect "Normal Retirement Age." It is important that any pilot who desires to retire at the Normal Retirement Age be able to do so with FULL retirement benefits.

To that end, we aimed to negotiate NO IMPEDIMENTS to retirement at the Normal Retirement age, and NO INCENTIVES to work beyond the Normal Retirement age.

These goals were especially important to the vast majority of pilots whose seat progression was slowed by 5 years when the Regulated Age changed.


Adding multipliers to what now exists would constitute an INCENTIVE for many pilots to work BEYOND Normal Retirement age in order to benefit from those additional multipliers. As they work longer, seat progression (and the attendant pay rate increases) for all those junior to them would be delayed.

I said the axiom was observed by the MEC for quite some time, but the current "ONE MORE PEAK" or "FLY 'TIL YOU DIE" retirement incentive seems to violate that axiom. Delaying retirement in order to receive a benefit has a negative effect on the seat progression of everyone junior.

So, I guess it depends on what the membership wants. Do we want to continue to make it easy for pilots to retire at Age 60, or do we want to pay them to stay longer?


Personally, I would prefer to leave and enjoy retirement.




Quote:
Originally Posted by DLax85 View Post

But yes, this whole discussion puts different pilot demographics in different positions

Thatís clearly expressed and explained in other threads. Itís very disconcerting.

There are dozens of demographic subgroups who will be affected differently by any change in our retirement plans. There is no magic plan that will benefit everyone equally. One huge advantage of the combination of plans we have now is improvements in BOTH plans will benefit everyone to some extent.

Some people seem to think a guy with a High 5 and 25 years can no longer benefit from improvements to the A Plan. On the contrary, they can receive an immediate benefit by raising the CBA cap to follow the IRS cap. Since that's what the A Plan was originally designed to do, that's exactly what we should be aiming to do.


It only costs money.






.
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