How's our A Fund Doing? 10 year History
05-11-2018, 05:00 PM
#61
Gets Weekends Off
Joined APC: Mar 2012
Position: Two Wheeler FrontSeat
Posts: 1,162
Originally Posted by DLax85
Here ya go...
I think this hybrid approach to improving our Total Retirement will address a number of issues (stagnate $260K, pilots working on average 4-5 years longer, not transferring all investment risk, not redesigning disability benefit, not having to freeze current A plan, not trading High 5 for Career Avg Earnings, not taking away pilot flexibility and QOL,...and many more “unseen” issues/consequences that will certainly arise by changing to a VB plan)
These changes are all simple to understand, implement and transparent:
1. Current A Fund High 5 FAE method, but $260K Cap replaced and indexed to IRS401 limits
(This will be about a 5-6% immediate increase and then rise, as the IRS adjusts based on inflation - approx 2-3% per year)
2. Current 2% multiplier for first 25 YOS x High 5 FAE, then added 1% multiplier for additional 5 YOS. (Combined 30 max)
Thus new max = 55% of IRS401 limits
PLUS
3. Increase B found over time from 9% to 13%
DISCUSS....
I think this hybrid approach to improving our Total Retirement will address a number of issues (stagnate $260K, pilots working on average 4-5 years longer, not transferring all investment risk, not redesigning disability benefit, not having to freeze current A plan, not trading High 5 for Career Avg Earnings, not taking away pilot flexibility and QOL,...and many more “unseen” issues/consequences that will certainly arise by changing to a VB plan)
These changes are all simple to understand, implement and transparent:
1. Current A Fund High 5 FAE method, but $260K Cap replaced and indexed to IRS401 limits
(This will be about a 5-6% immediate increase and then rise, as the IRS adjusts based on inflation - approx 2-3% per year)
2. Current 2% multiplier for first 25 YOS x High 5 FAE, then added 1% multiplier for additional 5 YOS. (Combined 30 max)
Thus new max = 55% of IRS401 limits
PLUS
3. Increase B found over time from 9% to 13%
DISCUSS....
05-12-2018, 02:08 AM
#62
Gets Weekends Off
Joined APC: Aug 2006
Posts: 1,820
Originally Posted by Nightflyer
DLax85,
You ideas are great, but let's add Cash over Cap for the B fund.
Otherwise, it just speeds up the time that I get my money from the company, but it does not increase the money that I get.
You ideas are great, but let's add Cash over Cap for the B fund.
Otherwise, it just speeds up the time that I get my money from the company, but it does not increase the money that I get.
05-12-2018, 07:46 AM
#64
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,109
Originally Posted by pinseeker
So you know that incrementally increasing the A plan tied to the 401(a)(17) incomes limit has been tried before?
Why can you negotiate a VB plan outside of Section 6 and not the A plan?
(
Why can you negotiate a VB plan outside of Section 6 and not the A plan?
(
05-12-2018, 07:48 AM
#65
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,109
Originally Posted by pinseeker
The last time I checked, 12% of $270K was more than 9% of $270K, $8.1K more actually. However, I do think that cash over cap should be included.
05-12-2018, 02:01 PM
#66
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Joined APC: Dec 2005
Position: Leftof longitudinal
Posts: 1,899
Originally Posted by FXDX
NOTHING has been negotiated, there is NO floor. Your benefit could be less if you have the misfortune of retiring after a few down years in the market. We would be releasing the company from their liability, accepting all the market risk ourselves. We can already do that with our B fund, I don't want to do that to my A fund.
So far all we have is promises that the folks on LTD won't be left behind and those who got hired later in life and won't ever maximize their benefit under the current plan won't get left behind. Those promises give me no solace whatsoever. Another thing they don't discuss during the meetings is a few years of 4A2b. Sure, every year counts, even the bad ones, especially the bad ones.
Nobody will be left behind, yeah, never heard that before.
So far all we have is promises that the folks on LTD won't be left behind and those who got hired later in life and won't ever maximize their benefit under the current plan won't get left behind. Those promises give me no solace whatsoever. Another thing they don't discuss during the meetings is a few years of 4A2b. Sure, every year counts, even the bad ones, especially the bad ones.
Nobody will be left behind, yeah, never heard that before.
IMO, VB would work well for a small group who has very clear control of the fund management team. For a large group, the appointment of the investment team would not reside with the line pilot IMO. Yet, the line pilot assumes a much higher risk. Particularly if a company can negotiate a lower floor for future pilot retirements with a promise of higher returns and lower risks. Can see why FedEx management would sit calmly. They have time to let frustration seep until the advantage to the negotiation leans toward their interests and normal section 6 timeline .
05-12-2018, 04:26 PM
#67
Proponent of Hysteria
Joined APC: Mar 2005
Position: 3B
Posts: 1,052
And this is a solely self inflicted wound. The union has added to our lack of unity and trust by going off the rails on this wild goose chase which is having a definite negative impact on my peace of mind and quality of life. Company has to be sitting there thanking their lucky stars regardless of whether they want to proceed with the idea because we have shot ourselves in the foot and further fractured our pilot group. Talk about pitching various factions of the seniority list against each other, not sure the company could do it better if they tried.
05-13-2018, 09:44 AM
#68
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Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Originally Posted by Tuck
Because their is no "win" for the Company with that. Look, this has to be a win-win for it to work out side of Section 6. There is zero requirement for Company to engage - giving them ability to get out of current DB is the carrot here. ANYTHING else, even asking for 1 penny more (indexing ceiling to 401a17 would be asking for more) and Company will of course say "see you in section 6"
While I have many thoughts and many questions on your whole approach to this issue, I’ll keep it simple to start..
Please explain how we are getting “more” if the company isn’t spending even “1 penny more”?
Thx,
DLax
05-13-2018, 09:57 AM
#69
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Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Originally Posted by Tuck
My view is that cash over cap is a tough fight to have when you still have a traditional pension plan. To my knowledge, no carrier has ever had cash over cap with a pension - it was something added after pensions were gone. Cash over cap alone still presents other problems with IRS limitations - having some sort of a DB and a DC fund is still best way to maximize our earnings and keep them tax free.
Neither our DB or our DC keep our earnings “tax free”.... they are “tax deferred”. The tax man will eventually cometh.
Nothing is free.
We will get what we negotiate.
I’d prefer to do that within Section 6, with patience, clarity, transparency, simplicity, confidence and unity.
I think many would agree our current approach doesn’t reflect all those qualities.
05-14-2018, 06:05 AM
#70
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Joined APC: Nov 2005
Position: 757 Capt
Posts: 2,418
Originally Posted by SaltyDog
As an outsider, well said. Why not consider using a flat dollar supplement to the current DB for each year per contract above the current payout. Get a contract by contract plus up, but eliminate risks of a sustained bad market etc.
IMO, VB would work well for a small group who has very clear control of the fund management team. For a large group, the appointment of the investment team would not reside with the line pilot IMO. Yet, the line pilot assumes a much higher risk. Particularly if a company can negotiate a lower floor for future pilot retirements with a promise of higher returns and lower risks. Can see why FedEx management would sit calmly. They have time to let frustration seep until the advantage to the negotiation leans toward their interests and normal section 6 timeline .
IMO, VB would work well for a small group who has very clear control of the fund management team. For a large group, the appointment of the investment team would not reside with the line pilot IMO. Yet, the line pilot assumes a much higher risk. Particularly if a company can negotiate a lower floor for future pilot retirements with a promise of higher returns and lower risks. Can see why FedEx management would sit calmly. They have time to let frustration seep until the advantage to the negotiation leans toward their interests and normal section 6 timeline .
Tentative VB proposal is unlimited YOS...FedEx has had the odd 28-early 30s hire.
And a predictable funding requirement, with the safety valve of a Reduced Pension Assets requirement in Bear markets\severe economic downturns.
As proposed, there's a 2% floor to Pension Benefits.
As has been discussed, that 2% floor is NOT the equivalent of a 2% FAE.
But, as has been Modeled with the Actual Market returns from 99-2016 and then an assumed return equal to the targeted rate of 5% it is superior to our Current A plan.
As Compared to our Current 130k Pension Plan-returned a benefit 31% better for a 25 YOS new hire and a benefit 3% better for a 15 YOS new hire
The Best Outcome would be modifying our A plan. Tying it to IRS Qualified A plan limits which would result in a 220k Pension which would be a 70% improvement over our Current 130 A plan. And, restoring it to a similar value as the Pension created in CBA 99
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