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How's our A Fund Doing? 10 year History

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How's our A Fund Doing? 10 year History

Old 05-09-2018, 05:39 PM
  #41  
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Originally Posted by FXDX View Post
StarClipper: IF you really were a FedEx pilot there is no way you could not have known that.
Dude give it up already
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Old 05-09-2018, 09:00 PM
  #42  
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But he did stay at a Holiday Inn, last night.
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Old 05-10-2018, 09:59 AM
  #43  
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Dude: that was my only post referring to your employment status.

Tough to believe that you are a FedEx pilot and didn't know that the union has presented this idea to the company for them to research and get back to us.
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Old 05-10-2018, 12:27 PM
  #44  
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Originally Posted by pinseeker View Post
Tuck,

First of all, what happens to upgrade progression when your retirement is now calculated on career earnings vs. the current high 5 model? I would think that the historic upgrade model would be thrown out the window due to the fact that more pilots would try to upgrade sooner to try to increase their average salary and increase their retirement.!
Not going to be much of an issue down the line. The absolutist highest current VB benefits based on is $260k. With pay rates increasing along with the 401a17 limits, this is not going to be much of a factor. I'm a WB FO. If this were to pass, by the time it does I will be able to easily make $275/280 at my current seat for example. In addition, you more than make up for it on the backside.

Originally Posted by pinseeker View Post
Another assumption in the VB plan is that the company is going to agree to increase their contributions every year, IE. it is more expensive, in order to eliminate their risk. I have asked the union several times how much more would it cost to raise our A plan vs the increase in the cost of the VB plan. So far the answers have been it's proprietary information, and the calculation is harder to make than you think. Hmm, they can't say that raising the A plan to say a high 5 of $340K would be 30% more expensive than the same benefit under the VB plan? I think that the costs aren't significantly different, or they would be including that it the sales campaign.
Costs to raise the current VB plan just to $300k (resulting in a benefit increase of $130k up to $150k) are huge. I asked that question at a small group meeting and got a good answer. The model, if passed would have to have an absolute % of pilot salary Company would pay out for year - they would have to agree to it. Why would they pay more in the out years? I suppose it comes down to trying to quantify the value of the pension benefit obligations they would be ridding themselves of.

Originally Posted by pinseeker View Post
Also, what would the asset mix be in the VB plan. The company would still control the investments. And how about how a floor benefit effects the plan. The NC has stated that the floor may be less than $130K, that would have to be negotiated.
Everything has to be negotiated. The asset mix would probably be similar to how the Company invests now - most private pension plans are very similar - ours would be typically conservative. Attend the meetings, look at the model and as the Cheiron reps those questions. Yes, of course, the final product is most important and it has to be negotiated. A floor of 2% is great but that might not be possible - still worth looking at though right?

Originally Posted by pinseeker View Post
The problem with the comparisons that the union has been putting out between the A plan and the VB plan is that they are assuming that the A plan contributions are fixed and that the VB plan contributions are greater than the current A plan and will increase infinitely.
I've never heard anyone say that. Who told you that? The A plan contributions are roughly a percentage of pilot salary (varies based on market returns) and that number will go down over time since the cap on benefits is static. Under the VB plan the contributions would be a straight % and that number will increase with pilot salary - 15 years out I imagine the VB plan would cost the company more in pension than the current A plan but they will immediately rid themselves of the PBO which is huge and difficult to quantify.
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Old 05-10-2018, 12:28 PM
  #45  
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Originally Posted by LunkerHunter View Post
How many years after retiring at 65 would ths new benefit last at $156K per year? I heard that this whole proposal is based on an average life expectancy that Fedex won’t disclose.
I have not heard that from anyone. The benefit lasts the same as your current benefit - until you die or your survivor dies.
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Old 05-10-2018, 12:29 PM
  #46  
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Originally Posted by Adlerdriver View Post
What happens if the red section in your theoretical above gets changed to:

YEAR 14-20 average pay IRS 401a17 limits indexed up annually - estimate benefit $107,000
YEAR 20-30 out on medical disability
The NC has said that disability will be negotiated and it will have to be similar to the current benefit in order for it to be acceptable.
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Old 05-10-2018, 12:36 PM
  #47  
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Originally Posted by DLax85 View Post
Tuck -

Please provide the pay you are assuming for each year 14 thru 30 in your calculations above...or at least confirm you are assuming the average pay over those 17 years is $314,705.88
Using 401a17 limits at that point as average WB pay will surpass that.


Originally Posted by DLax85 View Post
Now, if you limit one plan to 25 YOS, while allowing the other to go to 30 AND you limit one plan to $260K, while allowing another to be indexed to a higher IRS limit - then those two changes may offset the decrease in earned benefit

It’s easy to show Plan VB is greater than Plan A, when you assume there is NO WAY we could possibly improve Plan A.
I'm not assuming anything but I believe, and everyone with knowledge in this area believes, the company will not improve the current A plan. It's not that they can't afford to - they refuse to. Line in the sand. We wasted a TON of time in 2011 and 2015 CBAs to try and get them to move and they didn't. So we can go down that road again and likely end up wasting a ton more of time or we can try something new. On the other point, yup, having no limit on YOS is a plus for the VB plan, realizing of course that it may delay seniority progression as some (very few historically) decide to delay their planned retirement based on the new VB plan). I think it's worth it though (and my seniority would be delayed).

Originally Posted by DLax85 View Post
The company cries “we’re too poor...we can’t possibly make any improvements” (...All while pilots are working 4-5 years longer AND their payouts in retirement are 4-5 years less...Hmm?)

Then our leadership proclaims “We must change!”

(We must abandon High 5, we must work longer for the same earned accrued benefit, and we must accept the investment risk)

Does the financial data provided by the company (presented in my first post in this thread) support thses statements in 2016?

What will the 2017 data show?

Given market returns last year, what about 2018?

I’m going to predict the next 2 years will also showing FTAP funding levels over 100%

In Unity,

DLax
Once again your basing this on whether the company can afford it. I can easily afford to give my son a $50/week allowance but I choose not to. No matter how much he complains, whines or continues to ask me he isn't going to get it. So we can go down that road again but I believe there's nothing there.
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Old 05-10-2018, 12:45 PM
  #48  
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Originally Posted by Tuck View Post
Not going to be much of an issue down the line. The absolutist highest current VB benefits based on is $260k. With pay rates increasing along with the 401a17 limits, this is not going to be much of a factor. I'm a WB FO. If this were to pass, by the time it does I will be able to easily make $275/280 at my current seat for example. In addition, you more than make up for it on the backside.


Costs to raise the current VB plan just to $300k (resulting in a benefit increase of $130k up to $150k) are huge. I asked that question at a small group meeting and got a good answer. The model, if passed would have to have an absolute % of pilot salary Company would pay out for year - they would have to agree to it. Why would they pay more in the out years? I suppose it comes down to trying to quantify the value of the pension benefit obligations they would be ridding themselves of.


Everything has to be negotiated. The asset mix would probably be similar to how the Company invests now - most private pension plans are very similar - ours would be typically conservative. Attend the meetings, look at the model and as the Cheiron reps those questions. Yes, of course, the final product is most important and it has to be negotiated. A floor of 2% is great but that might not be possible - still worth looking at though right?


I've never heard anyone say that. Who told you that? The A plan contributions are roughly a percentage of pilot salary (varies based on market returns) and that number will go down over time since the cap on benefits is static. Under the VB plan the contributions would be a straight % and that number will increase with pilot salary - 15 years out I imagine the VB plan would cost the company more in pension than the current A plan but they will immediately rid themselves of the PBO which is huge and difficult to quantify.
Tuck,

To reply to your first response, what do you mean when you say that the VB contribution is capped at $260k? In the model presentation the union stated that the 401(a)(17) limit was increase annually based on their historic prediction. Also, if your retirement benefit is based on lifetime earnings, don't you think that guys will try to upgrade quicker to increase those earnings. We only have a little over 1500 WB captains and the top 1500 on the seniority list were all hired prior to 2000.

To answer your last question, the NC and several reps have told me that the VB plan with a floor benefit and insuring that no pilot is disadvantaged by freezing the A plan will cost more than the current A plan. I have no idea what you mean by PBO, but the company will still have to pay the same PBGC premiums that they currently pay. The benefit to the company is if the market goes down, they don't have to make a large contribution to the plan to make up the underfunded amount. The PBGC funding requirements are there to help insure that our A plan stays funded. That is a good thing.
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Old 05-10-2018, 01:13 PM
  #49  
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Originally Posted by pinseeker View Post
Really?

The $130K is for life. If you tie the VB plan to the market after you retire, your $156K may go up, but it can also go down. It could even go below the $130K.
Doubtful - briefings I attended said they would place a "high water mark" on your number. So for example, you retire at $156k and keep money in the stock market. It can go up but can't go below $156k. How do you do this? Stabilization fund and caps on earnings - as always, everything comes down to negotiations. If you don't like the final plan then don't vote for it. If you really think we shouldn't even negotiated (and thus continue to fight for A fund improvements in the next round) then you can do that do.
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Old 05-10-2018, 01:15 PM
  #50  
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Originally Posted by DLax85 View Post
You control your B plan level of risk - completely, just you.

Dial it up - heavy equities. Dial it down - heavy cash & bonds.

Pass it on to your heirs

You won’t be able to tie your VB benefits to the “stock market”

You will be able to tie (expose) them to the VB plans investment returns

These won’t (and shouldn’t) be just equities. They will be about a 50% equities / 50% bonds mix

Benefit plans can’t just focus on growth (in the way a young pilot may load up on equities). They must make payments to beneficiaries, and therefore typically match their bond and dividend paying stocks to those liabilities.

And remember, VB benefit plans go “up” or “down” compared to the negotiated “hurdle rate”

The retirement plan can actually make a positive return, but one less than the hurdle rate, and then your retirement benefit would decrease.
All true - it would be great to have a more conservative investment approach in retirement but that's not possible with the vb plan. However, a "high water mark" is...but needs to be negotiated.
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