How's our A Fund Doing? 10 year History
#43
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.
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.
#44
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
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.!
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.!
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.
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.
#45
Gets Weekends Off
Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
I have not heard that from anyone. The benefit lasts the same as your current benefit - until you die or your survivor dies.
#46
Gets Weekends Off
Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
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.
#47
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
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.
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.
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
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
#48
Gets Weekends Off
Joined APC: Aug 2006
Posts: 1,820
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.
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.
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.
#49
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
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.
#50
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Joined APC: Sep 2006
Position: MD11 FO
Posts: 1,108
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.
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.
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