Well,
let's see pinseeker

Could it perhaps be a result of shared Investment returns?

Repeatedly, I've shown you that year by year the 2% floor isn't nearly the same cost as a 2% FAE for the Same caps.

Oh I know, you're one of those that simply don't believe the Stock Market's going to increase in Value over the next 25 years.
Or perhaps you're one of those who fails to realize that the VB isn't "buying" shares of a Money Market Fund...but notional shares in our Pension trust. Share's that will fluctuate up\down, but never result in a value less than 2% (Assuming that's Negotiated)


But No-You, Pinseeker Know with Absolute Certainty that there must be some fairy dust in the works somewhere creating the "appearance" that the VB will return a roughly 160k pension for a 2018 new hire versus the 130 our unchanging Pension would otherwise deliver.

You Sir, are So Incredibly Smart I'd like to hire you as my Notional Investment Advisor...and I will gladly pay you 1000$ a day, No wait, you claim to be a 15% 75 Capt, so I will pay you 10k a day for the next 30 days.

Or, I will start you at 1 cent and double it each day

Which One do you want?

Expect a Notional Check from the Iron Bank....

 

Well, since you are offering, I'll take the 1 cent doubled every day for a month.

If you look at the annuity calculator that Lag posted several month ago, it will show you that at 6.5% ROI, it will take about $2.2 million to buy a $130K/year for life retirement for a 60 year old male. It will take a $2.7 million annuity for the same male for a $160K/ year retirement.

Now, at at ROI of 6.5%, it takes a yearly investment of $35K for 25 years to get $2.2 million.

Using that same ROI, it takes a yearly investment of $43K for 25 years to get $2.7 million.

That's a difference of $8K per year. If you multiply that by 25 years and 4600 pilots, that cost is almost $1 Billion more than the cost for the $130K/year retirement.

Even if you include the max PBGC payment, which is around $600, it still isn't close to being cheaper to fund a $160K retirement over a $130K retirement.

You consistently say that you have shown me that the 2% floor isn't higher than a floating FAE cap. I've never said it is. That windmill is dead.

I've asked you to show me how it is cheaper for fund a $160K retirement over a $130K retirement. You haven't done that.

The fairy dust that you claim I am using comes from the modeler that the union has put out. If you put a 35 year old with a first year salary of $75,000 and $0 for the high five with historical career earnings and retiring at 60, the modeler gives you a floor benefit of $158K. Try it, it won't bite.

 

No wishful thinking, he mention a few of his to priorities including QOL but retirement was nowhere on that list. That’s a bit concerning.

 



Just when I thought there was hope, that you truly understand some of the math thanks to your, correct, choice of a Geometric Progression...you have to trot that out.

Displaying you truly, have a serious fail in how Pensions work.

Not disputing the Value of what it would take for an Individual to accumulate\purchase an Annuity.
But Pensions are a Group Function.

If our Pension simply purchased an Annuity for a pilot at Retirement...then there wouldn't be any emphasis on the funding level\how many are retired and collecting benefits-etc.

There Wouldn't be Any Benefit for FedEx to offload Pension assets to someone like Metlife (I know-confusing isn't it, but Google FedEx Offloads Pension to Metlife)

Here's the thing, just as is true with Health Care, it's Cheaper for 4500 people to have X dollars of Pension liability than it is for a single person. Why you might ask? (BTW-For Health Care the Insurance bet is More People will be healthy than average)
This might sound shocking, but people die. They die all the time. Car accidents, airplane crashes, fall off of roofs, shot by jealous husbands...you get the idea.
Statistically, something like 1/3 to 2/5 of us are going to die within 10 years of retirement. Maybe 1/10 of us are going to die before retiring. And it is the untimely death of oh, so many of us, that helps support the Pensions of those of us lucky enough to make it to 90. Or unlucky enough to make it to 129 (if you believe that news story).

The Big Huge Reason our Union is pursuing this, is because they promised to. Most people totally failed to notice, but there were a Lot and I mean A LOT of people who were disappointed that the 2015 TA achieved 0% of Improvement in our A plan after 2+ years of SS ramping up the support\emotions to try and get it back to the 50% Income Replacement value it was pre CBA2011. So much disappointment that SL achieved nada that our Union promised to try and find a way to improve our A plan.
This is the result of all that effort.

IMO-order of Value.
Current A Plan
VB Plan
High 5 A Plan with at least a 25% fixed Income limit (ie 325sh)
High 5 A Plan with a Floating Cap

What, if anything we will achieve pre S6 is TBD.
What we will achieve in S6 is also TBD, as is the timing involved.

I'm fine anyway it shapes out, and once negotiations hit that year mark--I'll be changing my field draft answer to No, and simply flying my line.
For as long as it takes

 

After much internal debate and intense considered thought, I have come to a conclusion on the subject of Defined Benefit versus the new proposed Variable Benefit:

NO!

 

They promised to do it during negotiations first..... and that worked out so well.

I’d say it was right around 43%.

 

Oh Kronan, there you go trying to belittle people again and you still avoid the question. I fully understand how pension funding works, assets and liabilities. Mortality charts and investment returns.

If the modeler is showing that a 35 year old hired today would get $160K per year minimum guaranteed, how is it cheaper to fund that retirement than it would be to fund a guaranteed $130K per year retirement? You either refuse to answer the question with data and facts, or you simply can't do it. If it is cheaper to fund a $160K retirement than a $130K retirement, why didn't the company want to raise the cap?

Maybe the union will write you notional checks in retirement.

 

The promised to look at a lot of options and appeared to have decided to buy the used fiat after the first test drive.

 

You "fully understand" it and yet you wrote

"Well, since you are offering, I'll take the 1 cent doubled every day for a month.

If you look at the annuity calculator that Lag posted several month ago, it will show you that at 6.5% ROI, it will take about $2.2 million to buy a $130K/year for life retirement for a 60 year old male. It will take a $2.7 million annuity for the same male for a $160K/ year retirement.

Now, at at ROI of 6.5%, it takes a yearly investment of $35K for 25 years to get $2.2 million.

Using that same ROI, it takes a yearly investment of $43K for 25 years to get $2.7 million.

That's a difference of $8K per year. If you multiply that by 25 years and 4600 pilots, that cost is almost $1 Billion more than the cost for the $130K/year retirement."


And I did answer it,
1st-indicated that a portion of the 160k Pension the Modeler shows for a newhire is based upon returns Greater than the 5% hurdle rate.
2nd-also stated that the 160k for a newhire in No Way is the Equivalent of todays 130k. It's only Better than the 130k decades down the road.

You may, or may not have noticed, but Corporations tend to be pretty intent on Cash Flow and Percentages. (Margin) IOW-Just because they are making a Million dollar profit today....doesn't Mean that's better than a 800k profit 30 years ago.
And the Same holds true for the Future.

The 2% floor for our notional newhire is Cheaper than the 2% FAE, as I have shown over and over and over.
Even offered to input 26+ years of Salary and IRS DC Cap limits as Calculated by YOU and whatever QOL pace YOU think is best to show that.

IOW a 25k Pension Contribution in 25 years is a heck of a lot more affordable than a 25k Pension Contribution today

 

Previous messages have indicated that they've evaluated multiple options, and that this is the best fit.
That it's better than the UPS FDA model because it doesn't have to be renegotiated every contract as UPS's solution does

The Only way to have 100% of all the information is to be on the inside, subject to the odd NDAs Mgt Legal mandates prior to sharing proprietary company information (such as the Upgrade timeline or full retirement data)
Why Mgt would perceive the need to protect that escapes me.