The next Annual Funding Notice should be out by late Sept.

It's required to be distributed within 120 days after a Plan Year closeout.

The Fedex Corporations Employees Pension Plan runs from Jun 1 thru May 31

Thus, we will have the 2017 values (Jun 1, 2017 thru May 31, 2018) in Sept.

The Bloomberg article quoted was published in Jan 2018, and it referenced plan stock market values from May 31, 2017.

It did NOT reference the Funding Target Attainment Percentage, which is required by law

I just want to make one point here. I’m pretty confident that many, if not most pilots make the decision to be QOL bidders BECAUSE of the “high 5” clause in the current A Plan. Changing that may change their bidding choices, naturally.

Agreed. QOL bidders allow those who want to upgrade sooner or make more $ now to do so. If they don’t drop trips/delay upgrade then the 100% bidder or guy who flies extra won’t have that option. Similarly, the guys who will grab extra trips are the reason any of us might be able to drop that trip or R day we got stuck with on our schedule. The current system makes possible the flexibility that makes this a good job. A bigger pension is nice but know what will change if we change the whole paradigm here.

Couple of corrections (should have watched video first!)

I was hired two weeks before I turned 37, so I used that 37 and my current age. I do have a high 5 under current system due to FEPP. I used historical return, which I think defaults to 5% going forward. I am already a captain so I put 3 % on earnings growth as indicated in video. My projected salary peaked at around $481 at 62, which didn't strike me as absurdly high or unrealistic based on what I make now. Also--the "what if there are good years?" question I had is more or less captured in the stochastic results...so that's answered. (Told you I could be Capt Obvious at times...)

At 65, numbers are for old/new/stochastic 130/157/161-176.

46k improvement....if if if all goes well is nice. It is still less than I hoped.

At 62, numbers are modest but still better....130/139/140-149.

At 60...which is 23 years of service for me....its 120/124/126-131.

Basically, what I read is that if the 10k/year is critical to me, I "might" get it two years early under the new plan. Going beyond 62 all the way to 65 might buy me another 30-45k a year, or about 3-4 grand a month. All that assumes that the risk/downside/implementation concerns are all met along the way, which I think we all agree are some big hurdles. For me--if we could magically move the 260k cap to 300k or something, it would be a wash. For the guys in their thirties, however, with a lot of years ahead, I can certainly see how the math works much better for them under a new plan.

Reese--I think once the "pancake" of benefits for year is determined, the benefit is locked. For instance, I don't think you'll make 130k once year in retirement and 88k in another. The issue with "variable" is how much benefit you accrue for each year, hence the "stochastic" model showing the range of potential benefits.

Overall...I am struck with a huge "meh" feeling. There might be some upside for me, but like others I'm a bit late to capture a lot of the gains. The extra 3 years accruing benefits would be nice, but I'm not sure if I want to go to 65 to reap them, and with Tricare and a very modest benefit reduction going at 60 or 62 is a solid option if life is going well. Overall--its better--but it doesn't change any of my "when to go" math or fundamentally change how I plan to live in retirement.

As long as we are throwing spaghetti at the walls with our own dream sheet, you know what I would like to see as a benefit in exchange for taking on this plan (if we do?) Eliminate the 3% a year penalty for those between 55-60. While some would stay to max their benefits on the back end, some might consider leaving sooner if the penalty went away.

Last takeaway--if you are reservist, close the deal. Get that retirement--even if its coloring books or non-flying work. I'm realizing as 60 gets closer what a very nice addition that will be to our post retirement income.

One of the biggest concerns which is yet to be addressed, “ What happens if a guy goes on LTD at 45 but then returns at 55 where under the current A Plan he/she can still get their high 5?” There is no provision for that under the proposed VB Plan

Thanks to Albie for taking the time to produce some numbers.

Some thoughts, since our NC was unable to get mgt to agree to at least match the DC limit in 2015-I think it is unlikely mgt will agree to a floating match in CBA 202x. (Although a floating match of our traditional high 5 would be superior to the VB plan)

As food for thought, the assumed future increase of the DC limit has been said to be artificially high to “sell” the VB. Same people who argued our 3&4% annual CBA raises aren’t even COLA raises...well, if the future DC limit predictions are too high, how can our CBA raises be too low?

And, I tend to think the era of easy money via the Fed and a 0% rate was s long gone, IMO-inflation is going to be closer to 3% than the 1.5-2% we’ve been fortunate enough to experience over the past 9’sh years.

Don’t need to be a WB Capt either, NB Capt can fairly easily meet the limits. What with the occasional trip disruptions, revised pairings, etc.
And I’ve had more than one friend tell me they took a paycut to upgrade to NB Capt from 777FO

Disability. What has been said is that you would continue to accrue at previous earnings rate.
I think 10 years out would be tough to come back from at age 55 or later (question posted was disabled 45-55). And what do you come back as? If it was me, think I’d rather come back as an FO. Maybe 777 ‘Prof RFO’ until I felt comfortable in an airplane again.

I maybe a bit optimistic here, but I don’t think a change to VB plan will be have as big an impact as many seem to think. Layovers at home are tough to beat. Not being on Reserve tough to beat. Being able to pull the trigger on retirement without penalty after 60 is tough to beat.
Those who will chase the $$, already chase the $$.
The benefits of earning an income to Age 65, and staying on the cheaper FedEx employee health care, aren’t impacted by a change.

Albeif15,

No sir, common misconception with the plan. Variable BENEFIT has to do with your pension check, not your accrual rate. You have two options at retirement. You can choose to "lock in" the pension check that is being paid that year, or you can choose the "variable" pension check for the duration of retirement. Variable benefit goes up over time(market goes up over time), but also has bad years where it'll go down during down markets. This has been mentioned on at least two videos.

The stotastically awesome (can't spell that word) graph that they show you in the modeler is what's POSSIBLE when markets fall short, meet, or exceed the hurdle rate throughout your tenure with the company. The top of the green box is your "best case" scenario. The brown box is your "worst case" scenario. Can't go lower than that. Brown box assumes every year is a bad year and you only receive your min accrual/payout. In negotations(IF we get that far), we would never want the brown box to be any less than the A fund current maximum (hopefully higher).

Again, brown box ASSUMES 2% min accrual, 5% hurdle, etc etc etc. None of this is set in stone, it's a basic calculator and it's still using hypothetical numbers that are still subject to negotiation.

Reese,

You are wrong again. The accrual is variable as well. Otherwise, how do you get the gains above the minimum accrual rate? And, as you said, all of this still has to be negotiated.

And again, if the minimum accrual rate gives you a higher guarantee than the current $130k, and the hurdle rate is less than the rate the company uses to determine if the plan is funded, how is this less expensive for the company?

If there are any guaranteed benefits via either a min accrual rate, or a locked in, guaranteed retirement check, why wouldn't the PBGC require penalty payments if these guarantees aren't funded properly?

You are counting on the union to negotiate all of these very complicated variables, yet they couldn't even get us a 3% pay raise in the last contract. They said it was, but the math showed it was short. That sounds like a group that I want screwing with my retirement.

https://www.investopedia.com/terms/v...nefit-plan.asp

"the payout changes depending on how well the plan's investments perform."

https://www.planadviser.com/actuary-...benefit-plans/

“A variable benefit plan is a type of pension plan that, unlike a traditional DB plan that promises a set return every year, fluctuates with the market, he explains. Hence the name variable benefit.”

Sure, accrual dollars change but they're not really 'variable." They rate is fixed according to a formula and where you fall within the formula dictates your accrual. But that’s NOT what the Variable aspect of the plan is referring to.

https://www.mwe.com/en/thought-leade...15/12/increase

"Single-employer defined benefit pension plans must pay annual premiums to the Pension Benefit Guaranty Corporation (PBGC), the U.S. government agency that insures these plans. All single-employer defined benefit pension plans pay an annual fixed premium. Those plans with unfunded vested benefits at year-end must pay an additional variable rate premium."

I’m not saying you’re wrong, but please provide me a reference where it says you only pay penalties if it's funded less than 80% and that contradicts the above statement. I searched for a long time, but my efforts yielded nothing. Yes, capped at ~$500, but multiplied by XX,XXX annually is a lot.

https://www.law.cornell.edu/uscode/text/29/1083

"(C)Limitation for underfunded plans: The preceding provisions of this paragraph shall not apply for any plan year if the ratio (expressed as a percentage) which—
…..(ii)the funding target of the plan for the preceding plan year (determined without regard to subsection (i)(1)),
is less than 80 percent. In the case of plan years beginning in 2008, the ratio under this subparagraph may be determined using such methods of estimation as the Secretary of the Treasury may prescribe."

80% applies to MRC's, yes, I agree. I would say FedEx is not currently required to pay these.

https://www.planadviser.com/actuary-...benefit-plans/

“An additional reason why an employer might consider a variable benefit plan is that, unlike traditional pension plans that are typically underfunded and that require DB plan sponsors to pay 3% of their underfunding each year to the Pension Benefit Guaranty Corporation (PBGC), variable benefit plans remain 100% or very close to 100% funded. The reason for this is that the benefits rise or decrease as the plan’s returns exceed, meet or fall below the hurdle rate, Klein says. Therefore, variable benefit plan sponsors do not have to pay the annual penalty to the PBGC, only the minimal per-head cost, he says.”

Also, see previous post for another reference regarding paying penalties on VB plans. They are almost always funded at 100% by design, because the benefit that gets paid out is variable. It corrects/adjusts to reflect the performance of the plan. You still have to pay the FIXED per head premiums on a VB plan, just not the variable rate premiums that kick in when a fund is underfunded.

http://www.milliman.com/uploadedFile...uity-plans.pdf

The above link explains why a VB plan is beneficial to an employer(also supports my argument for "predictable contributions" for FedEx). We need to educate ourselves if the union is going to force the issue.

I cannot find a specific reference regarding VB plan and bankruptcy. I do know, that usually if assets cancel out liabilities within a bankruptcy filing, the judge calls it a wash. He doesn’t need to re-allocate the funds, because a VB plan is 100% funded. Where as, with an A fund, if it’s 85% funded, he’s going to see that as a liability, and rule on it. But again, that’s an understanding.

Also, I believe it has been stated that the pension will be in the control of Pilots and the Union, with a representative from FedEx on the board. I specifically asked the question of who would "own" the plan at a meeting, they told me "we" would. FedEx would only have a rep as an advisor. Maybe I heard wrong, but I specifically asked about bankruptcy, what happens, and who actually "owns" the fund/pension.

We'll have to wait and see I guess with what FedEx tells us our pension is funded at. There ARE two different metrics like DLax said. I briefly reviewed them, with discount rates, amortizations, etc., it strikes me as a way to spin the same number in two different ways.

VB plans have been around since ~2009, they're out there. But just because you've never heard of it or know the insides and outs, doesn't necessarily mean it's smoke and mirrors. I can't tell you how many times I've been told "I can't contribute to a Roth IRA because I make too much." Yes, you can, you just have never heard how to. (Backdoor Roth)

I may be mistaken on this, but isn't the penalty for leaving before age 60 a federal law?