Ditto my previous point. One pilot's retirement benefit will not be reduced because another pilot earned more. We're not splitting up a pie.





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I think we are doing exactly that, splitting a pie. You will not get a percentage of your earnings, you will get a percentage of the total input from the company based on your earnings.

The companies portion of this plan is to allow for a FIXED amount they have every year. We are asking for a possible variable of a "floor" to earning where they might have an additional expense if our ROI doe not meet the floor return. If they never have a need to plus up for the floor earnings, then their cost per year is static. (perhaps there is an annual COL increase but the details are unknown)

IF you were getting a percentage of your earnings, then we would never use the term "pancake" to describe what you get. Instead, there would be a percentage being used as an example, with a max cap of earnings being shown. Never ever have I ever heard anyone explaining this say we get a percentage of our earnings. They've always said we get a percentage of the total or a pancake. In this video they say FedEx pays a percentage of payroll each year (5:45) https://www.youtube.com/watch?v=mm_K3B_Xbws That percentage of payroll is what is then divided out based on how much you earn. So yes, the payroll percentage is the pie and you get a portion of the pie. If you earn more you earn it at the expense of those with less earnings.

 

If we all don't understand exactly how this works, then it is either too complicated to vote on, or the union has not done a good job of explaining it, perhaps on purpose.

"You have to vote for it, before we know how it works" comes to mind.

We all have a college education. If this plan is really that confusing or complicated or subject to interpretation, how hard will it be to understand once the company's lawyers put their spin on it?

Just like lie flat seats, we are about to have our clock cleaned.

 

Where to start?

First, the company costs aren't fixed or static, their costs increase every year that our pay increases. The company costs are a percentage of total payroll. If payroll goes up, costs go up. Their costs will be known, not static or fixed. If the plan doesn't meet the floor guarantee, then they will have to pony up more cash. Of course that all still has to be negotiated and no one really knows how that will work. I've asked what happens if the company says they can't meet the floor guarantee, and the answer was that they would have to, it's in the contract.

Second, your "pancake" is determined by taking 2% of your earnings and then figuring out how many "pancakes" you get by the cost of each "pancake." If you earned $250K this year, your benefit would be $5000. If the cost of a pancake at the end of the year is $10, you get 500 pancakes.

 

Are there a finite number of block hours in a FDX calendar year? What determines the FDX contribution to the pile of pancakes? How many angels can dance on the point of a pin?

 

Sounds a lot like mutual fund NAV's. Seems pretty straightforward. Benefits earned build over time, but vary with share price. No artificial earnings or YOS cap, just the IRS limit which is already 15 grand over our cap.

 

Then I'm glad I spoke up, because I think your are incorrect.


I'm reticent to use the "Whiteboard" video as reference, as it is so filled with omissions, misleading statements, and outright lies, but since you've cited it below, I'll point you back at it for a more careful listen. Begin at 4:50 (I think this link should help: Retirement Education: Variable Benefit Plan (Whiteboard Video) beginning at 4:50) and follow along with my transcription. I've taken the liberty of highlighting a few spots.

Funny, you could say the same things about our 'B' Fund, otherwise known as our Defined Contribution Plan. That's because The Company is only responsible for what goes in the fund each year, and not so concerned about what should come out on the retirement end. The have a bit more liability than the B Fund because they have the Longevity Risk -- we may live too long. They might have the responsibility for funding an underperformance of the fund, i.e., performance below the Floor value. (Color me surprised if they agree to assume that responsibility, though. It would be far more likely they would only agree to a scheme with a Cap Rate to fund a Stabilization Reserve.) Since The Company would no longer be responsible for guaranteeing any benefit, the pilot would have to be ready to accept whatever outcome the market might produce.

But I digress.


Listen to Greg Reardon. He says exactly that.


January 2018 Joint Council Meeting: Greg Reardon (Begin at 18:38)


Start with Salary, compare with IRS Salary limit.

Take the lower of the 2, multiply by 2%, that's your Annual Floor Accrual.

Divide Annual Floor Accrual by Beginning of Year Share Value, that's your number of pancakes.

Go through another step or two (looking at the performance of the fund (Actual Investment Return), the Floor Accrual Rate, and the Cap Rate) to determine the new share value. Multiply that by the number of new pancakes to determine the End of Year Annual Benefit, which is only significant if and when you're retiring. Until then, its ... ahem ... variable.


Nowhere does Mr. Reardon mention that any pilot's benefit is affected in any way by how much any other pilot works or earns. If you make $150K and your buddy makes $300K, your benefit is based on $150K, and his benefit is based on the IRS Salary limit ($275K in 2918, increasing in future years.) So, in 2018, The Company would contribute to the fund a fixed percentage of your $150K and his $275K and then they'd be done. Like the old Ron Popiel RONCO Showtime Rotisserie ...




If it winds up being undercooked, they won't care. It must be your fault for not following the instructions.







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Except it's NOT like a mutual fund. You don't own it, you can't move it, and the benefits do NOT build over time. If the pilot earns X pancakes in year 1, Y pancakes in year 2, and Z pancakes in year 3, at the end of 3 years he has only X+Y+Z pancakes, regardless of how the market performs or the fund performs. They don't earn dividends to be converted to extra pancakes.

The only relevant value ever assigned to each pancake is that value on the day the pilot retires. If that happens to be at the end of a good market year, YAY TEAM!

If it happens to be at the end of a horrible market year, SUCKS TO BE YOU! (Accept a lower benefit, or be stuck playing stock market roulette with your retirement.)


We cannot negotiate IRS limits, but we CAN negotiate CBA Caps.

Do you know what the current IRS limit is for a Defined Benefit Retirement? (HINT: It's a whole lot more than $130K.)





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Yes.


You quoted pinseeker's answer.


It depends on the type of dance. Ballroom? Square? Line? You need to be more specific with your question.






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Except we get all of the bad. We don't control the investments. Like Tony said, it isn't in our name. It is based off all years, not just high 5.

If the company goes under and you have a mutual fund in your name, like the "B" plan, you keep all of the money.

With the VB plan, just like the DB plan, if the company goes under, or is distressed enough to get a judge to allow them to terminate the plan, we get the PBGC payout. That payout is currently much less than our current A plan, regardless of when you take the benefits.