The Walrus

I'm getting hungry.

Reese

Inflation Tony, inflation has resulted in the loss value of A fund. $130k in 1999 is $87k today. That is most assuredly YOUR problem.

Reese

Why is one of the pros of a variable benefit plan “inflation protection” Tony? If you say the shares/payout don’t change in value, that doesn’t make sense...

Did you read that paper that I attached? Did you watch the videos? I’ll reference again the videon where the guy specifically says the 2 options of fixed vs variable election at retirement.

Reese

https://m.youtube.com/watch?v=LvjGtv6POFM&feature=youtu.be

Start watching from 2mins 15sec, keep watching till 3mins.

You have two options upon retiring.

1) Choose variable -> Your paychecks in retirement fluctuate with market returns going forward

2) Choose Fixed -> Your paychecks in retirement are fixed, not inflation adjusted, do not grow, and will always reflect the value of your "pension" at retirement.

PW305

It’s worth $130k in todays dollars

golfandfly

Past market performance is just that, in the past.

Past inflation... the same.

What if the market goes down big, and stays there for the next 10-20 years? Sure, it’s a big “what if”, but I’m damn sure gonna look at worse case when it comes to changing our retirement.

I’d say most of us have a tremendous gain in the market lately. But it doesn’t always go up and there is certainly potential for a crash.

This plan is so full of pitfalls that I can’t believe people are actually considering it. This isn’t the only solution. And it’s not even a good one. Why in the world would we ever agree to this plan when it assures you’ll have to work a lot to maximize the benefit? Hell, we could agree to other productivity gains from the company and at least get something in return.

pinseeker

Says who? That's what they say now, but nothing has been negotiated yet. I mentioned to an MEC member that we have already shown the company what we will be happy with, now the company will try to see how low we will go. The response, "we have some tricks that they don't know about." Sound familiar? We are going to outsmart the company just like we have done so many times in the past.

By the way, what happens if your last 13 years before retirement end up being like 1999-2012? You have purchased your highest earnings pancakes at the same price and they are worth exactly what they were 13 years ago. How does that keep up with inflation?

To paraphrase a block rep from 2015, "they can't even get the easy math right, so how can I trust them with the more complicated sections?"

I feel the same way about them trying to improve our retirement while still saving the company money. The company outsmarts us every time, and this time will be no different.

No ALPA lanyard or pin for me anymore.

pinseeker

Since you watch the video's, I'm sure you saw the one where they stated that the "pancakes" were purchased once at the end of the year. Since what is in the video's and what the NC puts out is what we are going to get, I'm sure that is what is going to happen.

kwri10s

Dude there are no pros of the VBP period. The only people getting a benefit out of this plan are those that are already maxed in the current plan. Then you are getting something extra that you had ZERO expectation of receiving. IF the old guys had wanted an improved retirement plan then they would have voted no on the last contract that did not improve the retirement. You cannot have it both ways. Guys cannot vote yes on the contract saying they are happy with the deal and then turn around and say they want a better retirement. If guys were a yes vote....then suck it up and live with what we have and the rest of us union ball-busters will get our A plan improvements on the next contract.

If this was a good or even an average plan, lots of companies would be doing this. No one is doing this that was not forced into it by potential reorg. In that case, this is an option we could look at. Feel free to ask any money manager you know if they are familiar with this plan and if they would recommend it over a DB plan.

TonyC

If you started receiving $130,000 per year in 1999, this conversation is irrelevant to you.

The CBA A Plan will pay up to $130,000 in today's dollars.



Who claims the proposed plan provides "inflation protection"? Even if you opt to leave your money in the plan when you retire, there is no guarantee that future performance of the fund will guarantee inflation protection, only a HOPE that your benefit will improve and/or keep up with inflation. Hope does not equal protection.



The paper you attached is a 2012 conversation about "Variable Annuities." Don't be confused just because it contains the word "variable." It is not the Variable Benefit Plan the MEC has presented.


I've watched all the videos, and attended meetings, and asked questions when questions were permitted. In the video you linked, I'm sitting in the third row, on the aisle, left side, just off the screen to the right. I listened to the entire briefing, not just a short soundbite at the beginning.


Those with sufficient attention spans are rewarded around the 18:38 mark:

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

AT THE END OF EACH YEAR (not quarterly, not monthly, not once a fortnight) the benefit accrual is determined and the accrual is converted to "shares" by dividing it by share price.

In the example, the pilot gets 501 shares for the first year. If he retires after the first year, the price of those shares will determine his retirement benefit. If he works for another year, the new value of those 501 shares will be determined at the end of the next year by the performance of the fund during the second year. If he works for a third year, the retirement benefit based on those 501 shares will be determined by the performance of the fund during the third year, and so on. In the example given, those 501 shares would provide a Retirement Benefit of $5,135 in the first year, $5,035 in the second year, and $5,286, $5,125, or $5,225 in the third though fifth years, respectively. Regardless of the year, the benefit is based on the 501 shares ("pancakes" -- that's where the term comes from, Mr. Reardon) and the fund's performance during the last year. The 501 pancakes will always be 501 pancakes, and the only price/value that matters is the one assigned when the pilot retires, and that is determined by the performance of the fund that year. No dividends, no compounding interest, no fairy dust, and no unicorn toots.





It is possible, if negotiated, that a pilot could choose between a guaranteed benefit or a benefit that will continue to fluctuate with the stock market.

It is possible, if negotiated, to increase the A Plan's CBA FAE Cap.

It is possible, if negotiated, to negotiate a Cost of Living Adjustment to a retirement benefit.

It is possible, if negotiated, to be paid in gold bars instead of U.S. dollars.

It is also possible that the option to leave your money in the fund is the only way to convince someone to agree to a plan where the pilot's retirement benefit will be unknown until he retires, and there's a good chance it will be based on a bad year in the stock market. If it doesn't work out for you, here's a safety valve.


I like the way you used "variable" and "fixed" in your "choices" above. That's NOT what the "Variable" in the MEC plan refers to. Good luck with retirement planning when you won't know what the retirement benefit will be until you retire. Oh, and if you decided to go for the "Fly 'til you die, or One More Peak" bonus by announcing your retirement a year ahead of time -- have fun watching the market all year long.






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