Tony C is Running for Block 3
02-06-2019, 03:30 PM
#11
Gets Weekends Off
Joined APC: Aug 2015
Posts: 180
Originally Posted by vagabond
I moved that retirement thread to Union Talk. Also moved all the others (Delta, United and even JetBlue!) there and comparison of the different points of view is so much easier now.
Did Joe DePete retire? (FedEx)
Did Joe DePete retire? (FedEx)
02-06-2019, 06:23 PM
#12
Organizational Learning
Joined APC: Nov 2005
Position: Directly behind the combiner
Posts: 4,948
Since you asked ...
Thanks, Brad.
Congratulations to Capt. Pete Harmon on being chosen to be our new MEC Chairman. As we face daily challenges, and as we prepare for the next round of Collective Bargaining, we should all join in wishing him tremendous success. We are counting on his superior leadership to improve our collective future.
Capt. Harmon will be resigning his current position as Seniority Block 3 Representative effective with the election of his replacement. The nomination step of that process is now in progress. Block 3 is part of Local Council 26, so all pilots in Local Council 26 can participate in nominating and electing the Block 3 Rep. That includes Seniority Block 6 and the Instructor Block 11. If you are in either Block 3, Block 6, or Block 11, I urge you to participate in nominating and electing our new Rep.
Over the past couple of weeks, I have talked with many friends and acquaintances to ask for their support for my nomination. I have been overwhelmed with the unconditional support they have so generously offered, and I cannot thank them enough. They know me as a passionate pilot advocate who will work tirelessly to defend our hard-earned and negotiated benefits, and to never flinch in the effort to advance our causes. I have never subscribed to the theory that it’s the job of “the union” to decide how to divide the metaphorical pie offered by “The Company”. When striving for fair improvements to our contract, you’ll never hear me say, “What are you willing to give up for that?” My answer is “nothing.” We shouldn’t have to give up any earned benefit in order achieve the further improvements we deserve. In short, we deserve a bigger pie. I’m not in the business of dividing leftover scraps. I’m fighting for a bigger pie.
In my discussions I’ve only been asked about one specific topic, and that’s why I am writing now. What about that retirement plan? While I could talk or write for days on this topic, I’ll try to be brief. It would be an understatement to say I have been disappointed by the MEC’s approach to this issue. I was extremely disappointed by the failure to improve our Defined Benefit retirement in the last round of RLA Section 6 negotiations and went so far as to purchase and distribute a large quantity of “VOTE NO” lanyards. 43% of you voted with me. When the MEC almost immediately afterward announced an effort to gather more information about our current retirement plans, I believed they were a little late to the game (why not before the TA, instead of after?), but I thought it would at least prepare us for the next round of negotiations. Patiently I waited to hear more facts about our A Plan, and our B Plan, and how they could be improved, and what it would take to achieve those improvements.
Sadly, we still have not received any of that information. When I had the temerity to ask the question at a Joint Council Meeting, “What would it cost to raise the Defined Benefit FAE Cap from $260,000 to $280,000 or $300,000?”, I was accused of asking a political question and told the MEC would never consider it because of the fighting that had occurred during the previous CBA negotiations. No, I was asking a money question, a business question, because negotiating is a business transaction, and it boils down to money. If we don’t know the cost, how can we possibly negotiate it? We need that information in order to make informed decisions, and we were led to believe the MEC would get it. Yet, we’re still left in the dark
Worse than being left in the dark is being fed incorrect information. Pilots have been told over and over that The Company has told us “No” to improving the Defined Benefit Plan over the last three contracts. If they’ve told us “No” 3 times in a row, why would they tell us “Yes” now? We should just give up on asking. While they seem comfortable feeding that story to the FedEx pilots, they had to stick more closely to the facts when the article was published in the ALPA magazine about the Variable Benefit Plan. In fact, The Company has only said, “No” ONE time, this last time. Our 2006 CBA included enhancements to the A Plan for certain age and seniority bands of pilots, and it included a valuable VEBA benefit for an age band of pilots who could then retire at age 60 with help to address the huge increase in cost of health care insurance until reaching age 65. At the same time, The Company acknowledged the need to raise the FAE Cap and agreed to do it with the next CBA. The “next” CBA turned out to be the “Bridge (to nowhere)” Contract where we accepted a modest pay rate increase with no changes to work rules. The same deal had been offered by The Company in 2006, but we outright rejected it then. But in 2011, strangely, we were the party that offered it. As a Block Representative and MEC Member at that time, I opposed the deal, and one of the many reasons I cited was it would leave the next age band of pilots out in the cold to pay the increased cost of post-retirement health care insurance. This would create an obstacle to retirement at Age 60, a principle we had promised to not violate. We promised to create no obstacle to retiring at the normal retirement age, and no incentive to work beyond the normal retirement age. In making the Bridge deal, we created an obstacle to retirement at the normal retirement age, and we never even addressed the A Plan to increase the FAE Cap.
That was two rounds of CBA negotiations with a promise to improve it the next time, followed by a next time when we were in too big of a hurry to even ask. It wasn’t until the third and most recent time that The Company balked at raising the FAE Cap. Our Negotiating Committee went with that, and the MEC sent the TA to the pilots for ratification, and 57% of the pilots said Yes, the lowest level of support I’ve ever heard of. When you hear “The Company said ‘No’ the last three times, why would they ever say ‘Yes’?” know you’re listening to a defeatist, and they’re not dealing with facts. I am not a defeatist.
I am disturbed by the tendency to use $130,000 as the benchmark for comparing our current retirement plan with an alternate retirement scheme. “Here’s Choice A, $130,000, and here’s Choice B, more than $130,000 (maybe), which one do you want? These are your only choices.” Invalid benchmark, and false choice. When the $260,000 FAE Cap was written into our very first CBA, it corresponded to the IRS limit for defined benefit plans, and exceeded the FAE of most pilots. The IRS limit was $130,000, so the FAE limit, based on a maximum of 50% of the FAE, was double the IRS limit. Now, take a moment to consider the same IRS limit for 2019 is $225,000. If we focus on our FAE Cap being twice the IRS limit, we should be talking about an FAE Cap of $550,000. Although it would be reasonable to argue for an FAE Cap of $550,000, most of us don’t get there. (Sounds a lot like the situation in 1998.)
In my opinion, the only valid benchmark is the same which was intended in our original CBA, that being 50% of a pilot’s Final Average Earnings (FAE). Any pilot who works for 25 years, accumulating a 2% benefit each year, should receive a retirement income from the Defined Benefit plan equal to 50% of his Final Average Earnings. Guaranteed! Absolute, regardless of stock market performance. The CBA FAE Cap wasn’t a meaningful limit when it was instituted, and it should not represent a reduction in benefit today or in the future. The supporters of the Variable Benefit Plan want to use $130,000 as the benchmark for comparing an alternate plan. I believe the proper benchmark is 50% FAE, and it should be just as certain as our current benefit, not relying on the performance of the stock market.
Which brings me to my next point, which is distribution of risk. The combination of Defined Benefit Plan and Defined Contribution Plan we have now is the perfect combination of two worlds. Both plans have their own particular risks, and their own particular benefits. Risks are shared between The Company and the pilot. I’m sure The Company would love to be absolved of their responsibility to provide a guaranteed benefit that we can never outlive, but it doesn’t make sense to me to take on that risk personally. We already bear that risk with our Defined Contribution Plan. Our goal has been to improve our retirement plans, not to relieve The Company of the risk they have.
With the Variable Benefit Plan, nobody will know what their final retirement benefit will be until they actually retire and the final value of each of their accumulated “pancakes” is determined. Regardless of how well the stock market has performed in previous years, a final bad year will decrease the value of all of the “pancakes” a pilot has earned over the years. Imagine announcing your retirement a year in advance (so you can collect the “Fly ‘til you die, or One More Peak!” benefit), and then watching the Stock Market through a sharp decline throughout the year. Who gets to make up the difference in what you anticipated in retirement income? You do.
The final point I’ll make about the retirement goes back to the fundamental principle adopted by the MEC (and since violated on multiple occasions) that we should not create obstacles to pilots who want to retire at the Normal Retirement Age, nor should we create incentives for them to work beyond the Normal Retirement Age. When we left pilots behind with the Bridge contract, we created an obstacle to retirement by way of increased health care insurance costs. When we created the retirement bonus, we created an incentive to work beyond the Normal Retirement Age. Do you realize that you cannot retire on your 60th birthday and receive that bonus? Unless your birthday just happens to be December 31st, you must continue until a subsequent December 31st, or until your 65th birthday. When the Variable Benefit Retirement Plan Sales team points to the fact that pilots are working longer, they don’t want to acknowledge that they’ve influenced the retirement decision with obstacles and incentives to delay retirement. The biggest of all incentives to delay retirement is the “every dollar counts” cheer they repeat. Not only can a pilot hope to increase his retirement benefit by working more every year, he can increase it by working more years. There aren’t many incentives more powerful than money, and the promise of more money is an incentive to delay retirement. When considering seniority and seat progression, every junior pilot should be concerned about such a scheme. We all remember what happened when the regulated age changed from 60 to 65, and the stagnation that occurred for 5 years. Not only will retirement decisions be affected, but pilots will rethink their quality of life versus upgrade decisions, and it will be more difficult to justify taking it easy after establishing a good “High Five” years of income. There are plenty of negative consequences that we can predict, but there will be even more unintended consequences that we probably have not yet considered.
I chuckled when I saw that the Variable Benefit Plan has a new name, the Pilot Stabilized Pension Plan. Giving it a new name makes it no less Variable, and no more Stabilized. I’m troubled when I hear MEC Reps brag that if we get this new retirement plan, future CBA negotiations will be easy, because we won’t have much to ask for. Let that sink in for a minute. While we are almost 32 months away from the Amendable Date of our CBA (by the way, it never expires, it only becomes amendable), our MEC and Negotiating Committee are still occupied with negotiating away our A Plan instead of focusing on the next round of RLA Section 6 Negotiations because they think that will be easy with the Variable Benefit Plan in place.
I’m not looking for the easy way out. I’m willing to fight for what we deserve. I’m ready to fight to hold The Company to their word to raise the FAE Cap. I believe I am uniquely qualified to represent the pilots of Block 3 and Local Council 26 in the upcoming RLA Section 6 Negotiations. It will not be easy for the Negotiating Committee, and it will not be easy for the MEC, and it will not be easy for FedEx pilots. It will require hard work, and I’ve proven that I am willing and able to do that work. I am asking for your vote.
Two of them, in fact. We are now in the Nomination Process. Although it will be done electronically next year, we’re still doing it by paper ballot for now. If you are in Block 3, Block 6, or Block 11 you should have received a Nomination Ballot in the mail in a plain white envelope from ALPA last week. (It is marked “IMPORTANT BALLOT” on the lower, right-hand corner.) Please write my name on the ballot and make no other marks. Place the ballot in the brown envelope and seal it, again making no marks. Then place the brown envelope in the yellow envelope, seal it, and fill in the blanks in the upper, left-hand corner. Please write your name legibly, as it will be used to determine if the ballot it valid. Including your ALPA number would be helpful. Finally, attach a stamp and mail it. ASAP. It must reach the office on Kirby by next Monday.
The Nomination Votes will be counted at the Local Council Meeting next Tuesday at 11:30AM at the Holiday Inn on Democrat. If you cannot mail the Nomination Ballot, you can get a floor ballot at the meeting. The two candidates receiving the most Nomination votes will advance to the next step, which is the election via electronic votes. Should I be one of those two nominated, I would appreciate your vote for election. That vote can be placed either by phone or via internet.
I appreciate your support, and stand ready to answer any questions you may have. (And, yes, I realize I failed to keep this brief. Thanks for reading it anyway.
)
Fraternally
Tony Cutler
Congratulations to Capt. Pete Harmon on being chosen to be our new MEC Chairman. As we face daily challenges, and as we prepare for the next round of Collective Bargaining, we should all join in wishing him tremendous success. We are counting on his superior leadership to improve our collective future.
Capt. Harmon will be resigning his current position as Seniority Block 3 Representative effective with the election of his replacement. The nomination step of that process is now in progress. Block 3 is part of Local Council 26, so all pilots in Local Council 26 can participate in nominating and electing the Block 3 Rep. That includes Seniority Block 6 and the Instructor Block 11. If you are in either Block 3, Block 6, or Block 11, I urge you to participate in nominating and electing our new Rep.
Over the past couple of weeks, I have talked with many friends and acquaintances to ask for their support for my nomination. I have been overwhelmed with the unconditional support they have so generously offered, and I cannot thank them enough. They know me as a passionate pilot advocate who will work tirelessly to defend our hard-earned and negotiated benefits, and to never flinch in the effort to advance our causes. I have never subscribed to the theory that it’s the job of “the union” to decide how to divide the metaphorical pie offered by “The Company”. When striving for fair improvements to our contract, you’ll never hear me say, “What are you willing to give up for that?” My answer is “nothing.” We shouldn’t have to give up any earned benefit in order achieve the further improvements we deserve. In short, we deserve a bigger pie. I’m not in the business of dividing leftover scraps. I’m fighting for a bigger pie.
In my discussions I’ve only been asked about one specific topic, and that’s why I am writing now. What about that retirement plan? While I could talk or write for days on this topic, I’ll try to be brief. It would be an understatement to say I have been disappointed by the MEC’s approach to this issue. I was extremely disappointed by the failure to improve our Defined Benefit retirement in the last round of RLA Section 6 negotiations and went so far as to purchase and distribute a large quantity of “VOTE NO” lanyards. 43% of you voted with me. When the MEC almost immediately afterward announced an effort to gather more information about our current retirement plans, I believed they were a little late to the game (why not before the TA, instead of after?), but I thought it would at least prepare us for the next round of negotiations. Patiently I waited to hear more facts about our A Plan, and our B Plan, and how they could be improved, and what it would take to achieve those improvements.
Sadly, we still have not received any of that information. When I had the temerity to ask the question at a Joint Council Meeting, “What would it cost to raise the Defined Benefit FAE Cap from $260,000 to $280,000 or $300,000?”, I was accused of asking a political question and told the MEC would never consider it because of the fighting that had occurred during the previous CBA negotiations. No, I was asking a money question, a business question, because negotiating is a business transaction, and it boils down to money. If we don’t know the cost, how can we possibly negotiate it? We need that information in order to make informed decisions, and we were led to believe the MEC would get it. Yet, we’re still left in the dark
Worse than being left in the dark is being fed incorrect information. Pilots have been told over and over that The Company has told us “No” to improving the Defined Benefit Plan over the last three contracts. If they’ve told us “No” 3 times in a row, why would they tell us “Yes” now? We should just give up on asking. While they seem comfortable feeding that story to the FedEx pilots, they had to stick more closely to the facts when the article was published in the ALPA magazine about the Variable Benefit Plan. In fact, The Company has only said, “No” ONE time, this last time. Our 2006 CBA included enhancements to the A Plan for certain age and seniority bands of pilots, and it included a valuable VEBA benefit for an age band of pilots who could then retire at age 60 with help to address the huge increase in cost of health care insurance until reaching age 65. At the same time, The Company acknowledged the need to raise the FAE Cap and agreed to do it with the next CBA. The “next” CBA turned out to be the “Bridge (to nowhere)” Contract where we accepted a modest pay rate increase with no changes to work rules. The same deal had been offered by The Company in 2006, but we outright rejected it then. But in 2011, strangely, we were the party that offered it. As a Block Representative and MEC Member at that time, I opposed the deal, and one of the many reasons I cited was it would leave the next age band of pilots out in the cold to pay the increased cost of post-retirement health care insurance. This would create an obstacle to retirement at Age 60, a principle we had promised to not violate. We promised to create no obstacle to retiring at the normal retirement age, and no incentive to work beyond the normal retirement age. In making the Bridge deal, we created an obstacle to retirement at the normal retirement age, and we never even addressed the A Plan to increase the FAE Cap.
That was two rounds of CBA negotiations with a promise to improve it the next time, followed by a next time when we were in too big of a hurry to even ask. It wasn’t until the third and most recent time that The Company balked at raising the FAE Cap. Our Negotiating Committee went with that, and the MEC sent the TA to the pilots for ratification, and 57% of the pilots said Yes, the lowest level of support I’ve ever heard of. When you hear “The Company said ‘No’ the last three times, why would they ever say ‘Yes’?” know you’re listening to a defeatist, and they’re not dealing with facts. I am not a defeatist.
I am disturbed by the tendency to use $130,000 as the benchmark for comparing our current retirement plan with an alternate retirement scheme. “Here’s Choice A, $130,000, and here’s Choice B, more than $130,000 (maybe), which one do you want? These are your only choices.” Invalid benchmark, and false choice. When the $260,000 FAE Cap was written into our very first CBA, it corresponded to the IRS limit for defined benefit plans, and exceeded the FAE of most pilots. The IRS limit was $130,000, so the FAE limit, based on a maximum of 50% of the FAE, was double the IRS limit. Now, take a moment to consider the same IRS limit for 2019 is $225,000. If we focus on our FAE Cap being twice the IRS limit, we should be talking about an FAE Cap of $550,000. Although it would be reasonable to argue for an FAE Cap of $550,000, most of us don’t get there. (Sounds a lot like the situation in 1998.)
In my opinion, the only valid benchmark is the same which was intended in our original CBA, that being 50% of a pilot’s Final Average Earnings (FAE). Any pilot who works for 25 years, accumulating a 2% benefit each year, should receive a retirement income from the Defined Benefit plan equal to 50% of his Final Average Earnings. Guaranteed! Absolute, regardless of stock market performance. The CBA FAE Cap wasn’t a meaningful limit when it was instituted, and it should not represent a reduction in benefit today or in the future. The supporters of the Variable Benefit Plan want to use $130,000 as the benchmark for comparing an alternate plan. I believe the proper benchmark is 50% FAE, and it should be just as certain as our current benefit, not relying on the performance of the stock market.
Which brings me to my next point, which is distribution of risk. The combination of Defined Benefit Plan and Defined Contribution Plan we have now is the perfect combination of two worlds. Both plans have their own particular risks, and their own particular benefits. Risks are shared between The Company and the pilot. I’m sure The Company would love to be absolved of their responsibility to provide a guaranteed benefit that we can never outlive, but it doesn’t make sense to me to take on that risk personally. We already bear that risk with our Defined Contribution Plan. Our goal has been to improve our retirement plans, not to relieve The Company of the risk they have.
With the Variable Benefit Plan, nobody will know what their final retirement benefit will be until they actually retire and the final value of each of their accumulated “pancakes” is determined. Regardless of how well the stock market has performed in previous years, a final bad year will decrease the value of all of the “pancakes” a pilot has earned over the years. Imagine announcing your retirement a year in advance (so you can collect the “Fly ‘til you die, or One More Peak!” benefit), and then watching the Stock Market through a sharp decline throughout the year. Who gets to make up the difference in what you anticipated in retirement income? You do.
The final point I’ll make about the retirement goes back to the fundamental principle adopted by the MEC (and since violated on multiple occasions) that we should not create obstacles to pilots who want to retire at the Normal Retirement Age, nor should we create incentives for them to work beyond the Normal Retirement Age. When we left pilots behind with the Bridge contract, we created an obstacle to retirement by way of increased health care insurance costs. When we created the retirement bonus, we created an incentive to work beyond the Normal Retirement Age. Do you realize that you cannot retire on your 60th birthday and receive that bonus? Unless your birthday just happens to be December 31st, you must continue until a subsequent December 31st, or until your 65th birthday. When the Variable Benefit Retirement Plan Sales team points to the fact that pilots are working longer, they don’t want to acknowledge that they’ve influenced the retirement decision with obstacles and incentives to delay retirement. The biggest of all incentives to delay retirement is the “every dollar counts” cheer they repeat. Not only can a pilot hope to increase his retirement benefit by working more every year, he can increase it by working more years. There aren’t many incentives more powerful than money, and the promise of more money is an incentive to delay retirement. When considering seniority and seat progression, every junior pilot should be concerned about such a scheme. We all remember what happened when the regulated age changed from 60 to 65, and the stagnation that occurred for 5 years. Not only will retirement decisions be affected, but pilots will rethink their quality of life versus upgrade decisions, and it will be more difficult to justify taking it easy after establishing a good “High Five” years of income. There are plenty of negative consequences that we can predict, but there will be even more unintended consequences that we probably have not yet considered.
I chuckled when I saw that the Variable Benefit Plan has a new name, the Pilot Stabilized Pension Plan. Giving it a new name makes it no less Variable, and no more Stabilized. I’m troubled when I hear MEC Reps brag that if we get this new retirement plan, future CBA negotiations will be easy, because we won’t have much to ask for. Let that sink in for a minute. While we are almost 32 months away from the Amendable Date of our CBA (by the way, it never expires, it only becomes amendable), our MEC and Negotiating Committee are still occupied with negotiating away our A Plan instead of focusing on the next round of RLA Section 6 Negotiations because they think that will be easy with the Variable Benefit Plan in place.
I’m not looking for the easy way out. I’m willing to fight for what we deserve. I’m ready to fight to hold The Company to their word to raise the FAE Cap. I believe I am uniquely qualified to represent the pilots of Block 3 and Local Council 26 in the upcoming RLA Section 6 Negotiations. It will not be easy for the Negotiating Committee, and it will not be easy for the MEC, and it will not be easy for FedEx pilots. It will require hard work, and I’ve proven that I am willing and able to do that work. I am asking for your vote.
Two of them, in fact. We are now in the Nomination Process. Although it will be done electronically next year, we’re still doing it by paper ballot for now. If you are in Block 3, Block 6, or Block 11 you should have received a Nomination Ballot in the mail in a plain white envelope from ALPA last week. (It is marked “IMPORTANT BALLOT” on the lower, right-hand corner.) Please write my name on the ballot and make no other marks. Place the ballot in the brown envelope and seal it, again making no marks. Then place the brown envelope in the yellow envelope, seal it, and fill in the blanks in the upper, left-hand corner. Please write your name legibly, as it will be used to determine if the ballot it valid. Including your ALPA number would be helpful. Finally, attach a stamp and mail it. ASAP. It must reach the office on Kirby by next Monday.
The Nomination Votes will be counted at the Local Council Meeting next Tuesday at 11:30AM at the Holiday Inn on Democrat. If you cannot mail the Nomination Ballot, you can get a floor ballot at the meeting. The two candidates receiving the most Nomination votes will advance to the next step, which is the election via electronic votes. Should I be one of those two nominated, I would appreciate your vote for election. That vote can be placed either by phone or via internet.
I appreciate your support, and stand ready to answer any questions you may have. (And, yes, I realize I failed to keep this brief. Thanks for reading it anyway.
)Fraternally
Tony Cutler
02-06-2019, 06:38 PM
#14
Organizational Learning
Joined APC: Nov 2005
Position: Directly behind the combiner
Posts: 4,948
Originally Posted by deus ex machina
What happen to John Cardaci... he was MC for less than a year?
.
02-06-2019, 07:58 PM
#15
Gets Weekends Off
Joined APC: Feb 2013
Posts: 615
Originally Posted by TonyC
Thanks, Brad.
Congratulations to Capt. Pete Harmon on being chosen to be our new MEC Chairman. As we face daily challenges, and as we prepare for the next round of Collective Bargaining, we should all join in wishing him tremendous success. We are counting on his superior leadership to improve our collective future.
Capt. Harmon will be resigning his current position as Seniority Block 3 Representative effective with the election of his replacement. The nomination step of that process is now in progress. Block 3 is part of Local Council 26, so all pilots in Local Council 26 can participate in nominating and electing the Block 3 Rep. That includes Seniority Block 6 and the Instructor Block 11. If you are in either Block 3, Block 6, or Block 11, I urge you to participate in nominating and electing our new Rep.
Over the past couple of weeks, I have talked with many friends and acquaintances to ask for their support for my nomination. I have been overwhelmed with the unconditional support they have so generously offered, and I cannot thank them enough. They know me as a passionate pilot advocate who will work tirelessly to defend our hard-earned and negotiated benefits, and to never flinch in the effort to advance our causes. I have never subscribed to the theory that it’s the job of “the union” to decide how to divide the metaphorical pie offered by “The Company”. When striving for fair improvements to our contract, you’ll never hear me say, “What are you willing to give up for that?” My answer is “nothing.” We shouldn’t have to give up any earned benefit in order achieve the further improvements we deserve. In short, we deserve a bigger pie. I’m not in the business of dividing leftover scraps. I’m fighting for a bigger pie.
In my discussions I’ve only been asked about one specific topic, and that’s why I am writing now. What about that retirement plan? While I could talk or write for days on this topic, I’ll try to be brief. It would be an understatement to say I have been disappointed by the MEC’s approach to this issue. I was extremely disappointed by the failure to improve our Defined Benefit retirement in the last round of RLA Section 6 negotiations and went so far as to purchase and distribute a large quantity of “VOTE NO” lanyards. 43% of you voted with me. When the MEC almost immediately afterward announced an effort to gather more information about our current retirement plans, I believed they were a little late to the game (why not before the TA, instead of after?), but I thought it would at least prepare us for the next round of negotiations. Patiently I waited to hear more facts about our A Plan, and our B Plan, and how they could be improved, and what it would take to achieve those improvements.
Sadly, we still have not received any of that information. When I had the temerity to ask the question at a Joint Council Meeting, “What would it cost to raise the Defined Benefit FAE Cap from $260,000 to $280,000 or $300,000?”, I was accused of asking a political question and told the MEC would never consider it because of the fighting that had occurred during the previous CBA negotiations. No, I was asking a money question, a business question, because negotiating is a business transaction, and it boils down to money. If we don’t know the cost, how can we possibly negotiate it? We need that information in order to make informed decisions, and we were led to believe the MEC would get it. Yet, we’re still left in the dark
Worse than being left in the dark is being fed incorrect information. Pilots have been told over and over that The Company has told us “No” to improving the Defined Benefit Plan over the last three contracts. If they’ve told us “No” 3 times in a row, why would they tell us “Yes” now? We should just give up on asking. While they seem comfortable feeding that story to the FedEx pilots, they had to stick more closely to the facts when the article was published in the ALPA magazine about the Variable Benefit Plan. In fact, The Company has only said, “No” ONE time, this last time. Our 2006 CBA included enhancements to the A Plan for certain age and seniority bands of pilots, and it included a valuable VEBA benefit for an age band of pilots who could then retire at age 60 with help to address the huge increase in cost of health care insurance until reaching age 65. At the same time, The Company acknowledged the need to raise the FAE Cap and agreed to do it with the next CBA. The “next” CBA turned out to be the “Bridge (to nowhere)” Contract where we accepted a modest pay rate increase with no changes to work rules. The same deal had been offered by The Company in 2006, but we outright rejected it then. But in 2011, strangely, we were the party that offered it. As a Block Representative and MEC Member at that time, I opposed the deal, and one of the many reasons I cited was it would leave the next age band of pilots out in the cold to pay the increased cost of post-retirement health care insurance. This would create an obstacle to retirement at Age 60, a principle we had promised to not violate. We promised to create no obstacle to retiring at the normal retirement age, and no incentive to work beyond the normal retirement age. In making the Bridge deal, we created an obstacle to retirement at the normal retirement age, and we never even addressed the A Plan to increase the FAE Cap.
That was two rounds of CBA negotiations with a promise to improve it the next time, followed by a next time when we were in too big of a hurry to even ask. It wasn’t until the third and most recent time that The Company balked at raising the FAE Cap. Our Negotiating Committee went with that, and the MEC sent the TA to the pilots for ratification, and 57% of the pilots said Yes, the lowest level of support I’ve ever heard of. When you hear “The Company said ‘No’ the last three times, why would they ever say ‘Yes’?” know you’re listening to a defeatist, and they’re not dealing with facts. I am not a defeatist.
I am disturbed by the tendency to use $130,000 as the benchmark for comparing our current retirement plan with an alternate retirement scheme. “Here’s Choice A, $130,000, and here’s Choice B, more than $130,000 (maybe), which one do you want? These are your only choices.” Invalid benchmark, and false choice. When the $260,000 FAE Cap was written into our very first CBA, it corresponded to the IRS limit for defined benefit plans, and exceeded the FAE of most pilots. The IRS limit was $130,000, so the FAE limit, based on a maximum of 50% of the FAE, was double the IRS limit. Now, take a moment to consider the same IRS limit for 2019 is $225,000. If we focus on our FAE Cap being twice the IRS limit, we should be talking about an FAE Cap of $550,000. Although it would be reasonable to argue for an FAE Cap of $550,000, most of us don’t get there. (Sounds a lot like the situation in 1998.)
In my opinion, the only valid benchmark is the same which was intended in our original CBA, that being 50% of a pilot’s Final Average Earnings (FAE). Any pilot who works for 25 years, accumulating a 2% benefit each year, should receive a retirement income from the Defined Benefit plan equal to 50% of his Final Average Earnings. Guaranteed! Absolute, regardless of stock market performance. The CBA FAE Cap wasn’t a meaningful limit when it was instituted, and it should not represent a reduction in benefit today or in the future. The supporters of the Variable Benefit Plan want to use $130,000 as the benchmark for comparing an alternate plan. I believe the proper benchmark is 50% FAE, and it should be just as certain as our current benefit, not relying on the performance of the stock market.
Which brings me to my next point, which is distribution of risk. The combination of Defined Benefit Plan and Defined Contribution Plan we have now is the perfect combination of two worlds. Both plans have their own particular risks, and their own particular benefits. Risks are shared between The Company and the pilot. I’m sure The Company would love to be absolved of their responsibility to provide a guaranteed benefit that we can never outlive, but it doesn’t make sense to me to take on that risk personally. We already bear that risk with our Defined Contribution Plan. Our goal has been to improve our retirement plans, not to relieve The Company of the risk they have.
With the Variable Benefit Plan, nobody will know what their final retirement benefit will be until they actually retire and the final value of each of their accumulated “pancakes” is determined. Regardless of how well the stock market has performed in previous years, a final bad year will decrease the value of all of the “pancakes” a pilot has earned over the years. Imagine announcing your retirement a year in advance (so you can collect the “Fly ‘til you die, or One More Peak!” benefit), and then watching the Stock Market through a sharp decline throughout the year. Who gets to make up the difference in what you anticipated in retirement income? You do.
The final point I’ll make about the retirement goes back to the fundamental principle adopted by the MEC (and since violated on multiple occasions) that we should not create obstacles to pilots who want to retire at the Normal Retirement Age, nor should we create incentives for them to work beyond the Normal Retirement Age. When we left pilots behind with the Bridge contract, we created an obstacle to retirement by way of increased health care insurance costs. When we created the retirement bonus, we created an incentive to work beyond the Normal Retirement Age. Do you realize that you cannot retire on your 60th birthday and receive that bonus? Unless your birthday just happens to be December 31st, you must continue until a subsequent December 31st, or until your 65th birthday. When the Variable Benefit Retirement Plan Sales team points to the fact that pilots are working longer, they don’t want to acknowledge that they’ve influenced the retirement decision with obstacles and incentives to delay retirement. The biggest of all incentives to delay retirement is the “every dollar counts” cheer they repeat. Not only can a pilot hope to increase his retirement benefit by working more every year, he can increase it by working more years. There aren’t many incentives more powerful than money, and the promise of more money is an incentive to delay retirement. When considering seniority and seat progression, every junior pilot should be concerned about such a scheme. We all remember what happened when the regulated age changed from 60 to 65, and the stagnation that occurred for 5 years. Not only will retirement decisions be affected, but pilots will rethink their quality of life versus upgrade decisions, and it will be more difficult to justify taking it easy after establishing a good “High Five” years of income. There are plenty of negative consequences that we can predict, but there will be even more unintended consequences that we probably have not yet considered.
I chuckled when I saw that the Variable Benefit Plan has a new name, the Pilot Stabilized Pension Plan. Giving it a new name makes it no less Variable, and no more Stabilized. I’m troubled when I hear MEC Reps brag that if we get this new retirement plan, future CBA negotiations will be easy, because we won’t have much to ask for. Let that sink in for a minute. While we are almost 32 months away from the Amendable Date of our CBA (by the way, it never expires, it only becomes amendable), our MEC and Negotiating Committee are still occupied with negotiating away our A Plan instead of focusing on the next round of RLA Section 6 Negotiations because they think that will be easy with the Variable Benefit Plan in place.
I’m not looking for the easy way out. I’m willing to fight for what we deserve. I’m ready to fight to hold The Company to their word to raise the FAE Cap. I believe I am uniquely qualified to represent the pilots of Block 3 and Local Council 26 in the upcoming RLA Section 6 Negotiations. It will not be easy for the Negotiating Committee, and it will not be easy for the MEC, and it will not be easy for FedEx pilots. It will require hard work, and I’ve proven that I am willing and able to do that work. I am asking for your vote.
Two of them, in fact. We are now in the Nomination Process. Although it will be done electronically next year, we’re still doing it by paper ballot for now. If you are in Block 3, Block 6, or Block 11 you should have received a Nomination Ballot in the mail in a plain white envelope from ALPA last week. (It is marked “IMPORTANT BALLOT” on the lower, right-hand corner.) Please write my name on the ballot and make no other marks. Place the ballot in the brown envelope and seal it, again making no marks. Then place the brown envelope in the yellow envelope, seal it, and fill in the blanks in the upper, left-hand corner. Please write your name legibly, as it will be used to determine if the ballot it valid. Including your ALPA number would be helpful. Finally, attach a stamp and mail it. ASAP. It must reach the office on Kirby by next Monday.
The Nomination Votes will be counted at the Local Council Meeting next Tuesday at 11:30AM at the Holiday Inn on Democrat. If you cannot mail the Nomination Ballot, you can get a floor ballot at the meeting. The two candidates receiving the most Nomination votes will advance to the next step, which is the election via electronic votes. Should I be one of those two nominated, I would appreciate your vote for election. That vote can be placed either by phone or via internet.
I appreciate your support, and stand ready to answer any questions you may have. (And, yes, I realize I failed to keep this brief. Thanks for reading it anyway. )
Fraternally
Tony Cutler
Congratulations to Capt. Pete Harmon on being chosen to be our new MEC Chairman. As we face daily challenges, and as we prepare for the next round of Collective Bargaining, we should all join in wishing him tremendous success. We are counting on his superior leadership to improve our collective future.
Capt. Harmon will be resigning his current position as Seniority Block 3 Representative effective with the election of his replacement. The nomination step of that process is now in progress. Block 3 is part of Local Council 26, so all pilots in Local Council 26 can participate in nominating and electing the Block 3 Rep. That includes Seniority Block 6 and the Instructor Block 11. If you are in either Block 3, Block 6, or Block 11, I urge you to participate in nominating and electing our new Rep.
Over the past couple of weeks, I have talked with many friends and acquaintances to ask for their support for my nomination. I have been overwhelmed with the unconditional support they have so generously offered, and I cannot thank them enough. They know me as a passionate pilot advocate who will work tirelessly to defend our hard-earned and negotiated benefits, and to never flinch in the effort to advance our causes. I have never subscribed to the theory that it’s the job of “the union” to decide how to divide the metaphorical pie offered by “The Company”. When striving for fair improvements to our contract, you’ll never hear me say, “What are you willing to give up for that?” My answer is “nothing.” We shouldn’t have to give up any earned benefit in order achieve the further improvements we deserve. In short, we deserve a bigger pie. I’m not in the business of dividing leftover scraps. I’m fighting for a bigger pie.
In my discussions I’ve only been asked about one specific topic, and that’s why I am writing now. What about that retirement plan? While I could talk or write for days on this topic, I’ll try to be brief. It would be an understatement to say I have been disappointed by the MEC’s approach to this issue. I was extremely disappointed by the failure to improve our Defined Benefit retirement in the last round of RLA Section 6 negotiations and went so far as to purchase and distribute a large quantity of “VOTE NO” lanyards. 43% of you voted with me. When the MEC almost immediately afterward announced an effort to gather more information about our current retirement plans, I believed they were a little late to the game (why not before the TA, instead of after?), but I thought it would at least prepare us for the next round of negotiations. Patiently I waited to hear more facts about our A Plan, and our B Plan, and how they could be improved, and what it would take to achieve those improvements.
Sadly, we still have not received any of that information. When I had the temerity to ask the question at a Joint Council Meeting, “What would it cost to raise the Defined Benefit FAE Cap from $260,000 to $280,000 or $300,000?”, I was accused of asking a political question and told the MEC would never consider it because of the fighting that had occurred during the previous CBA negotiations. No, I was asking a money question, a business question, because negotiating is a business transaction, and it boils down to money. If we don’t know the cost, how can we possibly negotiate it? We need that information in order to make informed decisions, and we were led to believe the MEC would get it. Yet, we’re still left in the dark
Worse than being left in the dark is being fed incorrect information. Pilots have been told over and over that The Company has told us “No” to improving the Defined Benefit Plan over the last three contracts. If they’ve told us “No” 3 times in a row, why would they tell us “Yes” now? We should just give up on asking. While they seem comfortable feeding that story to the FedEx pilots, they had to stick more closely to the facts when the article was published in the ALPA magazine about the Variable Benefit Plan. In fact, The Company has only said, “No” ONE time, this last time. Our 2006 CBA included enhancements to the A Plan for certain age and seniority bands of pilots, and it included a valuable VEBA benefit for an age band of pilots who could then retire at age 60 with help to address the huge increase in cost of health care insurance until reaching age 65. At the same time, The Company acknowledged the need to raise the FAE Cap and agreed to do it with the next CBA. The “next” CBA turned out to be the “Bridge (to nowhere)” Contract where we accepted a modest pay rate increase with no changes to work rules. The same deal had been offered by The Company in 2006, but we outright rejected it then. But in 2011, strangely, we were the party that offered it. As a Block Representative and MEC Member at that time, I opposed the deal, and one of the many reasons I cited was it would leave the next age band of pilots out in the cold to pay the increased cost of post-retirement health care insurance. This would create an obstacle to retirement at Age 60, a principle we had promised to not violate. We promised to create no obstacle to retiring at the normal retirement age, and no incentive to work beyond the normal retirement age. In making the Bridge deal, we created an obstacle to retirement at the normal retirement age, and we never even addressed the A Plan to increase the FAE Cap.
That was two rounds of CBA negotiations with a promise to improve it the next time, followed by a next time when we were in too big of a hurry to even ask. It wasn’t until the third and most recent time that The Company balked at raising the FAE Cap. Our Negotiating Committee went with that, and the MEC sent the TA to the pilots for ratification, and 57% of the pilots said Yes, the lowest level of support I’ve ever heard of. When you hear “The Company said ‘No’ the last three times, why would they ever say ‘Yes’?” know you’re listening to a defeatist, and they’re not dealing with facts. I am not a defeatist.
I am disturbed by the tendency to use $130,000 as the benchmark for comparing our current retirement plan with an alternate retirement scheme. “Here’s Choice A, $130,000, and here’s Choice B, more than $130,000 (maybe), which one do you want? These are your only choices.” Invalid benchmark, and false choice. When the $260,000 FAE Cap was written into our very first CBA, it corresponded to the IRS limit for defined benefit plans, and exceeded the FAE of most pilots. The IRS limit was $130,000, so the FAE limit, based on a maximum of 50% of the FAE, was double the IRS limit. Now, take a moment to consider the same IRS limit for 2019 is $225,000. If we focus on our FAE Cap being twice the IRS limit, we should be talking about an FAE Cap of $550,000. Although it would be reasonable to argue for an FAE Cap of $550,000, most of us don’t get there. (Sounds a lot like the situation in 1998.)
In my opinion, the only valid benchmark is the same which was intended in our original CBA, that being 50% of a pilot’s Final Average Earnings (FAE). Any pilot who works for 25 years, accumulating a 2% benefit each year, should receive a retirement income from the Defined Benefit plan equal to 50% of his Final Average Earnings. Guaranteed! Absolute, regardless of stock market performance. The CBA FAE Cap wasn’t a meaningful limit when it was instituted, and it should not represent a reduction in benefit today or in the future. The supporters of the Variable Benefit Plan want to use $130,000 as the benchmark for comparing an alternate plan. I believe the proper benchmark is 50% FAE, and it should be just as certain as our current benefit, not relying on the performance of the stock market.
Which brings me to my next point, which is distribution of risk. The combination of Defined Benefit Plan and Defined Contribution Plan we have now is the perfect combination of two worlds. Both plans have their own particular risks, and their own particular benefits. Risks are shared between The Company and the pilot. I’m sure The Company would love to be absolved of their responsibility to provide a guaranteed benefit that we can never outlive, but it doesn’t make sense to me to take on that risk personally. We already bear that risk with our Defined Contribution Plan. Our goal has been to improve our retirement plans, not to relieve The Company of the risk they have.
With the Variable Benefit Plan, nobody will know what their final retirement benefit will be until they actually retire and the final value of each of their accumulated “pancakes” is determined. Regardless of how well the stock market has performed in previous years, a final bad year will decrease the value of all of the “pancakes” a pilot has earned over the years. Imagine announcing your retirement a year in advance (so you can collect the “Fly ‘til you die, or One More Peak!” benefit), and then watching the Stock Market through a sharp decline throughout the year. Who gets to make up the difference in what you anticipated in retirement income? You do.
The final point I’ll make about the retirement goes back to the fundamental principle adopted by the MEC (and since violated on multiple occasions) that we should not create obstacles to pilots who want to retire at the Normal Retirement Age, nor should we create incentives for them to work beyond the Normal Retirement Age. When we left pilots behind with the Bridge contract, we created an obstacle to retirement by way of increased health care insurance costs. When we created the retirement bonus, we created an incentive to work beyond the Normal Retirement Age. Do you realize that you cannot retire on your 60th birthday and receive that bonus? Unless your birthday just happens to be December 31st, you must continue until a subsequent December 31st, or until your 65th birthday. When the Variable Benefit Retirement Plan Sales team points to the fact that pilots are working longer, they don’t want to acknowledge that they’ve influenced the retirement decision with obstacles and incentives to delay retirement. The biggest of all incentives to delay retirement is the “every dollar counts” cheer they repeat. Not only can a pilot hope to increase his retirement benefit by working more every year, he can increase it by working more years. There aren’t many incentives more powerful than money, and the promise of more money is an incentive to delay retirement. When considering seniority and seat progression, every junior pilot should be concerned about such a scheme. We all remember what happened when the regulated age changed from 60 to 65, and the stagnation that occurred for 5 years. Not only will retirement decisions be affected, but pilots will rethink their quality of life versus upgrade decisions, and it will be more difficult to justify taking it easy after establishing a good “High Five” years of income. There are plenty of negative consequences that we can predict, but there will be even more unintended consequences that we probably have not yet considered.
I chuckled when I saw that the Variable Benefit Plan has a new name, the Pilot Stabilized Pension Plan. Giving it a new name makes it no less Variable, and no more Stabilized. I’m troubled when I hear MEC Reps brag that if we get this new retirement plan, future CBA negotiations will be easy, because we won’t have much to ask for. Let that sink in for a minute. While we are almost 32 months away from the Amendable Date of our CBA (by the way, it never expires, it only becomes amendable), our MEC and Negotiating Committee are still occupied with negotiating away our A Plan instead of focusing on the next round of RLA Section 6 Negotiations because they think that will be easy with the Variable Benefit Plan in place.
I’m not looking for the easy way out. I’m willing to fight for what we deserve. I’m ready to fight to hold The Company to their word to raise the FAE Cap. I believe I am uniquely qualified to represent the pilots of Block 3 and Local Council 26 in the upcoming RLA Section 6 Negotiations. It will not be easy for the Negotiating Committee, and it will not be easy for the MEC, and it will not be easy for FedEx pilots. It will require hard work, and I’ve proven that I am willing and able to do that work. I am asking for your vote.
Two of them, in fact. We are now in the Nomination Process. Although it will be done electronically next year, we’re still doing it by paper ballot for now. If you are in Block 3, Block 6, or Block 11 you should have received a Nomination Ballot in the mail in a plain white envelope from ALPA last week. (It is marked “IMPORTANT BALLOT” on the lower, right-hand corner.) Please write my name on the ballot and make no other marks. Place the ballot in the brown envelope and seal it, again making no marks. Then place the brown envelope in the yellow envelope, seal it, and fill in the blanks in the upper, left-hand corner. Please write your name legibly, as it will be used to determine if the ballot it valid. Including your ALPA number would be helpful. Finally, attach a stamp and mail it. ASAP. It must reach the office on Kirby by next Monday.
The Nomination Votes will be counted at the Local Council Meeting next Tuesday at 11:30AM at the Holiday Inn on Democrat. If you cannot mail the Nomination Ballot, you can get a floor ballot at the meeting. The two candidates receiving the most Nomination votes will advance to the next step, which is the election via electronic votes. Should I be one of those two nominated, I would appreciate your vote for election. That vote can be placed either by phone or via internet.
I appreciate your support, and stand ready to answer any questions you may have. (And, yes, I realize I failed to keep this brief. Thanks for reading it anyway.
)Fraternally
Tony Cutler
02-07-2019, 03:04 AM
#17
Gets Weekends Off
Joined APC: Jul 2007
Position: MD-11
Posts: 395
Tony:
Your analysis of the Variable Benefit Scam is exactly what I've been trying to convey to those pilots with whom I fly. Though I am not in LC26, I whole heartedly support your candidacy. Best of luck!
PPP
Your analysis of the Variable Benefit Scam is exactly what I've been trying to convey to those pilots with whom I fly. Though I am not in LC26, I whole heartedly support your candidacy. Best of luck!
PPP
02-07-2019, 09:31 AM
#20
Gets Weekends Off
Joined APC: Aug 2007
Position: Always Fly With Favorite Captain
Posts: 376
Post #12 by Tony C is the best explanation of a critical issue that I've seen in a long time. Raise that bar ! Hopefully, also raising a toast to an improved A Fund in a few years. 
Thread
Thread Starter
Forum
Replies
Last Post
