Originally Posted by golfandfly

You can only take responsibly for your vote. I voted no. Of course the TA was a big topic of conversation during this time.

We were promised by the union that there would be no sales job, the merits would speak for themselves. As usual, this wasn’t the case. We can plead our cases to other pilots, but we just don’t have the pulpit the union has. They used scare tactics like.. it could be years before we get a new TA; we got every nickel possible; we won because we kept our pension and didn’t go wholesale PBS, etc. I believe it was a 57-43 TA approval, but I have no doubt they swayed enough pilots to get over 50%.

Regardless, you win some and lose some. The majority voted yes and that’s that. I’d say many of those “yes” voters regret their decision now. To me, it was a great time to fight for retirement benefits. Hopefully, we have the fortitude to do so this time.

Anyway, we have a survey in a few days and we all have our opportunity to give our thoughts. Let’s see how it shakes out and hopefully we’ll unify no matter which direction we go.

Originally Posted by kwri10s

We split the "pie" amongst all the pilots based upon their individual earnings for that year as a percentage of total earning. Feel free to play stump the ALPA rep the next time they try to spin this and you're around. Ask them if you earn 100k every year for the next 10 years will your pancakes be the same every year? After the tap-dancing (mostly because none of them really understand the plan either), the answer will be, it depends. If it was a flay percentage of your earnings, it would not depend. It depends on what everyone else makes.

Originally Posted by DLax85

FXLax -

In economic/financial modeling one can use nominal values (not adjusted for inflation) or real values (adjusted for inflation).

While adjusting for inflation is a more precise modeling method, it's also more complicated because it's another value one must estimate/assume, and is open for debate. Inflation in the 1970s was far different than the 1980s...which was different than the 1990s...or early 2000s...which is different than today & forecast.

US monetary policy, set by the Federal Reserve, also shifts with regards to inflation and unemployment. The Fed has recently shifted their views and policies regarding inflation, and I don't believe anyone knows what inflation will be for the next 10, 20 or 30 years. So with that said, introducing inflation into the model is another variable and another risk.

Given that, one can still build a nominal model - but such a model is affected by the discount rate used. Regardless of inflation, the discount rate (i) reduces the value of a current payout N years. Net Present Value of Payout in Year N = Payout times 1/(1+i)^N. Add up all future, discounted payouts and you will obtain the overall Net Present Value of any stream of payouts.

As the discount rate increases the value of future payouts decrease....and the total Net Present Value decreases

As the discount rate decreases the value of future payouts increase...and the total Net Present Value increases

So what discount rate should a pension fund use?

That's hotly debated by not only private pensions, but public pensions as well. If you do a simple Google Search you will see many articles. You can even research the discount rate used by the Fedex Plan. 3 Years ago, I did a lot of research on the Fedex Plan using financial reports in a university library.

The weighted discount rates used by our plan have steadily fallen from the 7.9%-8.5% range (1996-2000) to 7.7%-6.3% range (2001-2010)...to the 5.7%-4.0% range (2011-2017).

I have not updated my research for 2018 & 2019....sorry, I've been off doing "other things". I have the specific data on each year, but it's too much too type

So, while our $130,000 max payout has remained constant..... the Net Present Value (unadjusted for inflation) has Increased.

To my other point, the current Fedex A plan EROA (Expected Return on Assets) has also decreased (...which, from the Fund manager's perspective, makes it harder to fund the A Plan)

Those ranges are: 9.3%-10.9% (1996-2000).....10.9%-9.1% (2001-2007)....8.5%-8.0% (2008-2013)....and 7.75%-6.5% (2014-2017). Once again, I have each year but it's too much to type.

In combination, this decrease in the Discount Rate....and the decrease in the Expected Return on Assets....has put a greater burden on the company to fund the A plan. A burden that would shift to the pilots under the Variable Benefit Plan (...No thanks! The company can keep that promise, that responsibility and that burden!)

In my research, I was also able to obtain the AROA (Actual Return on Assets) for each year of the plan. Any year the AROA was greater than the EROA was a GOOD year for the plan. Any year the AROA was less than the EROA was a BAD year for the plan.

It's interesting to me that the VBB Modelor doesn't actually use the known AROA from our A Plan....rather it uses some weighted asset allocation of two other historical indexes: The S&P 500 Index and the Barclays US Aggregate Bond Index (...previously known as the Lehman US Aggregate Bond Index).

Why not? Why assume Fedex Fund managers would have performed liked the idexes? Why not look at their actual historical performance?

How would the modeler results be different if actual Fedex AROA returns were used?

In Unity,
DLax

Originally Posted by Iwa Washi

I'm personally convinced that a large part of that 57%-43% difference, was the special benefit for those people of a certain age at date of signing. This was a six year contract, with many years to be added to that during the next round of upcoming negotiations, that many of those people (over the age of 54 at the time) would retire under and just couldn't resist. They got theirs and all the negative repercussions and after effects of Contract 2015 are not their problem, as they are long gone or will be soon.

That's why I've always been against special carve outs for certain groups in these contracts - better that it is all for one and one for all. It is the company's job to shoot for a 50% plus one contract and that is exactly what they did. I certainly don't expect my MEC to do the same.

Originally Posted by trashhauler

The few things they threw at the over 54 crowd was cents on the dollar compared to fixing retirement. Again, I don’t know to many from that crowd who voted yes.

Originally Posted by oldTOAD

Back when this whole VBP-whatever you want to call it-was announced, I was deadheading and just happened to be seated next to a corporate retirement advisor. She helps companies get out of pension plans. I asked her about this new program the Union was promoting and she said “You never give up a defined benefit pension”. She thought we were crazy for considering it.

Originally Posted by DLax85

I had too a similar conversation with a 30 year+ Financial Officer who works on union pensions in the Northeast. He fully understood the difference between our current Define Benefit Pension....and the proposed Variable Benefit Pension. He too said it would be crazy to give it up. Way too many variables, and in the end the pilots will be taking the risks. I explained we had a B fund too. He said - Keep your A fund, and get the B fund increased. That's the best you're gonna get without getting screwed.

In Unity,
DLax

Originally Posted by FXLAX

....Is it an unreasonable assumption that the purchasing power of $130k today will be less in 25 years?

Originally Posted by trashhauler

I actually found that vast majority of pilots that I know that were retiring within a couple of years after contract 2015 passing actually voted no on the contract because retirement was not fixed. I find myself in the same position on this contract. It will be my last contract and I get the feeling that I will be voting no as well. The few things they threw at the over 54 crowd was cents on the dollar compared to fixing retirement. Again, I don’t know to many from that crowd who voted yes.

Originally Posted by Noworkallplay

All good info. We currently have an HSA plan that the company puts 4k in annually and then you are allowed another 2,500ish pre tax contributions and a wellness benefit. So total of 7,200ish annually. The number you can put in annually goes up per IRS regulations. So having another account that can only be used for health care wouldn't be a huge advantage for many since we already have an account to do this in my opinion. I would be more interested in just doing cash over cap and having a C plan that way the money is not pigeon holed into only being used for healthcare.

We also have a disability sick account that has spill over once its full. Many outsiders don't know about this. You accrue 72 hours of sick time annually and it maxes out at 686 hours. It takes about 9 years to fill it up then 72 hours of pay every year after that is paid to you and you can front load you 401k with it. A WB Capt is getting 23,400k annually spillover from this. Then at the end of said pilots career they get paid 50% of its value paid in cash. At current rates thats 111,400k. So think if you have 30 years at purple and you fill it up the first 9 years you will on average get an additional 25k annually for the last 20 years plus the 110,000k plus at retirement. Do you guys have this at Brown?

Originally Posted by DLax85

Kronan -

If so, I think this is in error. The pilots retiring in the second year, have 2 years of credit in the new retirement plan.
DLax