And, again, the PSPP is a Defined Benefit Pension. Only thing different is how the benefit is calculated.
And, rumors aside that the NC doesn't listen. They added a benefit will never be less than what our existing Defined Benefit would produce. EG. If your YOS = 25, you'd never receive less than a $130k benefit.

 

They aren’t listening when we tell them most of us aren’t interested in this plan.

 

The VB website has disappeared so I don't know where to find the answers other than the 2018 youtube videos which have changed quite a bit.

1 - Does anyone have any info on the survivor portion of the VB/PSPP? Is there a reduced benefit in exchange for the benefit payout to spouses for the remainder of their lives? Is this taken into account in your calculations Kronan of the new plan? I bet a significant percentage of payouts will go to surviving spouses from the time they are 60 through 85. This is because they are typically a couple years younger than most male pilots and their life expectancy is in their 80s.

2 - Is there an option to defer the VB/PSPP payments for a year or two in retirement to boost one's payout like our current A plan or is this only based on pure pilot productivity? If I retire at age 60 with 20 years of service now and defer my payouts until 65, I will get a pension based on 25 years of service despite not working or more if I choose to defer for longer. I assume since the pancake plan is all about making the pancakes this is unavailable. Is there information to the contrary?

Many thanks! Dr K

 

Boy, there's all kinds of fear mongering that a PBGC payout would be proportional to the Pension Trust FedEx's going to be handing over in the future.

PBGC payments aren't based on whatever funds a bankrupt FedEx is going to hand over in the future, but rather on when you begin collecting Retirement.
Earlier you begin collecting your retirement check, the less PBGC is willing to "pay" you. It's not a percentage of what your retirement check was, but a Max payment. If you want percentages, for a $130k pension, PBGC payouts range from 35% to 50% as you age from 60-65. (You Don't want to look at the haircut retiring as early as possible might give you)

If you want actual $$, pretty sure I updated it this year. But could be slightly off
60-$45.3k
61-$50.2k
62-$55.1k
63-$60k
64-$64.9k
65-$69.8k

 

That is the hard truth. They keep tweaking the FART plan and making promises that they won't be able to deliver when we, the members, don't want a new plan.

 

Numbers I've thrown out the past couple of days are purely, absolutely, notional. Just theoretical showing that even with year after year losses, a constant influx of $$ can support our notional plan.
Doesn't in any way shape or form, take into consideration survivors benefits. It's my expectation, that a Survivors component would be similar to the impact on our current Pension.
Anyone know what happens with UPS's 1%\FDA pension. If there's NO cut in Survivor benefits, that would be a HUGE point in favor of adopting an FDA plan. Even though the FDA plan expires at the end of every CBA and has to be renegotiated. (Would be tough for me to imagine it going away...but then again, in the bleak economic future every anti-PSPP poster forecasts you never know. Could see it simply being frozen at the previous CBAs value, but again, who knows)


Dr K, I think you're mistaken on the additional YOS for an Age 60 retiree. Your Pension will increase, but I think that increase is based on the value your 20 YOS had when you retired. But I could certainly be mistaken, haven't attended a retirement seminar so haven't seen the numbers. And I don't recall if the FedEx Retirement website breaks things down that precisely. Seem to recall it just producing various Benefits under different scenarios\choices.

Right now, the modeler's gone because the plan is done.
Some of the possibilities suggested were, you can let it float to increase your Pension, fix the value at retirement, even a lump sum option.

Everything subject to negotiation.
Hurdle Rate, Floor Rate, CAP rate.
Personally, I kind of like the idea of a 2.1% floor and a CAP tied to WB Capt\Min BLG. Shoot, even NB Capt

 

Kronan I'll check on that thanks!

 

As you've pointed out, In the beginning of the new pension fund liability will be extremely low because those retiring will have very few years. But clearly over time, that won't be true.

Let's use some of your earlier assumptions and just base it on constant dollars today....but 25 years out. In year 25, all pilots who've retired will have had a chance to max out the plan.

200 pilots retire per year
Pilots live for 20 years after retirement (Age 65-85)
Yields 400 pilots in retirement at any given time
Each retire at max cap $285K
2% per year guaranteed floor
That's $142,500 per pilot

So payout liability in year 25 = $142,500 x 400 = $57M

In reality, I think this modeling is simplistic and isn't how the fund will work. I think the fund will also need to have some assets slated against future retirements (i.e. the 5,000 pilots who are still actively working), however, I just want to point out any plan must be built for long term payouts and liabilities, not just short term ones.

Those long term liabilities have long term, ever changing risks, and I believe we should allow the company to bare those in accordance with our current CBA. Take any additional $$ and risk in each individual pilots B fund.

In Unity,
DLax

 

And this alone is problematic. So you want me to back a Variable Benefit Plan without telling me the hurdle rate?

Will / Can the hurdle rate change over time?

If one assumes a 50/50 equities & bond asset allocation what hurdle rate should we use?

Ask that to a financial advisor in 1980....then 1990....then 2000...then 2010...then 2020. Even if they all used the same methodology, you would get 5 different answers. Why? Because equity and bond markets change!!

Does anyone really have confidence "we" will negotiate the correct hurdle rate ?

Please inform us on how our current funds Actual Return on Assets (AROA) has performed compared to the funds Expected Return on Assets (EROA)...???

When you mention the CAP rate - do you mean earnings Cap (i.e. the IRS 401(K) cap)....or the CAP rate on the funds investments returns.

The latter was mentioned in the unions very first white board video as a possible means to create a stabilization fund, but then not included in the modeler calculations. That's disingenuous. Which is it?

In Unity,
DLax

 

Sorry, simple but significant math error above
200 pilots per year x 20 years of retirement = 4,000 pilots drawing those pensions (not 400)

That mistake by a factor of 10 means the annual payout liability = $570M per year (not $57M)

$570M....no way they’re funding that with a small percentage of annual Pilot income. That amount will need serious market performance. Keep that burden on the company!!.