hoya saxa

Haha, shack. The trolling is strong with that one.


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kronan

100% agree that everything would have to be negotiated. But a big consensus seems to be I'm against the PSPP BECAUSE it's still subject to negotiation, and "I" don't trust my NC to remember to input a floor or tie the accumulation rate to a value in order to protect the thickness of a years pancakes from a regulatory change regarding the DC limit.

kronan

Fastburner, it appears I can't quote your quote.

So, just off the top of the melon.
The Richard Hudson email you reference. To paraphrase your back and forth, you create a scenario where the value of our Trust declines for several years, and reaches the point where the Obligations Exceed the Assets. Essentially, you've got a $120 electric bill due at the end of the month but you only have $100 in your checking account. IMO-FedEx would be obligated to add funds to meet the obligations. And, I think Richard's answer to you supports that. "If however, there is an extra cash call on the employer to put more cash in the main pension fund which the employer is not able to do, the plan can freeze benefit accruals to help fix the funding crisis"
Or alternatively, negotiate to lower the Floor, reduce the earnings CAP, create a longevity Cap. Lots of possibilities in a situation like that. But that's equally true with our Current A plan.
I think that's less likely with the PSPP than a similarly capped A plan. PSPP proposed design had yearly contributions to our Pension Trust. Current A plan has only a funding if needed. So, in good years FedEx doesn't have to add a penny to our Pension Trust even though the obligations continue to increase with every new pilot we hire. The Good news is that FedEx has been incredibly smart over time by having realistic ROI's built in and using leverage to fund our Pension with long term debt at low rates. (Although I'm thinking FedEx would rather be doing that in the current bond market than the one 2 or 3 years back)

As to the military, didn't take a look in our PBB, but think the Long Term mil leave B plan funding is tied to Average BLG. Not the bare bones minimum. I know a couple of guys who sidestepped 4A2B by returning to AD, so I'll try and see if they paid attention or are willing to take a look at the FedEx Retirement page to see what they were credited while on their LOA. (Assuming they even know they Can take a look)

kwri10s

Those are neither of my top concerns about the FART plan. But you are correct I don't trust my NC to tell the truth or even negotiate in the best interest of the majority of the pilots; I'm not even beginning to trust them to even understand the consequences of regulatory change and how that might affect the accumulation rate. Of course we all understand that having any sort of plan would have to be negotiated, however, based on the last time the NC just took this proposed plan to the company without even having a simple poll to see if there was interest in pilot group of having this plan. I am assuming they are planning to propose exactly the same plan they keep trotting out. So that is the only plan we can actually dissect at this time.

I'll give you my top concerns. One, this plan does not exist anywhere as presented to us previously. We are the test guinny pigs for the program. Not one single nationally recognized financial services organization was brought in or consulted on the FART plan or alternative plans. The only person brought in as a consultant gave his opinion on four different options and then recommended the plan he created. They should have kicked him out right then and started again. The due diligence on possible options was never done. So concern one...General Conceptual plan opposition--possible emperor’s new clothes scenario.

Two, the FART plan as previously briefed has a huge bedrock foundational problem in that our withdrawals will start almost immediately after implementation. We have pretty substantial retirements every year for the next 10 years. Around half the pilot group will retire in that time frame and begin withdrawing funds from the pool. Without a massive (multi Billion+) pot of money to seed the pool, there is no way for the pool to afford to pay the immediate withdrawal payments unless those payments come at the expense of those still in the pool. Think social security trust fund. Do we as pilots actually think that 10 years down the road if the pool is low the company will step in and add "water"? NOT a chance. ALL the risk for the new plan falls on the backs of the pilots under the age of 50. The FART plan is a huge win for any pilot over 55 that will retire with over 25 years of service. They will get additional money that they never had any expectation of receiving. That money will be guaranteed with a minimum rate of return. A sideways market will not affect the over 55 group, they will start to withdraw a set amount monthly and all under funding will come out of the pool from the younger pilots.

Third, assuming that there was actually a real examination of possible potential plans and the FART plan was deemed to be the best, and assuming that FDX coughs up a huge pot of money to "seed" the pool with; I have a huge problem with a plan that rewards those that work more and punishes those that work less. I came to this career with the understanding that I could always maximize my pay if I wanted to, but if I choose to be a quality father and support my children both financially and by being physically present at as much of their lives as possible I could do that. Regardless of how I choose to work, I have always known that my retirement would not be diminished if I choose quality of life over financial earnings. This plan will penalize me for being a good husband and father (well at least from an attendance perspective). Any program that pits us against each other, competing for a limited amount of retirement pancakes will force me to make family decisions based upon future retirement income. While I realize that the B plan does that a little bit now, the A plan completely balances out the minor loss I might take now. Remember, those choosing family over money already are making some form of decision to sacrifice money for QOL.

So I'm not particually concerned about bankruptcy although guys are quite right in that the NC should stop talking out both sides of their mouths on that issue. I also am less interested in the balance of how the funds will be invested. Mostly because I already realize that there is no way we will ever see greater than 40% of investments in commodities (stocks). I do question somewhat the rates of return that individuals think they might get, but that more a lack of understanding of reality on ther part.

DLax85

Noworkallplay -

I understand how the PSPP (aka Variable Benefit Plan) removes the earnings cap and years of service limits.

Could you please explain how it allows us to capture some of the market gains that we currently get nothing for?

Could you also please explain the stabilizing features and how they work?

(It appears my understanding of those to very salient features differ from proponents of the PSPP)

Thank you,

In Unity,
DLax

p.s. I've attended numerous hub turn meetings, read the retirement literature online, and watched all the retirement videos too. I'm genuinely interested in your understanding of how the two features will work.

DLax85

+1

Research Broadly, Think Critically, and Demand Transparency
In Unity,
DLax

DLax85

You're two-thirds correct:

I don't trust the NC to be able to negotiate a number of features that could greatly affect the performance of the PSPP - most specifically the "hurdle rate"

I don't trust my NC to input a floor - because thats precisely what the company wants to stop funding, and what a Variable Benefit Plan allows. The company wants to fund the plan like a Defined Contribution Plan. Fund it annually, and walk away from the investment risk.

I do think you can protect the earnings cap from a regulatory change in the DC limit. Merely add verbiage that states the earnings cap is "...the GREATER of the IRS 401(K) limits or Narrowbody Capt Pay x 1,000 hours".

Current estimates for future increases in the IRS 401(K) limits are 2.4%..... future pay increases?? Probably 3%.

Of course, my recommendation is to just add this feature to our current A plan.

In Unity,
DLax

golfandfly

I’ll admit it, I don’t have faith we can negotiate a sound plan. I’m not saying I don’t trust our negotiating committee, but as the old saying goes, the company has a team of hundreds of lawyers and we have 2 guys that went to night school...

seefive

Agree. More information is always good

kronan

It's interesting that you (and others) think our Union can succeed in negotiating some provisions while predicting nothing but abject failure in negotiating the provisions of the PSPP.

As to pay raises, one of the comments I made during the web survey was that I thought inflation was going to increase over the next decade so my preference would be annual raises in excess of what we received during CBA2015. Say, like a 3%, 4%, 4%, 3%.

I also commented that perhaps one of the years could be reduced to change our B plan to Cash over Cap and plus it up. Say, year 2 only a 1% longevity raise while changing our B plan to an 11% Cash over Cap.
Haven't done the math on it, but I'd suspect that the Total dollar value would be lower than a straight 4% raise-but it would be hard for the company to argue that they can't "afford" a change like that. And, there'd be some tax savings for those below the cap while obviously benefiting everyone above the cap as well.