Originally Posted by TonyC

Thanks all for the kind words. It's liberating to be free from the muzzle I've been wearing, but it will only be worth it to me if we can work together to effect meaningful improvement to our pension benefit.

You are absolutely welcome to share my letter with anyone interested. In fact, I would encourage you to do so. I wouldn't even mind it being shared on JetFlyers. The more pilots who contact their Block Reps, the better.




Less than a month now. We exchange RLA Section 6 Openers with The Company in May, and monthly bidding for May opens in 4 days.

And yet, the MEC has not yet met to determine what those Openers will be.

Let that sink in for a minute.

The Negotiating Committee knows what they want the MEC to adopt as Openers ... and I'm sure the NC Chair has a preference about how to address our first Negotiating Goal -- Improve Retirement. Do you think he wants what the members want? Do you think our Block Reps will resist his "suggestions" and insist on what the members want? Here's why I believe it is critical that EVERY pilot contacts their Block Reps to voice their specific opinion. We only get one chance at openers.

The next MEC Meeting is scheduled to begin 2 weeks from tomorrow and conclude 9 days before we exchange Openers.

In 28 days we will be IN -- IN -- IN Negotiations for our next CBA. It doesn't start in November, or after peak, or in a couple of years after many are tired of waiting.




It DOES matter whether The Company has the money. If they don't, we would be irresponsible to demand it. If they do, it comes down to whether or not they WANT to, and we can influence that evaluation.
Sorry it doesn't - you're sounding like SS "...and they can afford it" again - it only matters what you can negotiate and we have decades of history on this

A common criticism of raising the FAE Cap is how much money it would cost The Company. I like to flip the observation and point out how much The Company has SAVED over the past 22 years by NOT raising the FAE Cap. When I count the new B-777s and B-767s (and so on) on our ramps and the number of entire companies we have purchased and the billions of dollars invested in capital improvements over the past 22 years, I have a hard time producing a sympathetic tear.

But raising the FAE Cap to twice the IRS Defined Benefit limit would not even equate to an additional $100,000 per year per pilot today. With a 15-year widebody Captain working 1,000 credit hours at $335 and change per CH, a FAE would be closer to $340,000. If that same Captain has accrued 25 years of service, his Defined Benefit would be $170,000 per year, which is only $40,000 per year more than he can get today. (When I did the quick math for Kronan, I was being a bit flippant. We'll need some substantial pay raises before twice the IRS limit will become a practical limit for us again.) For pilots retiring this year with a $340,000 "High Five." it would only amount to $3,333.33 per month. The Company is treating us to more than that every month with the non-reducing Travel Bank that allows them to build bid-pack trips with Operational Deadheads. Pocket change.
You are not using realistic numbers. The AVERAGE annual earnings in 2016 was $304K - that's average - including FOs. I would suspect in 2020 the average was around $450K. I'm not sure if I know any 15 year WB captains that made less than $300K in a very long time.

You make it sound like it's an unreasonable ask ("... there's a reason why you don't offer $10K on a house listed for $1million - you won't even get a response). It's not the least bit unreasonable.

Yes, it will cost The Company more money. So will increased pay rates. So will increased fuel costs. New airplanes, new large package sort facilities, new companies, and pay raises and increased benefits for hub employees also cost money. We're not asking for more than we deserve, more than our fair share, or more than The Company can afford.
But for whatever reason there is a difference - we know from the work done that there is a cost of about 3x each DB dollar to their PBO. How exactly that is felt by the company is unknown but we know it's felt more than a book rate increase. Asking for what we deserve is irrelevant - we only care about what we can get.



The supporters of PSPP would like us to believe raising the FAE Cap is unreasonable, impossible, laughable ... zero chance ... many of whom were asking The Company to raise the FAE Cap in 2013, 2014, 2015 and telling the membership our proposals were reasonable, we had earned them, and The Company could afford them. It was a classic case of the Fox and the Grapes. They failed to achieve the goal, plain and simple. Instead of admitting failure, they decided to declare the goal was unachievable.
Huh? We had a stated goal of raising the FAE in 2013, 2014 and 2015 - well up until the great compromise was proposed and the can was kicked further down the road. You sound like you haven't spoken to the then R&I Chair but I pretty positive you have.




Increasing the FAE Cap is also doable. It will restore the intent of our pension plan to provide 50% of income to the retiree, and it will benefit every pilot.




That's the narrative that was created by those who failed to raise the FAE Cap in 2015 and has been driven by those who "discovered" the Variable Benefit Plan concept. It is a LIE.
it's not a lie - it's an opinion. I don't think we can achieve a 30% book rate increase on DOS - it is possible - it absolutely is but IMO it would be a waste of time to attempt it. That's not a lie - it's an opinion.

In 2006, The Company said, "next time." In 2011, we never discussed it. In 2015, an ineffective Negotiating Committee composed entirely of Scheduling Committee graduates working for a dysfunctional MEC passed proposals that telegraphed zero commitment to improving our "A" Plan. Of course The Company would say, "No" under those circumstances. We, the membership, were not even given the chance to demonstrate our commitment to improving our "A" Plan by conducting informational picketing.
This whole legend is getting way too much play. It doesn't matter what Maliniak may have or may not have told Chimenti in 06. When someone says "get you next time", i think both parties completely understand that the statement amounts to exactly zero. It doesn't matter what Maxwell said in 2015 - all that matters is the now.




a) and b) don't apply to people in the "donut hole" because they are only used to compute the amount of the annual contributions to the Variable Benefit "fund." At retirement, the benefit that would be accrued from that scheme would be compared to the benefit that would have been accrued from our "A" Plan had there been no change. If the Variable Benefit plan's benefit falls short of what the Defined Benefit would have been, the pilot is then "made whole." Of course, that's just a concept, and no details have been proposed, described, or negotiated to determine how that would be accomplished.

c) would apply, but whether that constitutes a benefit or not is a matter of debate. Along with the opportunity to grow is the risk of decline. A huge advantage of our Defined Benefit plan is that the pilot assumes no investment risk. Many of us would not consider adding investment risk to be a benefit.



I don't think you understand who the "donut hole" people will be. If the pilot under the Variable Benefit Plan receives a larger benefit than he would have had under the CURRENT (not legacy) Defined Benefit Plan, he's not in the "donut hole," and will receive no "make whole" benefit. Whether they fall into the "donut hole" or not is only determined at retirement. If the fund performs well, there will be fewer pilots who will fall into that hole; if the fund performs poorly, there will be more pilots who will have to be "made whole."
No, I do. When the plan was built the entire donut hole was about 200 people - and those were absolutely not certain donut holes because market returns COULD impact them positively.



So, there are some pilots, who by virtue of their age and years of service, will very likely be unable to achieve the same benefit under the Variable Benefit Plan as they might under the Defined Benefit Plan. Those pilots will most likely be in the "donut hole." Then there's the dynamic you've just mentioned. Under our Defined Benefit Plan, every year of service, regardless of early upgrade to Captain, late upgrade to Captain, or never upgrade to Captain, is worth 2% of that pilot's High Five in a retirement benefit.

So, what if a pilot can only work for FedEx for 10 years? How might this affect him? Let's say he's worked for 5 years under our Defined Benefit Plan, and he will have 5 years under the Variable Benefit Plan. First, he will have to reassess his upgrade plans. He may have chosen to enjoy seat seniority rather than chase pay rates, but the change in the method of computing retirement benefit may persuade him to upgrade sooner and work more every month. Even so, he might not be able to achieve the same benefit as he would have accrued under the Defined Benefit Plan. In that case, he would be the recipient of some type of "make whole" provision.
No, not really - our pay raises, and certainly our take home pay, which is after all, all that really matters, is increasing much faster than the IRS limits. It might have a short term affect but this is something that pilots deal with right now - many would make more if they switched seats but they have to factor in everything else - I see no reason why this wouldn't just be one more factor. Quality of life has always had a bigger impact at Fedex than other airlines because of the differences in our system form.

Take that same pilot, maintain the Defined Benefit, and raise the FAE Cap to twice the IRS limit. The pilot working for 10 years will receive 20% of his High Five in retirement, but that's currently limited to $130,000/year. With a 10-year, wide-body First Officer pay rate currently at $221.19/CH, it's completely reasonable that he could easily exceed $260,000 with his High Five.

Which is better for him? Raising the cap and therefore his retirement benefit to exceed $130,000, or "making him whole" to $130,000?
And now we circle back to what you believe is achievable.




You may view the ability to leave your primary source of pension income in the stock market as a huge benefit. I do not. I do not believe I am alone, or even in the minority.

The reason we are comfortable leaving our Defined Contribution Plan in the stock market where we can see gains and ... dips ... is because we do not rely on it as a source of income. Even in retirement, it will not be the primary source. It will supplement the guaranteed income of the Defined Benefit plan, and hopefully offset the effects of inflation on that amount.

The PSPP does not give you the option of adding a COLA to the Variable Benefit. It gives you the option of rolling the dice, which could very well result in a decrease.







The Company had an opportunity to look at our PSPP proposal and rejected it. In a period of harsh cost-cutting measures across the corporation, they decided to spend no more money even studying the plan. Do you suppose the cost had anything to do with it? Hey, this new thing will cost me more, but at least it has a price tag. Oh wait, it really doesn't have a precise price tag, because it just has a maximum, based on IRS limits. But wait, if I get 100 pilots to do the work of 150, they'll hit the limits and I'll only have to pay 100 times the IRS limit for 100 pilots instead of 150 times the IRS limit for 150 pilots.
Actually they didn't reject it and you know that. They said they didn't want to put the time and money into analyzing it fully at that time. Many have come up with reasons why but they absolutely did NOT reject it and you know that. But yes, they may not want it and may reject it - I think they are far likelier to engage on it than raising the FAE ceiling to $400K plus though. Heck, they at least listened to it, asked lots of questions and came back multiple times - something they have NEVER DONE on improving the DB plan in the last 21 years. You have to realize that - the Company HAS NEVER given even a thought to raising the DB plan - this doesn't mean it's not achievable but you seem to put some weight in the fact that the Company looked at the PSPP, brought in a ton of their financial wizzes, met multiple, submitted multiple questions and then just stopped as being the kiss of death but the fact that they have never even considered an improvement to the DB plan as just another hurdle for us to get over?

Or, I could use my actuaries to study the habits of pilots, their trends to upgrade, their tendencies to work extra or take vacation, their expected retirement date or date of expiring, and very closely predict the obligation of the pension plan to provide a retirement benefit, and use the 5, 10, 20, 25, 30 or more years of their career to accumulate the funds to support that obligation.

If the PSPP is so much better for The Company than our Defined Benefit Plan, why did The Company not unilaterally impose the plan on every single employee in The Company and accept our offer to do it to ourselves? It seems to me like the supposed benefits to The Company have been greatly overstated (misled?).




If a 50-year-old pilot were to wind up in the "donut hole," he could never see anything more than $78,000 per year in a retirement benefit. (15 YOS x 2% x High Five (limited by $260,000 Cap)) That's by definition of the "donut hole."

The same pilot could receive a large increase in his retirement benefit under our Defined Benefit by raising the FAE Cap. Even as a 15-year widebody FO earning $237.89/CH, he can easily exceed $260,000 per year.

Given the choice of a much higher dollar benefit and the ability to leave the money in the stock market, I have a feeling we would hear many pilots say, "Show me the money."




Are you really prepared to leave some pilots behind because you believe their number is small and they're more of an academic exercise? I'm not. I've flown with First Officers who are senior to me, and I've looked at the FO seniority lists. Their choices of seat progression are their choices, and they are right for them, and they are based on the current method of accruing retirement benefits, among other quality of life factors. If we change the method of accruing retirement benefits to place more weight on dollars earned per year than years of service, are you willing to have a system-wide bid to allow them to upgrade?

Guess who suffers the most when pilots are induced to work harder and longer. Junior pilots. Upgrades will slow, as will pilot hiring. That's no academic exercise. It may be an unintended consequence, but it's not unpredictable, and that makes it inexcusable.




You're talking about our primary retirement vehicle, upon which most pilots will rely for their monthly income after retirement, and talking like everything will be just peachy if the value of their fund drops 5%, then another 5%. Sure, they'll have "sufficient retirement funds elsewhere"??? Is there a "C" Plan somewhere that hasn't been published?

That's why many, dare I say most, will NOT want to assume the investment risk of keeping their primary source of retirement income in a fluctuating stock market.




Right. Since we have ATP certificates, we are experts in auto repair, plumbing, heart surgery, and retirement planning. The Company has actual, professional actuaries who have studied our proposal, and I guarantee they have looked into it enough to know what it is, and what it isn't. I can also guarantee they've known what their openers are going to be for months, if not years. And I will also guarantee they've already determined how best to use our own PSPP proposal against us.




You say PBO cost, I say PBO savings -- the savings they've enjoyed for the last 22 years.

You say "time and again," I say once.

Again, 2006, they said, "next time." 2011, it wasn't even discussed. 2015, they said, "Boo!" and our Negotiating Committee and MEC ran.




The big difference?

Under the Defined Benefit, if the Company is unlucky, I still get the same retirement benefit. I win.

Under the Variable Benefit Plan, if I am unlucky, I get a reduced retirement benefit. I lose.





[I've quoted the above out of chronological order so that I can address it together with the below.]




I find this line of reasoning arrogant, offensive, and disturbing. If you aren't in favor of PSPP, you just don't understand. It wasn't explained well. You should have attended a small group meeting. That's where they passed out the "real" secrets.
Tony - we operate as a democracy. When you were on the MEC how many of those elected reps were against the plan after getting the briefs? Be honest here. It's been a big deal - maybe the biggest deal for the past several years so every single block election has a focus on it - how many? If not many, why do think that is? Are they all just arrogant idiots or did they spend the time to sit with the designers, ask the questions, murder it to their best ability and then eventually support it? You tell me - nothing in executive session - just your reading of the room.

That's why some members of our ALPA leadership and certain SMEs don't want to hear our opinions -- we aren't smart enough to know what we want.

It's the VERY reason I want everyone to contact their Block Reps. We aren't that dumb. We know how to multiply Years of Service times 2% times our High Five, and we each have a vote. I don't see the point in giving them 2 years or more of negotiating a TA before we send them that message with a NO vote. Let's point this ship in the right direction to start with.

And before you come after me for saying that, I don't blame you for originating this "you just don't understand" line of reasoning. It came from the Negotiating Committee and the R & I Committee and the MEC, and you're just repeating it. But I know you're smart enough to stop repeating it.





If all 5,329 of us retire this year, our Company will be in big trouble, and we'll be looking at PBGC numbers. ;-)




In his March 20, 2015, Chairman's Message announcing his intention to not run for a fourth term, he said, "I always try to finish what I start ..." I assume he was not referring to his attempt to run for ALPA President in 2010 during his first term as MEC Chairman and just weeks after we began Section 6 negotiations with The Company. It probably doesn't refer to his push to discontinue those Section 6 Negotiations, either, choosing instead to approve a "bridge" contract and enter into "discussions."

I agree that it would have been easier to raise the FAE cap then, but our leadership did not give us the chance to show our resolve. That doesn't make it unachievable now, just harder. We won't do it with BB guns and pen knives. Bears require a larger caliber projectile.

[Metaphors, not threats of violence.]




FAE up to 300K won't restore the 50% replacement value of our pension. Maybe you were talking about bear cubs?

Anything less than 50%, either now or in the near future, should be a non-starter.






.

Originally Posted by FastBurner

Prior to Pension Protection Act of 2006, this document is from 2005. In 2011, AA froze their plan, the PBGC did NOT take over as the plan was 100% funded by then. So, a "standard termination" in PBGC speak.



Great write up FastBurner! One problem that I have found with frozen DB plans is that the PBGC has stated that they are not sure if frozen plans always qualify for PBGC benefits. They say that based on the funding of frozen plans, they may not meet the requirements of a qualified plan, and thus, not eligible for PBGC insurance. I agree with you that as our plan is currently funded and in the manner that benefits are currently being paid, there is little chance that our current plan would be terminated as a distressed plan and taken over by the PBGC. However, there are scenarios that would allow our plan to become underfunded, mainly based on benefits being taken in lump comes by other employees since we are all in the same trust, that would cause the plan to become distressed.

The document I am linking even mentions that quite a few hybrid plans, in the case mentioned, cash balance plans, moved the money from the frozen plan to the new plan and started the new benefits from the amount in the new existing plan. That is not what the MEC is proposing. They are proposing two separate plans.

I think that we are on the same page in regards to our retirement plan. I need to check out your website. We do need to get out the contrarian opinion to what the NC is pushing.

Here is the link. https://www.pbgc.gov/documents/frozen_plans_1205.pdf

Originally Posted by Tuck

You've got some good knowledge and done some solid homework. Are you saying you have volunteered before? You've only been here a few years (5million right?) and I've never heard of you or seen you on any ALPA committees ever. Just want to make sure here - TonyC probably would for sure know if you've been volunteering your services. Accuracy is important. I don't believe you ran in any block rep election?

Originally Posted by Tuck

You've got some good knowledge and done some solid homework. Are you saying you have volunteered before? You've only been here a few years (5million right?) and I've never heard of you or seen you on any ALPA committees ever. Just want to make sure here - TonyC probably would for sure know if you've been volunteering your services. Accuracy is important. I don't believe you ran in any block rep election?

Originally Posted by pinseeker

FastBurner, I don't think that our current plan is in any danger of being taken over by the PBGC. I also don't think that just because a plan is frozen, that it gets taken over either.

One of my concerns with the PSPP is that the PBGC only covers qualified plans. As far as my research has shown, an employee can only have one qualified plan. The document that I linked mentioned that most frozen plans are rolled into another qualified plan. The MEC/NC has stated that the PSPP would be a separate plan from the current FAE plan. Our current plan would not be rolled into the new plan. They would be two separate plans.

You seem to be very knowledgeable about this, so maybe you can answer the question that the NC and R&I guys won't/can't answer. If, as the NC and R&I say, our current DB plan would be a separate plan from the PSPP plan, which plan would be covered by the PBGC? Both the NC and R&I agree that the PBGC will only cover one qualified plan for an employee group and if this gets railroaded through as our openers, which plan would be covered? Or, is it incorrect that the PBGC will only cover one qualified plan? If so, then why hasn't FedEx created different plans for the other employee groups when they froze the benefits of the DB plan for them. If they have different plans, shouldn't there be a different EIN for each qualified plan?

Originally Posted by Tuck

Great response Tony - thx for taking the time. See my reply below in red (sorry!)

Originally Posted by Tuck

Sorry it doesn't - you're sounding like SS "...and they can afford it" again - it only matters what you can negotiate and we have decades of history on this

Originally Posted by Tuck

You are not using realistic numbers. The AVERAGE annual earnings in 2016 was $304K - that's average - including FOs. I would suspect in 2020 the average was around $450K. I'm not sure if I know any 15 year WB captains that made less than $300K in a very long time.

Originally Posted by Tuck

But for whatever reason there is a difference - we know from the work done that there is a cost of about 3x each DB dollar to their PBO. How exactly that is felt by the company is unknown but we know it's felt more than a book rate increase. Asking for what we deserve is irrelevant - we only care about what we can get.