pinseeker

That's basically how I remember the calculator working. I think it might have even been to 2017, I think it was the year before the calculator was published, since they didn't have data for the future.

Back to the PBGC, you are totally correct that we as individual pilots don't get to chose which plan we want to be protected individually. Sorry if that is not how it came across. We can, as a group, pick which plan is our current DB plan, which by default, would be protected under the PBGC. The problem is, that we can't have two DB plans, both protected by the PBGC. We can only have one active DB plan. If we freeze the current DB plan, though most pilots on the property will have a least some benefit, it wouldn't be our current qualified DB plan. If FedEx were to be able to declare the current plan stressed and get a judge to agree, then that plan would be turned over to the PBGC. However, since the pilots would have a separate qualified plan, the pilots portion of that plan would not be protected by the PBGC. That wouldn't matter to those with less than five years on property at the signing of the contract, because they wouldn't have been vested anyway. Those that have a majority of the pension in the current DB plan would be screwed. I recently asked the R&I about this and was told they are working on it. To me, it seems like they should have a solution to such a big problem before they decide to go down that path.

I am for an increase in the FAE. I am not saying that it has to be the IRS maximum earnings limit for DB plans, but I am not going to put a minimum number down either. I would definitely support a smaller increase in the FAE for a 15% DC plan with cash over cap. There are a lot of ways to skin the cat, I just don't think that the PSPP is a good one and I have let that be known to the people who matter. I will not support any negotiations that include the PSPP.

Tuck

I think you are wrong on this - many have posted exactly that. This is the ONLY reason why the Company wouldn't have to a contribution. Look, you should email the NC or R&I and ask some pointed questions - I think you've just got a lot wrong here and we have to start by agreeing on the facts. If you have some actual facts with data to back them up, please post those.

USMCFDX

I said they made contributions that were not required. Read the FedEx financial documents and you will understand why no contribution was required. It was not due to fund performance.

Noworkallplay

Page 15 of the 10Q from this last quarter

"We made voluntary contributions to our U.S. Pension Plans of $300 million during the nine months of 2021 and $1.0 billion during the nine months of 2020"

In this case the "voluntary contribution" definitely wasn't due to performance, since the fund made 15% in 2020. In other years the funding was due to fund under performance. As a whole the fund has outperformed the expected 6.75% expected return. In 2020 a big portion of the workforce (not pilots) who use to get out pension got cut out of the pension. This will relive a big liability on the fund over time. If the fund continues to outperform then less and less funding will be required. The problem arises if we (pilots) get a huge benefit increase. This will again lay a large liability on the fund. This will then have to be accounted for in a liabilities standpoint. Its a much bigger ratio than a 1 to 1 dollar increase in a FAE pension. This can all be found with very little research looking at annual 10k reports and quarterly 10Q reports. Google also has some great articles on why FAE pensions are so costly compared to other pension forms.

HIFLYR

[QUOTE=pinseeker;3213066]Tuck, I agree, this is a good discussion.


Here are my concerns with the PSPP:


First, only one of our DB plans can be protected by the PBGC. If we go to the PSPP and freeze our current DB plan, which plan gets protected.

Pinseeker
You seen knowledgable about this subject? Do you possibly have a reference for the above statement?
Thanks

Stan446

[QUOTE=pinseeker;3215467]That's basically how I remember the calculator working. I think it might have even been to 2017, I think it was the year before the calculator was published, since they didn't have data for the future.

Why wouldn't you want the FAE to be the max the IRS allows? The company has been making a killing by not raising the FAE average. They are obligated to pay us a pension and that pension should have grown to at least cover inflation. Fedex has been flying huge loads for at least a year and making a ton of money. Its time we share in the profits we work for. Enough of the, "The company can't afford it". This contract shouldn't be that hard. Some work rule changes, a pay raise and raise the pension to the max allowed by the IRS.

USMCFDX

Tuck - performance has nothing to do with required funding requirements - funding levels and liabilities require contributions not performance. You should email someone or read the FedEx 10-K filings. You have a lot wrong.

I don't have the current funding levels of our plan that was sent to us last year but if you read the document there are two different funding levels shown based on two different accounting methods. One of them shows us in a much better position than the other.

You can't possibly believe that FedEx would contribute extra billions with a "B" to our plan if it were fully funded and the performance was and great as you seem to think it is. There is a lot of accounting black magic that goes on.

Here are some facts from the 2019 10-K
FedEx 2019 10K SEC filing

2019 - Actual returns 4.05% - expected 6.75%

2018 - Actual returns 6.3% - expected 6.5%

2017 - Actual returns 9.2% - expected 6.5%

15 year period ended May 31, 2019 actual rate of return 7.5% net of fees and expenses

In 2018 22 million was required to be contributed and FedEx contributed 2.478 billion dollars

In 2019 there was zero dollars required to be contributed yet FedEx contributed 1.0 billion dollars

USMCFDX

View your Summary Annual Report by logging on to NetBenefits®. After you log on to your NetBenefits® account, this link will take you to the "Plan Information and Documents" screen. Click Summary Annual Report.

kronan

I think the PBGC only protects 1 plan is a more complicated assertion than many people think.
If we transition to a different type of a Pension via a PSPP style Benefit Formula, there will still be a plethora of people solely covered by our Previous Plan.
And a mix of benefit levels split between our Current Formula and the succeeding one.
But I think the PBGC ties the Maximum Benefit level to a Pension received from a specific company. So, should FedEx go down the crapper and be unable to Fund it's Pension obligations.
So, let's say assume Career NB FO
Proposed Plan transition was a Soft Freeze. FAE continues to improve, but YOS stop. Beyond year 10, Current A plan numbers exceed the maximum payout of the PBGC. (Rough wag of 2020 pay rate +10% at new TA and no additional longevity raises gets you to a $230k FAE)

Somewhen way down the road, FedEx is failing and doesn't have the cash flow to add to Pension Obligations. It would kind of be a no brainer that someone with a split Pension will have different levels of Pension accrued under both, so it would be nice if both Pensions failed if said individual would get the Max payout under both.
But it's a Government written insurance program.

kronan

Most recent Funding Level (and performance) from FB's all in one FedEx retirement page.

Pension trust funding 103.46%
Suspended funding in 2021 because the Pension is fully funded. (Note-FedEx FY year runs June 1st -May 31st)
Pension Trust made 15% from May of 2019-2020 net of fees

Again in 2020, to quote from the 5500, "For consolidated pension expense, we assumed a 6.75% expected long-term rate of return on our U.S. Pension Plan assets in 2020 and 2019. The historical annual return on our U.S. Pension plan assets, calculated on a compound geometric basis, was 7.7%, net of all fees and expenses, for the 15-year period ended May 31, 2020


So, I still think the conjecture that Performance has nothing to do with required funding for our Pension is odd.
IMO-it's one piece of the puzzle that impacts on ERISA required contributions to our Pension assets. Lose a lot of $$ by betting on big returns, and funding level of the Pension has to drop. Future returns significantly below your expected return, and funding level of the Pension's gonna drop.
Beat expectations and life is pretty good.