USMCFDX

Awsome - cheery pick the accounting method that shows the best result. You do know FedEx reports both to you annually.

There is more info out there that you are failing to post.

Noworkallplay

Although you wont respond because you have blocked me I will respond to you since you are not using facts. In 2017-18 I went to a couple of the hub turn meetings on the Variable Pension Plan. In that meeting it was clearly stated by the actuarial firm that

1.) The fund performance numbers used in the modeler was data from a similarly invested pension fund as our current one. The numbers used have to be acceptable to the PBGC to be insurable, so you cant just make up some false data and throw it in.

2.) Numerous layers of regulation and oversight are built to stress test a plan. So yes, the data used is accurate. Just as accurate as the data and expected returns on our current plan that has over performed over time. Now if you want to go play a dooms day scenario then feel free to do so. This same dooms day scenario would tank our current A plan, so whats your point?

In retirement you have to make some "planning" assumptions and estimates. This is how retirement planning works as a whole.

What I find astounding is many who say hire outside negotiators are also saying don't trust the outside professional retirement consultants and actuarial firms. What a cross talk argument.

pinseeker

I didn’t say that I wouldn’t want the FAE to be the max the IRS allows, I was simply saying that everything is negotiable. Do you even know what the IRS limit is? A 777 captain would have to work quite a bit of extra to reach that limit. An ANC MD captain, Probably a little more than the 777. A mix of FAE increase along with B plan increase would be ideal IMO.

pinseeker

I would like something more firm than an “I think.” Not targeting that at you, but at the MEC. So far, they can’t or won’t answer that question. It’s my opinion that we should know for sure how it will work before we start down the path of freezing one plan and starting another. I equate it to saying that I think there is a parachute in that pack just before jumping out of the plane. I wouldn’t jump.

pinseeker

When I have a little more time, I will try to link some info for you.

FastBurner

Sorry - working through this with blue comments:

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.

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 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.


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.


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.

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.


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."


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.

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?


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.

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.

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.






.

TonyC

Ever wonder how many employees have a retirement benefit that will be paid out of the pension fund? Ever wonder how many have died and will receive no further benefit? Ever wonder what percentage of the fund is represented by pilots, dead or alive? Ever wonder whether the highly-compensated employees still accruing a retirement benefit are interested in maintaining the fund and keeping it viable? Ever wonder why The Company doesn't want to share that information with us?

When most non-pilot employees were unilaterally moved to other types of plans, they did not reduce the liabilities. The benefits earned are still due to those employees. Any increase to our FAE cap will increase the Projected Benefit Obligation (PBO) incrementally, but the near term liabilities for those soon to retire would be ... I'll say it again ... pocket change.

Oh, and I'll say this again, Noworkallplay,I haven't seen that PM. Have you chosen the latter?




AMEN, AMEN, and AMEN!






.



​​​​​​​

FastBurner

PBGC Info on this thread needs clarification.

Plans terminate three ways; distress (bankruptcy), involuntary (PBGC recognizes inability of agency to fund plan), and standard (the plan can pay ALL the benefits).
https://www.pbgc.gov/about/factsheets/page/termination

First, the A Plan is fully funded and has been for many years due to Pension Benefit Act of 2006. The company states MANY times in the annual report and SEC documents that the Pension Plan is fully funded at 100.38% (from 5500 Schedule SB. Search FEDEX CORPORATION).
https://5500search.dol.gov/#q=((plan...eceived%20desc

At this point, the A plan is a perpetual motion machine - 25 billion averaging 7+% / year and paying out < 1 billion. That is why no "required" money needs placed into fund and all is voluntarily placed there.

Regardless, IF our A Plan terminated tomorrow, there is sufficient $$ in there and managed well enough, PBGC would determine it is fully funded and let the fund continue as a STANDARD termination. The scaremongering of lower amounts would not affect this plan. From Annual Report - Over the past several years, we have made voluntary contributions to our U.S. Pension Plans in excess of the minimum required contributions. For 2021, no pension contributions are required for our U.S. Pension Plans, as they are fully funded under the Employee Retirement Income Security Act, and no voluntary contributions are anticipated. (pg 85).

Vesting with a NEW PSPP. Anyone under 5 years is not vested (pilot retirement book page 12) and PBGC will NOT guarantee plans under 5 years (in your annual statement of funding AND all over PGBC site). So, a NEW hire sees a PSPP placed into effect at 4 yrs 9 mos, that persone may be "uncovered" by PBGC for nearly 10 years. If company got bought or quit operating, that person would get nothing from either plan. Also, anyone over 25 years and with new plan under 5 - again, if company got bought and/or new PSPP terminated, that retiree would get nothing from PBGC or plan.

The "fund" - more accurately Fedex Corporation Employees' Pension Plan, EIN 62-1721435- if terminated, would be separate from whatever new PSPP originates. In other words - once vested, each member gets exactly what was promised - think of hard freeze. Any "change" from our current plan to a new plan would be extremely difficult via negotiations as our model has not been created (that we know). On my site, I share the agencies that DO have a Variable Plan like this (don't read anything into "Pilot Stabilization" - those are just added to enhance wording). But Cheiron, Milliman, Findley (all contributors to a Variable Annuity Pension Plan, Variable Defined Benefit, etc) do not use this model... It's SO good, the "sellers" of program do not use it...

The PSPP or variable plan is really for either extremely distressed plans (not enough $$ to fund) or non-existent. The plan participants are already most likely getting nothing and this "saves" the day by removing the RISK from company to individual. Any variable plan CAN provide less than current benefit. Think of retiring now with max benefit and the next 5 years the investments decline in value - your benefit WILL go down every year.

https://fedexpilotretirement.wordpress.com/

When signing up (it's free to fedex pilot on seniority list) - for your username - use first four last name last four employee ID (turn2659) and I can look you up.

Oh and NOWORKALLPLAY has NEVER requested access... for what that's worth.




Good discussion.[/QUOTE]

kronan

I know you know this, so not sure why you asked this.

But the company DID impose a Benefit change to the pension of non-contractual employees. The company transitioned from a Traditional Pension Benefit calculation to a Cash Balance Pension. Notional investment based on 5% of Pensionable earnings (8% for some). Fastburner could probably provide the exact details, but seem to recall the Return on the notional shares\value was based on a defined Bond Performance.
The company has since totally eliminated the Portable Pension and gone to a straight 401k with improved matching contributions.

As to why the company elected to pass on opening negotiations to a change a few years back, I think we'd both agree that the optics of modifying Pilots Pensions while simultaneously eliminating everyone elses would be a badness thing.

(Worth noting, we now have Employees working at Fedex who've been covered by the Traditional Pension and the Portable Pension. So, Fastburner, anything in the required documentation over which one of their Pensions is covered by the PBGC?)

And FB, plan for a Transition is Everyone on Property is vested....vesting is a period of time that is Contractually established-and always could've been Immediate. That's just an exceptionally rare thing for Defined Benefits. IOW-those here less than 5 years wouldn't 'lose' anything.

And it's hard for me to imagine a world where FedEx suddenly can't meet a PSPP Style Pension obligation within the 1st five years after Transitioning to a New Formula.

Also, I'd be concerned about the possibility of a DC Limit Reduction if not for the fact that it's something we Already have negotiated into our CBA. So, that possibility is something we've already considered, and already have protective language embedded in our CBA.

The one thing that seldom comes up in any of these discussions, is how would Disability be addressed. Same Salary for years? Notional Upgrade to higher paying seats if Seniority allowed? All that's ever been said by our NC is we know, and we've taken that into consideration with no amplifying remarks.

Again, IMO
A Traditional Pension with a similar salary Cap is Superior.
I think a PSPP style Pension is likely easier to achieve (Everyone here, everyone, thinks PSPP is cheaper for the company...and now the Company is aware that we've considered it....so which Pension Improvement do you think the company is more likely to agree with)

Why hasn't Cheiron switched to a PSPP style pension? Perhaps because they don't have 5300+ people at the same Average Compensation level we're at (Google search says they have 112 Employees).

And the only reason we've researched alternatives to a Traditional Pension was the companies intransigence to improve our A plan, at all, during TA2015.

As TonyC likes to write, A Line in the Sand is easy to wipe out.

Except for when it's not.