pinseeker

Sorry, it sounded like you were saying that busdriver12 was wrong in correcting your statement that retirees still get the $4000 HRA contribution when you replied "No, it's contractual."

FXLAX

Poor wording on my part. I was just adding to his post, not trying to “correct” it.

busdriver12

I also try to explain to every fo that I fly with about the crappy, not negotiated for over 20 years pre age 65 retirement health care plans we have. Even if people think it doesn’t apply to them because they have Tricare or will fly until 65 (and who really knows about that), they sure don’t want the old guys sticking around just for healthcare. Crazy expensive, and only going up. I hope other people are aware of this and are making it an important issue for the next contract.

Stan446

How is it funded? Shortly after the 2006 CBA was ratified, the Company seeded the plan with over $40 million and began contributing $0.50/credit hour of pay into the plan. The $0.50 is not taxable to pilots. In the past you saw this as “VEBA” on your pay notice deductions. Inflation has increased the cost of medical care in the intervening decade requiring an increase to the ongoing funding of the plan. With the ratification of the 2015 CBA, the pilots put the plan on solid financial footing by increasing the per credit hour contribution to $1.00. This $1 per credit hour will be increased by $0.05 per year going forward. As of the first day of the 2018 November bid period, the per credit hour contribution increased to $1.15. Additionally, the pay notice label was changed to “Post-65 PRP” to increase crew force understanding.

​​​​​​What is the health of the PRP? Thanks to the increased funding the pilots ratified in the 2015 CBA, the PRP is in sound financial condition. As of 02/28/2019, the trust balance was $119.8 million. We manage this plan conservatively assuming a 4.5% annual rate of return for plan assets. The plan has returned 6.1% since inception (annualized). The overarching goal is to keep inflation at bay by increasing the benefit as best we can while keeping the plan responsibly funded for both current and future retirees. What does the PRP cost us? The Administrative Board strives to operate as efficiently as possible. Investment management and advisory fees have been repeatedly negotiated downward as the plan assets have grown. This year they are expected to be approximately 0.3% of plan assets. All other administrative costs are also closely monitored and frequently reevaluated for efficiency. The 2019 administrative costs were budgeted at $435,250 and include: • $28,500 – Actuary: This pays our actuaries, Segal Consulting, to run the calculations required by ERISA and necessary for us to manage the plan responsibly. • $25,000 – Audit/5500/990: This pays Withum, a certified accounting firm for the ERISA required audit of the plan and produce the required IRS Forms 5500 and 990. • $110,000 – Third Party Administrator: This pays MedPay, Inc. to handle all the mailings and processing of enrollments and claim payments. This is the sum of a $4.40per month fee per active claimant. • $50,000 – Plan Consultant: This covers the pay and expenses for the non-pilot person who runs the plan on a day-to-day basis. • $15,000 – Meeting Expenses: The Administrative Board meets in person twice a year to monitor and adjust the investments, review actuarial reports to set benefits levels, adjudicate claim appeals, etc. The Board meets via teleconference in between each inperson meeting to monitor and balance the investments on a quarterly basis. This budget line covers travel to and from, lodging, meals and other meeting expenses. • $40,000 – Board Member Time: This covers the time of the Administrative Board members. It comes in the form of flight pay loss for the two active pilot Board members and pay for the three retired members of the Board. The pilots endeavor to minimize this expense which is budgeted for worst case. 2018 actual cost was $29,809. • $6,000/$10,000 – Fidelity Bond Insurance and Fiduciary liability insurance: The first is an ERISA required insurance policy that protects the plan in the event of fiduciary breaches. The second protects the plan fiduciaries in the event of litigation.

Hmm, $119 million in the trust in 2019. I wonder where all the interest on that balance is going? $50,000 for someone to manage the fund? Stick it in Vanguard, how hard is that? $15,000/yr to have biannual meetings? Thats a lot of BBQ and beer.

FXLAX

Better yet, negotiate for the company to pay the administrative costs.