Originally Posted by TonyC (Post 3230857)

The pilot assumes almost all of the investment risk, which is far more than the pilot has now. The Company dumps ALL of the investment risk up until the point the Retirement Fund performs so poorly that the stabilization fund is depleted. The only limits on the pilot' investment risk are numbers to be negotiated. The floor protects the upside, and the hurdle limits the upside.

If the plan works as designed, The Company will have ZERO investment risk. The pilot will be the only party with investment risk.
If the Plan works as designed, The Company will contribute a defined amount of cash into our Pension Trust each and every year. FastBurner might have the information on hand, but I can’t recall the last time The Company was required to contribute into our Pension Trust. Instead the Investment Performance, combined with some debt leveraged voluntary contributions has kept our Pension Trust fully funded.
And again, a PSPP style plan is a Defined Benefit Plan. A company can’t just decide to Not Pay Promised Benefits due to poor investment performance in a Trust. It takes either negotiation with a Union to reduce benefits, bankruptcy court actions to freeze a pension, or in the absolute worst case terminating a pension and handing over the Pension Trust investments to the PBGC.
Which would be a huge haircut, 2021 Max PBGC benefit for straight life is $47.1k if you begin collecting retirement benefits at 60. At 63 it’s 62.3k. At 65 it’s $72.4k. At 55 it’s $32.6k



"Individual pot of money [that] runs out" has not been used to describe the Variable Benefit Plan. Another straw man.

Nobody said it wouldn't pay out benefits for a lifetime. Another straw man.

Any time you call the PSPP a Defined Contribution plan….that’s what it means, no DC plan is a Lifetime Benefit. A PSPP style plan is a Defined Benefit Plan, which I guess both of us now agree that a PSPP style plan is a Defined Benefit Plan since it’s a Lifetime payout.



The Variable Benefit Plan cannot be compared to a traditional Defined Benefit Plan. At best it can be described as a Hybrid Plan. Anybody with a smartphone and an ounce of Google-foo can find numerous descriptions of the "new" plan concept that has been suggested for failing Defined Benefit plans that combines features of a Defined Benefit Plan and a Defined Contribution Plan.

What The Company puts in is an amount of money every year proportional to the employee's annual salary, up to the IRS Defined Contribution Compensation Limit. That amount of money, whatever it is, is the last The Company ever has to worry about the pilot's eventual retirement benefit. It may go up, or it may go down, and The Company doesn't care. The Benefit the pilot receives upon retirement for each year's salary will VARY depending on how the Retirement Fund performed in the market. The shares he "accumulated" each year will be multiplied by the value of a share that year, and that will determine the lifelong Retirement Benefit the pilot will receive each year. The fact that the amount is a fixed amount then does not make it a Defined Benefit plan.

This video has only received 2,267 views. It's a pity, because this is Greg Reardon of Cheiron explaining how the Variable Benefit Plan works. He's the guy who started using the term pancakes. I BEG you all to watch this video, and I have it cued here right before the most important part: https://youtu.be/LvjGtv6POFM?t=1119

Wait, does this now mean that there IS a floor accrual rate? I thought that didn’t exist. And the video uses the IRS Defined Contribution Limit because that’s what our Union chose to use. There’s nothing magical about it, nor is there any reason we couldn’t use WB Captain pay as the negotiated value.
Unless that is, you simultaneously believe that the limit to compensation that can be considered for a PSPP style Pension is limited to $290k this year, while the earnings limit for an improved Traditional Plan is unlimited. (That a Traditional Pension plan is only capped by the 415(b)(1)(A) limit of $230k





The amount of cash The Company must contribute to the fund to support the 2% "Floor Accrual Rate" is a tiny detail that would have to be negotiated. In the first year of the example used in the above-linked video, the pilot accrues a retirement benefit of $5,007. How much money in the fund is needed to match that liability? Oh, wait, $5,007 is not the liability, really, because that number can go up or down depending on the performance of the fund. The only real liability is the floor, and even that is supported by the stabilization fund. So, if the plan functions as advertised, The Company gets a discount on every pancake. Plenty of details for our "experts" to negotiate.

So, you’re agreeing with me here, now, that the actual Company Contribution annual contribution that was floated across the table 3’sh years ago was never publicized? Are you then also agreeing that our hired guns, Accountants, Pension experts stress tested this proposal through various economic environments and predicted success? (Of note, there is no absolute guarantee that a PSPP style Pension will still work for future results, but that also holds true for our Traditional Pension)

Where'd you come up with 580?

It was a response to another poster for a year 1 transition. Assumes the 2% times 290 with the notional $10 starting point for share value. A value that has absolutely no correlation with the underlying value of the Pension Trust. It’s a notional value. Just as in the video, if the Investment Returns in our Pension Trust is 2% for the year, the notional value of that $10 per share decreases 3% so the original $10 value is $9.70 in year 2. Even though the underlying value of Assets in our Pension Trust would increase and there'd be another contribution as well.

We can't tie the calculation to twice the DB limit because the IRS has set the rules for how the calculations are done. The limit is the IRS DEFINED CONTRIBUTION Compensation limit because that's the law. Reference the above-linked video at 25:36.

Does that same law apply to a Traditional Pension? Does that mean our only solution is increasing the multiple to improve our Traditional Pension?




All the details (apart from the IRS rules) are negotiable.

The Final Average Earnings Cap is also negotiable.

I totally agree.
§ 401(a)(17) of the IRS code refers to the annual compensation limit for DEFINED CONTRIBUTION plans

§ 415(c) of the IRS code refers to the Limitation for DEFINED CONTRIBUTION plans

So, No, we don't have a CBA provision to establish a non-qualified plan in the event the IRS lowers the DEFINED BENEFIT limit. If you could stick to the facts instead of what you "think" it is, it might be less confusing.So, here you’re quoting the CBA to show that we already have protective language should the DC limit be lowered. Doesn’t that mean it would be realistic to assume that similar protective language would be added to protect a PSPP style plan if we tied the compensation to the DC limit.
And, you elected to bypass Paragraph 1 which discusses the Non-Qualified Pension Plan for pilots. Only downside is that plan limits our protection to the FAE max of $260k. Which I assume would also be negotiated upwards if our Traditional A plan is improved.





Every year counts in different ways for different plan types. If all we have are two defined contribution plans, like our current "B" Plan and the proposed Variable Benefit Plan, then every Credit Hour of every year counts towards improving the retirement benefit and the "B" Plan balance.

Under our current "A" Plan, a traditional Defined Benefit Plan, every year counts as a Year of Service, and that equates to 2% of the pilot's "High Five" Final Average Earnings. Maybe it's a young family, or maybe it's an aging parent, or maybe it's a family member with a major illness that causes the pilot to pay more attention to his home life than his flying gig. Maybe it's just a desire to remain senior in a lower-paying seat to improve his quality of life. Regardless of the reason, the pilot gets to choose to work less and still get 2% Years of Service credit under our "A" Plan. Under the Variable Benefit Plan, he won't have that choice.

On multiple occasions I have said a Traditional Pension is Superior to a PSPP style Pension with the same Compensation limits. An Average is always superior to a year by year addition. It's only in comparison to our unchanged Pension Plan that a PSPP style plan is, modestly, superior to. IMO




Your expectation ...

To Be Negotiated.

USERRA doesn’t leave much to be negotiated. And if you look into our PBB, you’ll find 1,000 is a years of service value. Not sure if it’s explicitly stated anywhere, but that 1000 hours of service isn’t tied to actual pay anywhere that I can think of.
USERRA requires employers to reemploy an eligible returning service member into the position and benefits the service member would have had, with reasonable certainty, if not for the military service. In other words, a returning service member is entitled to the seniority, rights, and benefits they would have attained had they remained continuously employed. 38 U.S.C. §§ 4312, 4316(a), 4318; 20 C.F.R. § 1002.191.
• Therefore, employers are required to determine a reemployed service member's eligibility for participation in a pension plan and the vesting and accrual of the service member's pension benefits as if the service member had not left for military service. 38 U.S.C. § 4318; 20 C.F.R. §



Fixed contribution. That's right.

How does that economic collapse impact on Traditional "A" plans? That's The Company's problem, because they bear ALL of the investment risk.

Oh, and those highly-compensated executives still have a personal vested interest in the the success or failure of the fund since they're in it too.

A couple of links, again, a PSPP style plan is a Defined Benefit Plan. The Benefit Calculation formula isn’t as easy as 2%*YOS*FAE, but it would still exist. And none of the Government protections embedded in law can be negotiated away.

https://www.investopedia.com/terms/d...ensionplan.asp


https://www.investopedia.com/terms/p...nshortfall.asp






Not when a Company wasn't going through a bankruptcy. I'm sure you know bankruptcy rules have changed to make it much more difficult for companies to use it as a tool to unload debt and walk away scot free. Delta used bankruptcy to do just that right before the bankruptcy laws changed because they knew they wouldn't be able to do it after the change.

Totally agree. Just as there have been multiple improvements to Pension Protection laws following the dot.com melt down. Pension Law changes that The Company has said made improving our Pension, even a smidgen, more expensive than they were willing to entertain.




The Variable Benefit will also be subject to inflation. Our "A" Plan benefit has not been hurt by inflation, it has been hurt by our failure to raise the FAE CAP at the same rate as we have raised hourly pay rates. A pilot close to retirement may not see ANY improvement from the PSPP over the current "A" plan with the current FAE Cap, but EVERYONE will see a SUBSTANTIAL improvement over the "status quo" by raising the FAE Cap.

Ask anybody nearing retirement what their ACTUAL High Five (not limited by $260,000) is today. If they have 25 years of service, divide that High Five by 2, and that's what they should get in retirement in return for their years of hard work making this Company not only possible, but fabulously successful. THAT's what they deserve, not some "modest improvement" over $130,000.Inflation hasn’t hurt our pension, but inflation has hurt our Pension….is that your point?


You’re making an assumption regarding what would happen. That an FAE would be retroactively applied should we succeed in adjusting our Traditional Pension to at least the Defined Benefit Limit…again, I’m assuming that you don’t think the $290k annual compensation limit is applicable to a Traditional A plan (yet somehow limits what can be used in a PSPP style Pension Plan)…but rather the $230k Defined Benefit Limit which effectively means a $460k FAE
Which equates to 1332 hours of pay for an International WB Capt at $345.56.

IMO-an improvement to our FAE would be phased in over time, and likely effective for subsequent plan years. Our Retirement plan year runs June 1st-May 31st. So, IMO, a TA reached\passed for a November 2022 effective date would mean a Pension transition effective June 1st, 2023. And should we achieve a FAE improvement ceiling of $460k, result in a 4*$260k + 1*460k Pension in 2024 of $150k. (Assumption here is that the new FAE would have a max of $460k)
Would be great if our Pension Benefit jumped from $130k to $230k effective with our next CBA date, I just don’t think it’s likely.

So, since you’re nearing retirement TonyC, what would your ACTUAL High Five be?

Personally, I want MORE than I deserve. Unfortunately, we only receive what we Negotiate, not what we deserve.
Yes, FedEx can AFFORD to raise the FAE Cap to $460k. Just as FedEx could AFFORD to provide a Pension to everyone employed at FedEx which makes this Company possible and fabulously successful. But raising the FAE for us was a Line in The Sand for the Company in 2015, and eliminating the Pension for our fellow employees is something that FedEx just did.




.

Originally Posted by TonyC;[url=[url

tel:3231464]3231464]I refuse to accept that assumption.






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Originally Posted by kronan (Post 3231585)

A couple of links, again, a PSPP style plan is a Defined Benefit Plan. The Benefit Calculation formula isn’t as easy as 2%*YOS*FAE, but it would still exist. And none of the Government protections embedded in law can be negotiated away.

https://www.investopedia.com/terms/d...ensionplan.asp


https://www.investopedia.com/terms/p...nshortfall.asp.

Originally Posted by gatorhater (Post 3231612)

Kinda what I was getting at

Originally Posted by kronan (Post 3231585)

My apologies for the long post, not quite sure how APC will display this. Hopefully not too confusing, and that the Blue Text (my response) is easily readable.

Originally Posted by kronan (Post 3231585)

My apologies for the long post,

Originally Posted by kronan (Post 3231585)

not quite sure how APC will display this.

Originally Posted by kronan (Post 3231585)

Hopefully not too confusing,

​​​​​​​

Originally Posted by kronan (Post 3231585)

and that the Blue Text (my response) is easily readable.

Originally Posted by kronan (Post 3231585)

If the Plan works as designed, The Company will contribute a defined amount of cash into our Pension Trust each and every year. FastBurner might have the information on hand, but I can’t recall the last time The Company was required to contribute into our Pension Trust. Instead the Investment Performance, combined with some debt leveraged voluntary contributions has kept our Pension Trust fully funded.
And again, a PSPP style plan is a Defined Benefit Plan. A company can’t just decide to Not Pay Promised Benefits due to poor investment performance in a Trust. It takes either negotiation with a Union to reduce benefits, bankruptcy court actions to freeze a pension, or in the absolute worst case terminating a pension and handing over the Pension Trust investments to the PBGC.
Which would be a huge haircut, 2021 Max PBGC benefit for straight life is $47.1k if you begin collecting retirement benefits at 60. At 63 it’s 62.3k. At 65 it’s $72.4k. At 55 it’s $32.6k

Originally Posted by kronan (Post 3231585)

Any time you call the PSPP a Defined Contribution plan….that’s what it means, no DC plan is a Lifetime Benefit. A PSPP style plan is a Defined Benefit Plan, which I guess both of us now agree that a PSPP style plan is a Defined Benefit Plan since it’s a Lifetime payout.

Originally Posted by kronan (Post 3231585)

Wait, does this now mean that there IS a floor accrual rate? I thought that didn’t exist.

Originally Posted by kronan (Post 3231585)

And the video uses the IRS Defined Contribution Limit because that’s what our Union chose to use. There’s nothing magical about it, nor is there any reason we couldn’t use WB Captain pay as the negotiated value.

Originally Posted by kronan (Post 3231585)

Unless that is, you simultaneously believe that the limit to compensation that can be considered for a PSPP style Pension is limited to $290k this year, while the earnings limit for an improved Traditional Plan is unlimited. (That a Traditional Pension plan is only capped by the 415(b)(1)(A) limit of $230k

Originally Posted by kronan (Post 3231585)

So, you’re agreeing with me here, now, that the actual Company Contribution annual contribution that was floated across the table 3’sh years ago was never publicized? Are you then also agreeing that our hired guns, Accountants, Pension experts stress tested this proposal through various economic environments and predicted success? (Of note, there is no absolute guarantee that a PSPP style Pension will still work for future results, but that also holds true for our Traditional Pension)