I have a little over 25 years left and have run the numbers for myself. Uncapped 20% is not going to cut it to replace the current A-Plan. I’m not going to negotiate in public, but just to match the current A-Plan would be an ADDITIONAL 14.6% cash over cap. That means just to stay level with what we presently have (without the balanced retirement aspect — A and B Plan), I would need 24% cash over cap.

*All based on 8% annualized return (high for some) and 3% wage progression.

 

"My data"? It was just a general statement of guys I've talked to and flown with. If you think that statement is false, ok. And polling numbers? Thats a joke. Where are the numbers? Do you actually fly the line and work at FX? Who would give up the A plan which is the same as an annuity in favor of a stock market based fund? Hmm, lets see, I get a guaranteed payout from the company, which should now be the IRS limit, which should be $230K. And then, I can contribute to my 401K as much as I want. Why do you think we are second class or lesser in any way of what we should be getting. The company and Union have put the propaganda out that we can't get what we can rightly and legally deserve. Our next contract should be A plan IRS max, and pay raises. Its not that hard. If you are flying with anyone new, then convince them to fight for what is right. Just because some one is a new hire, that doesn't mean they can't fight for their future and not be sold out like guys like you.

 

Ok. This is my fault for not explaining myself clearer and defining my terms all while typing in a hurry.

Let me try better.

UPS has an A-plan and a B-plan.

The A-plan has two parts. Let's call them the Defined Benefit (DB) part and the Fixed Dollar Amount (FDA) part.

The DB part is structured like a traditional pension, like ours, except with different numbers. They get 1% of FAE with a max of 30 years. This is the part they could not improve. UPS refused to budge on this issue due to the exact reasons we were given why we couldn't improve ours: new funding and accounting laws passed make it extremely cost prohibitive to do so (I'm sure the company can afford it, but are unwilling to do so). Even while we look towards the IPA as the paragon of pilot's unions with their cohesiveness, etc., they accepted that fact as true and went "outside the box" to improve their A-plan.

That's what brought on the FDA. It was a vehicle to give UPS pilots a larger A-plan in retirement outside the DC part, which, again, they were unable to get UPS to agree to. The FDA is based on seat position and years of service. As of Jan 2021 the numbers are $4,200 (Capt) and $3,360 (FO) with a max of 30 years TOS. The concern with the FDA is that it does expire with the CBA and will have to be renegotiated each subsequent CBA.

Just for comparison sake, lets take a FedEx and a UPS pilot who got hired at 40 years old and will have 25 years of service at retirement with a FAE of $450,000 as a Captain.

FedEx: $450,000 x 2% x 25 = $260,000 (cap) x 2% x 25 = $130,000/year

UPS (DB): $450,000 x 1% x 25 = $112,500/year
-or-
UPS (FD): $4,200 x 25 = $105,000/year

My preference would, of course, be to improve our DB plan, either by increasing the 2% or increasing/removing the 260 cap. That would be a coup. But, I'm a realist and after having the company not budge on the last few contract, I'm not optimistic that they'll be willing to here. So, if we want an increase in our A-plan, we're (IMO) going to have to look outside the box to better it. With that, I'm willing to listen to proposals. I'm not a "'No' no matter what" voter. I'm a "listen and make a decision" voter. I could see a UPS type arrangement working where we take our A-plan and convert it to variable pension plan, with an FDA of $5,200/year (or greater) provided by the company. That way we have the upside of being able to more than likely improve our DB, with the "floor" of the FDA of $130,000 being guaranteed by the company just like the IPA gets.

Or maybe it'll be something else. But I'm willing to listen.

 

This is not an accurate statement.

The Captain Flat Dollar Amount defined benefit went from $3k/YOS to $4k/YOS at date of signing on 1 Sept 16, is currently $4200/YOS, and with the 2020 extension will increase to $4300/YOS on 1 Jan 22 and $4400/YOS on 1 Jan 23.

EDIT: clearly I’m late to the game and missed about a dozen posts after the one I replied to that expanded on the topic, LOL

I would submit the FDA calculation, which has to be negotiated basically every CBA due to ERISA rules, is fundamentally different than a market-based “pancake” plan. That renegotiation entails risk, yes, but those risks are substantially different IMO.

 

Good comparison. minor correction which really doesn’t affect your point…UPS DB also has a cap. $300k or legal limit whichever is lesser.

Numbers run out to Jan 2023 currently…30yrs. $4400 (FD) $132,000/yr. Food for thought.

 

I was using "A-plan" generically for the DB plan, which I admit was confusing. They were not able to increase the DB portion of their A-plan.

I expounded on my thoughts, here: Enough talking, it's time for Action!

 

Thanks. I thought they had a cap, but I couldn't find it on my cursory Google search. I appreciate the correction.

 

Not trying to be argumentative, but the IPA *did* in fact increase their defined benefit (ie. A Plan). What they increased was the Flat Dollar Amount calculation of their defined benefit plan.

What was not increased was the Final Average Earnings calculation of their defined benefit plan.

That may seem potato-potatoe, but it is a VERY important distinction IMO.

I appreciate your expanded thoughts - that was a good lesson for me to scroll to the bottom and read everything before replying.

 

I know... we're typing over each other.

I agree. That's why I would like (if we can't improve our DB plan) to maybe see something like the "pancake" plan with a FDA to guarantee a min of $xxx,xxx where $xxx,xxx > $130,000. That way we are guaranteed a "floor" of $xxx,xxx (like UPS) and have the potential of much more with the "pancakes."

 

Why would we get "much more" than the floor benefit if the company still controls the plan, which they will. Why wouldn't the company tell the investment managers that they want a portfolio that has a 95% chance of maintaining the floor benefit it all markets? The sales job that the MEC has been pushing is that the pancake plan will average historical market returns. They fail to account for funding of a stabilization plan or factor in that FedEx might not be interested in historical market returns, especially since they keep the longevity risk and we inherit the market risk. Right now, FedEx averages about 6.8% ROI. If the hurdle rate is 5%, then historically we would realize a 1.8% increase annually. That will continue to fall behind a 3% wage increase. If FedEx is now longer seeing a benefit of higher ROI, and now only care about the longevity risk, why wouldn't they see a ROI of 5%-5.5% to ensure that they meet the longevity risk. It is a lot easier to get 5.5% ROI than 7%.