Hacker15e

I think most pilots who don't want to get rid of the pension are interested in the diversification of their retirement portfolio a defined benefit plan gives them, as they probably already have other DC-style or personal market-based investments outside of the B-Fund.

Merle Haggard

Ahhh, Stan's a "my" airplane guy. Over 30 years of doing this and that's usually a solid first indicator.

JustInFacts

So, you don't need to show the math? As Moneybags pointed out, the DB plan for new hires under TA1 may have changed, but it didn't go away. There is a cost to the company for the MBCBP. What the difference in the two is would be the savings, or possibly, additional cost. In breaking down the $3.8B in added cost to the contract over our 2015 contract, it has been stated that about 60% went into retirement and 40% went into wages. They didn't say that 60% went into increasing the FAE to $338K, it was for the entire retirement package.

So, you have people on here who say that the current pension isn't really worth much and the increase really won't help them. Well, every dollar you get out of the pension is money that you don't have to save. A lot of people have stated that our current pension would have a annuity value of $1.7 million. So, if we raised our pension by 25%, the annuity value would be about $2.1 million. So, how much would the company have to contribute every year for 25 years in order to get an annuity worth $2.1 million?

If you use the average ROR of our current pension plan of 6.8%, the company would have to contribut about $35000 per year for 25 years (or $875K) to get to that value. So if we got close to Delta rates, how much would the company contribute to the MBCBP in 25 years with historical upgrades? I used a rate of 95% of current Delta rates X 1000 hours to get yearly income and increased the IRS earnings limit by 3% per year. I took 11% of those yearly earnings until they exceeded the IRS limit, and then took 11% of the IRS limit for a total of 25 years and came up with a company contribution of $1.08 million, or $205,000 more than what some say would be required for a $169k pension. Now, if you work more than 25 years as a new hire, you get even more. If you take the $169k pension, you get nothing more after 25 years.

Now, both plans are qualified plans and are insured by the PBGC, so the insurance rate for both plans would be the same. So, it is quite possible that sunsetting the current DB plan could actually cost the company more money. So why would the company agree to this? Well, if you read their earnings reports and SEC filings, you will see that calculating for our current DB plan is very involved and has numerous variables that are subject to change. The company hates that. They want to know the costs. So, if you think that our DB plan isn't really worth much, how can you say that the company will save billions by sunsetting it? I'd like to see how you calculate it.

Anomjnom12

hahahahaha I thought the same thing when I read this. love it.

threeighteen

Yeah you missed the whole point. They only considered the cost of the replacement plan without considering the savings of eliminating the original plan. Then they sold it as the most valuable TA per pilot in ALPA history. That’s the whole problem.

Freight

Still waiting to see the math on that claim.

plzdontfireme

I would be interested too. But I'm pretty sure ALPA's "contract costing" division is still refusing to provide it to us. They did admit to not assigning a dollar value to the pension sunset because it was "too difficult."

threeighteen

When ALPA shows their work, I’ll show mine.

max8222

They did. You just didn't like it or could not understand it. Wonder it ALPA'S math will improve for when ever we get a TA. I am sure you will not like that math either.

threeighteen

oh? Link??