Had anyone heard of MBCBP BEFORE yesterday???
06-13-2023, 11:58 PM
#11
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So 66k is the approximate max contribution. It's not 20% because there are prescribed IRS limitations on salaries if I am understanding this correctly.
Ok so this brings to mind two questions does it truly represent a greater value than the A plan and how does it compare to the industry standard higher value DC plans with cash over cap attributes?
I am uncertain on the former without doing a bit more math maybe some of our more keyed in colleagues can chime in here. Regarding the later here's what Deltas plan looks like according to their TA
2026 A330 Capt pay rate $474.20 Avg earnings $483,684 total DC contributions (18%) $87,063
That's what it costs Delta for that plan for that participant 87k. The the TA proposed mix is limited to 66k. A 25% difference and the latter is fully credited to an employee controlled account or as cash today.
So again help me understand why accepting lower rates and the additional concessions is worth it. This talk about numbers in the aggregate and costs to the company per head is obsfucation and they now it. It's why it's the lead story.
Has anyone seen any union emails explaining why our payrates are substatially less?
It's also worth noting that the reduced payrates coupled with 4a2c BLGs for an extended period of time and additional wet leasing could reduce the overall average of what they pay as all of this is a percentage of payrates that they've negotiated lower than everyone else.
Ok so this brings to mind two questions does it truly represent a greater value than the A plan and how does it compare to the industry standard higher value DC plans with cash over cap attributes?
I am uncertain on the former without doing a bit more math maybe some of our more keyed in colleagues can chime in here. Regarding the later here's what Deltas plan looks like according to their TA
2026 A330 Capt pay rate $474.20 Avg earnings $483,684 total DC contributions (18%) $87,063
That's what it costs Delta for that plan for that participant 87k. The the TA proposed mix is limited to 66k. A 25% difference and the latter is fully credited to an employee controlled account or as cash today.
So again help me understand why accepting lower rates and the additional concessions is worth it. This talk about numbers in the aggregate and costs to the company per head is obsfucation and they now it. It's why it's the lead story.
Has anyone seen any union emails explaining why our payrates are substatially less?
It's also worth noting that the reduced payrates coupled with 4a2c BLGs for an extended period of time and additional wet leasing could reduce the overall average of what they pay as all of this is a percentage of payrates that they've negotiated lower than everyone else.
06-14-2023, 03:18 AM
#12
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Joined APC: Oct 2015
Position: Gear slinger
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Originally Posted by DLax85
"MARKET BASED CASH BALANCE PLAN".....MARKET BASED.....the 6.5% is just a number they are targeting, and what the big total numbers they are showing are based upon. They are not guaranteed. I believe the plan asset mix will be 55% equity index/ 45% bond index. A younger pilots portion cannot be invested in 100% equities because the plan must make specific payouts to older pilots retiring. The overall risk profile will be moderate/balanced. Now go research the current 10-year forecasts among top investment firms for this type of portfolio. They range from 3.875 - 5.425% for this specific plan asset mix. Of course, ASSUMING a larger 6.5% return will make the final estimates bigger, especially over a longer time horizon. Market based cash balance plans typically do have a safety feature that your balance can never fall below the contributions earned, but that just protects the employee from losing their basic contributions. The return is effectively zero.
06-14-2023, 04:06 AM
#13
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Posts: 139
Originally Posted by Otterbox
6.5% seems like a pipe dream. A couple days of searching hasn’t found any mention of an avg 6.5% return. Most MBCBPs avg 3% (5% seems to be the high end) returns in exchange for being able to never receive less pay credits out than put in, annual contribution limits based on age (in addition to income limits) as well as a lifetime cap of $3.4 million
Delta has cash over cap with a spill over into a MBCBP if they choose. Or they can take the cash over cap as taxable income. Senior pilots there will get higher net contributions from the company because they won’t cap out like we do. Also the vast majority of the contributions will be in an account they own. They also have the nice option of taking some of the contributions as taxable income to spend as they choose.
06-14-2023, 04:12 AM
#14
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Posts: 1,820
Originally Posted by TomAce
It’s a defined benefit plan but only guarantees you that all the company contributions will be in your account when you retire, no guarantee on returns. It targets a 6.5% return using a mix of stocks and bonds.
If you’re making over the IRS limit, you’ll never actually get 20% contributed because you’ll cap out. Rough math says contributions will be around 16-17% in those cases. It is not a replacement for a pension. And it’s not better than a 401k because you have no control over the investments and the money is held in a trust. Like everything in this TA, it’s a giant let down.
If you’re making over the IRS limit, you’ll never actually get 20% contributed because you’ll cap out. Rough math says contributions will be around 16-17% in those cases. It is not a replacement for a pension. And it’s not better than a 401k because you have no control over the investments and the money is held in a trust. Like everything in this TA, it’s a giant let down.
06-14-2023, 06:06 AM
#15
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Joined APC: Apr 2007
Posts: 909
Originally Posted by DLax85
I'm not in favor of the TA, and not a fan of the MBCBP, but let's ensure we understand how it truly works. There will still be a 9% B Plan which is currently capped at $330K (IRS limit adjusted annually) = $29,700 this year.....and a totally separate bucket for the 11% MBCBP money - 11% which is capped by the same IRS limit, $330K this year = $36,3000 this year. The company just sent out an email explaining this. The company will not make any contributions to either your B Fund or your MBCBP once you exceed the specified IRS limits each year.
Essentially, we will be selling the A Plan for our new hires for 11%. Previous, ALPA estimates on the value of our A plan were 20-24%. The company is getting a GREAT Deal moving forward.
Essentially, we will be selling the A Plan for our new hires for 11%. Previous, ALPA estimates on the value of our A plan were 20-24%. The company is getting a GREAT Deal moving forward.
None of that matters to the pilot who is furloughed while our freight is contracted out.
06-14-2023, 06:09 AM
#17
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Joined APC: Apr 2007
Posts: 909
Originally Posted by Shaman
It's also worth noting that the reduced payrates coupled with 4a2c BLGs for an extended period of time and additional wet leasing could reduce the overall average of what they pay as all of this is a percentage of payrates that they've negotiated lower than everyone else.
06-15-2023, 08:11 AM
#20
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Joined APC: Dec 2006
Posts: 2,057
Originally Posted by MongoPawn
Read the disclaimer for the new retirement modeler & look who's back!
Imagine that. Pat and the NC all along were quietly making pancakes the last two years and kept it hidden from all of us. The same pancakes we didn't want 3 years ago. That is unconscionable, Pat!
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