Shaman

Where did this come from? Did I miss an announcement? Why all the secrecy? Are we seriously supposed to do due diligence on this in 4 weeks?

Theyve made verbal assertions on the value of this TA but wheres the math. Has anyone seen it?

Nothing good can ever come from clandestine machinations. They won't trust us with the information until it's too late to say no without significant downside outcomes.

Please someone tell me I missed an email or a meeting where this was discussed. How did one person get so much power?

MalteseX

I hadn’t heard of it. But I have a huge problem with the way this was introduced. It was a secret until the TA release. Now we are supposed to vote the TA up or down THEN get educational briefings and computer modeling after the vote.

Do we know enough about this thing to get rid of our pension plan for all new hires after 7/31. I surely don’t. I had never heard of this type of pension before this TA.

nightrider

So on our 12% b plan i top out the irs limit in September every year, no payments to the acct after that
your captains will top out the same way and then the 11% additional isn’t payed to anyone, because you have already topped out for the year, correct me if I am wrong, if I am right then this is a horrible deal for your guys.

MalteseX

Yes. From what I understand (since hearing about this yesterday and reading about it since) the limit for 2023 on this “vehicle” is $330,000. If your gross pay goes above this figure, all 11% inputs cease. The company contribution (ie “new money “ - not including interest payments), will be $36,300 per year.
But this is from me and my C student learning curve.

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.

ClncClarence

I feel like some are overlooking that we still get the 9% DC to the PRSP in addition to the 11% MBCBP. In reality the combined company/pilot limit (in 2023) is $66k (PRSP) plus $36,300 (MBCBP). The two limits are based on the same income restrictions, but they fill up independently. Total tax-advantaged savings is up to $102,300 between company and pilot.

Based on this, the most money (from 2023 limits) one could get from the company is $66,000. You can fill up the rest of the space with your own $22,500 tradtional/Roth contribution limit plus any after-tax contributions that could then be converted to Roth. That’s where the $102,300 annual tax-advantaged number comes from.

I’m voting no regardless but the email sent out by the NC this evening does clarify how this works.

MalteseX

Thanks for explaining that. That clears up what the NC Chairman was trying to explain in his comm. Now I understand what he was saying. Thanks.

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.

ClncClarence

I agree with you. It’s not the solution I was looking for but I think it’s important to have an informed discussion about how it actually works.

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.