DLax85

From one of my posts in another thread 3 weeks ago. Data Sources: Vanguard & Fidelity 10-year forecasts…

"MARKET BASED CASH BALANCE PLAN".....MARKET BASED.....the 6.5% is just a number they are targeting. 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.

The current 10-year forecasts from top investment firms for this specific asset mix range from 3.875 - 5.425%

Of course, ASSUMING a larger 6.5% return will make the final modeler 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.

TomAce

It’s underperforming garbage. The modeler assumes IRS limits increase each year with inflation. No answer if IRS limit remains flat for years. You’ll just lose contribution % from the company depending on your pay rate.

Spectre186

If the company can pay 9% 401k and 11% MCBP, I’d much rather take a 20% 401k with cash over cap and the additional option to put CoC in to a MBCBP.

I get to control the investments, allowing me to be aggressive while young, and then moderate the risk as I approach retirement.

This should be an easy sell to the company, they don’t even have to guarantee the 20% they put in. I’m fine with assuming all risk.

Stan446

Not sure why this isn't an option. I know many younger guys feel this way. I think the problem facing the Union is trying to keep a DB plan. I think its a very slippery slope to try to just get rid of the DB plan and go to straight DC contributions. You know some guys are going to be ****ed and probably sue if the DB plan is gone or changed and its not available. The MCBP plan isn't new and just made up by our Union though. This type of plan is being offered to high income employees at other places than the airlines. The plus side is the MCBP pays out at least a minimum fixed amount when you retire and that is what our current DB does. I think we are at a point with the retirement DB plan that too many people want too many solutions. There's a lot of IRS issues that come into play and perhaps thats why this plan came up. I'd look up MCBP plans outside of what the TA says and definitely not what is said here.

Flying Boxes

Company artificially keeping contributions down by using IRS limits that do NOT apply to MBCBP.

talked to a financial advisor. He does these all the time. He laughed at our TA MBCBP! Thinks it’s a screw job.

Stan446

I didn't say I'm for it. Whats your financial advisor's plan for the FedEx pilot group?

Flying Boxes

I talked to a financial advisor. Your turn .