Inconvenient MBCBP Truths
 

No conspiracy theories, half truths or lies. Just the FACTS.

FACT: “The historical annual return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was 5.70%, net of all fees and expenses, for the 15-year period ended May 31, 2023.”

FACT: “2023: Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was -2.70%, which was lower than our expected rate of return of 6.50%.”

FACT: “2022: Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was -10.8%, which was lower than our expected rate of return of 6.50%.”

Source; FedEx 2023 10-K report pages 100 & 102.
https://s21.q4cdn.com/665674268/file...-FY23-10-K.pdf

The modeler uses 6.5%. We were told the company thinks they can achieve 7%. But they’ve not been able to do that over at least the past 15 years.

Do you want FedEx to be the fiduciary of your retirement investment? Are 11% contributions enough given this news?

MBCBP = Defined Funding with Variable Results.

last I checked. We never asked for this bridge to nowhere. So glad TA1 never passed.

PD, RS, DU, PM, CS, MEC all wrote about our unprofessionalism and how we are at fault we are that people cannot retire now. Is that the bridge to nowhere? In an earlier post a $4.3 million dollars in stock options is a pretty good bridge to nowhere seems pretty good. Wait until he starts using FedEx Lawyers who already complain pilots make to much, start suing us for making fun of his wrong color tie.

Thank you for sharing this. The MBCBP is garbage. Far too much of our money would have gone into it with low returns. If they insist on creating a similar setup, we have to demand that the company is not the fiduciary.

The MBCBP must make payments to those in retirement, thus the asset mix of 55% equities /45% bonds is not unreasonable. Rather it’s prudent.

However, even the 6.5% goal is above current, forward looking, market forecasts by major investment firms we utilize (Vanguard, Fidelity & Schwab).

If the MBCBP is the way forward,then the solution is to use a lower estimated return (perhaps 5.5%) and require the company to give a larger annual percentage contribution.

11% is insufficient. Fix it NOW! Not in the “next contract”.

In Transparency, Integrity & Unity (for Everyone),
DLax

ps. I’d prefer Everyone had a choice - even future new hires.

The only retirement I’m interested in is our current plan. Fix the hem once and for all in a way which keeps up with inflation. The company can afford it, no question about that.

Curious what you think about Delta’s set up as MBCBP as a spillover as opposed to 11%?

Also, what do you think about their goal of 8% target ROI?

Current pilots on the list could opt out at Delta though, so we'll get 18% DC and anything over 330k (in 2023) paid out in cash. Future hires will have their spill cash above 330k (this number increases yearly per the IRS) forced into the MBCBP. According to a poll on APC, 40% of current pilots opted out of the MBCBP at Delta.

Delta’s retirement set up is better IMO. Mitigates changes in IRS limits by having CoC, guaranteeing max contributions from the company each year. Eg a widebody captain in our TA setup would only get about 17% contributions because of no CoC. If I were a pilot at Delta, I’d opt out of the MBCBP and take the extra taxable income to invest in real estate. Our union seems to think that isn’t a good idea and everyone should have this giant pot of deferred tax burden 25 years from now. Good luck with that when uncle sam decides to tax the snot out of it.

If we stick with our garbage MBCBP design then we must ensure the company is not the fiduciary.

MBCBP inevitable?
 

If we do have the MBCBP, it would be better for many to increase the B fund first, then have the rest going into MBCBP. This gives more agency to the pilot first, with roth, ability to control investments, and more control over distributions in retirement depending on what the market is doing, more ownership. 15 % B fund first, or why not 20%? I understand that the highest paid pilots will max out pretty fast. It sounds like the MBCBP was designed as a spillover for those without a legacy pension who earn a lot. The May TA is making it into the whole kit and caboodle. It doesn't look like there is a way out of the A plan which would be fair to everyone. Maybe a graduated buyout based on age and longevity, over the course of the contract if the company cannot "afford" this. Our earnings are being eaten by inflation from the bottom, and overtaxed by the government from the top. This is not the company's or union's fault, but given that the company remains profitable, I think we must negotiate better compensation!