NotMrNiceGuy

Everyone needs to calculate what the pension/DC is worth in their own circumstance for those making the change to the MBCBP. For those with over 22 years or so, it’s somewhere between 25-30%. So why would we be okay with 15%? It’s not even in the ball park.

For those in that age demographic, the old A-Plan is not an option as it will never be improved again. We’d be putting ourselves in the same situation as we’re trying to get out of without the possibility of throwing a Hail Mary on our last contract.

Why would the retirement come at the expense of current compensation? The company will contribute less to our retirement than Delta does to theirs. If we keep that MBCBP, our pay rates should exceed the legacies by a good bit since we are capped and they are not.

Those legacy pay rates and retirement also do not account for their profit sharing. Delta is effectively getting pay rates 10% higher than ours with another 2% contributed to the DC because it’s pensionable. And that average accounts for black swan events like COVID and the Great Recession.

TomAce

I'd like to see cash over cap in the DC fund. I think that's the easiest solution. And I would love a higher % overall. But my priority over that is more pay now. Hopefully we can get both, not saying it's one or the other, but I think it's reasonable to have priorities. Not sure why that's an issue.

NotMrNiceGuy

We just had a 60/40 TA. Obviously everyone has their own priorities. We have a diverse pilot group. That’s to be expected.

The issue is that this was advertised as a Pay and Retirement CBA. We skipped QOL to maximize our those two items. And we did neither. Our pay was 10% less than industry. The MBCBP retirement would’ve left a contingent of Captains making 20% less than DAL, UAL, and AA. And those legacy contracts were primarily QOL (except for American).

Don’t get me wrong, Retirement was PHENOMENAL for those retiring in less than 5 years or those that had 25 YOS by 2026. But it was a concession for significant group that is going to meet IRS limits. I came here fresh off a contract that had industry leading hourly rates of pay and the best retirement in the industry, bar none.

And that’s the issue. We don’t have to pay for retirement through pay rates or retro. Delta didn’t. UAL didn’t. And they have the best in the industry right now. And they got it without sacrificing QOL or retirement.

EyesOn

Why do we all talk like splitting the retirement is guaranteed? Why not push for a snap up improvement to the pension plus an annual inflation increase? $150,000 starting now plus 3.5% annual increase indefinitely. Increase the DC with CoC or keep it the same.

NotMrNiceGuy

Could tie the A-Plan to the 401(k) compensation limits. $345K next year. Half would be $172.5.

That would use up a massive amount of negotiating capital.

kwri10s

The current A plan has cost the company ZERO for the last 4 years. They've put ZERO contributions into the Big Pool. (I cannot remember what it's called) But the pot of money that has the pilots, the managers, the old employee retirement money, etc. How much of that fund is the pilots? No one seems to actually know or be willing to share. But if the last 4 years have cost the company ZERO, how do you know increasing the annuity payout will even cost them anything? Just for giggles I searched some Schwab annuity pricing. If I do a $15k monthly payout at 60 then a $15k payout at 65 is about $500k less. A $11k monthly payout at 60 roughly costs the same as a 15k payout at 65. Since the fund is funded to IRS mandates for age 60 when our retirement triggers, it seems to my quick math that it costs the company ZERO to raise the A plan to 180k if every pilot went to 65. I'm not sure it would take too much negotiating capital to get a cost zero improvement.

Since we "know" that the company fund makes at least 6.5% per year in ROI because that is the amount our NC said we would make in the company run CBP. Then it's not too hard to project forward how much the big fund will allow to provided increases for the A plan going forward. Now we have no real idea what the company numbers are since ALPA won't tell us, or they don't know. But all the union saying the company cannot afford to increase the A plan really does not make sense at least to my simple math. It's not costing them anything now.

TomAce

Hey company, you know that pesky pension you’ve ended for all employees except pilots, and have refused to increase except when offering to end it for new hires, well instead, we would like it to increase every year forever for everyone.

Sounds simple to ask a for profit company to agree to an ever increasing liability. I would like to think that conversation has been had a few times since 1999.

It might be surprising, but there are pilots here who don’t love the pension and would like a high % DC and / or MBCBP instead.

TomAce

A quick google search of "why companies don't like pensions" is enlightening. It's more than just cost. This is from the first link that showed up:

"Pension plan administration is complicated compared to other retirement vehicles."
"With a defined benefit plan, risk lies with the employer, not the employee."

"To guarantee this benefit, an employer must consider investment returns, aggregate plan participant benefits, and even actuarial projections, then contribute according to estimates. With significantly simpler administration, it is no wonder that private employers are ditching defined benefit plans, including pensions.

With defined benefit plans, employees don't need to worry about market volatility and investment returns. However, for employers seeking to fund benefits for potentially tens of thousands of employees and their families, investing is a must. Typically, pension plans invest conservatively, in ways that hedge losses in the event of a downturn in an asset class. However, today's market conditions show why that can be a risky move, with both equities and bonds slipping. Overall, when millions of dollars in pension assets are at stake, market risk is a serious consideration for pension plan administrators.

Defined contribution plans, however, put the risk in the hands of the employee. By giving a matching contribution, an employer can help fund their employees' retirement without playing in the market. Meanwhile, the employee's benefit increases or decreases with their investments, over which the employer has zero control or interest."

https://www.fool.com/the-ascent/buyi...the%20employer.

NotMrNiceGuy

This is an interesting point. When the age was moved from 60 to 65, it was basically a windfall for the company. Every person that works an extra five years, the company pays 5 years less of the pension.

kwri10s

I agree. I know why the company wants out. If the market takes a huge dive then they might have an unexpected capital cost that is not planned for and might arrive at in inoportune time for them with respect to earnings. I get that. Not really my problem. I've been around a while and as you get older you realize that a bunch of your buddies are either out on med, or have family members with issue that keep them min running at FDX. It's great to know that they don't have to work full speed ahead to max their retirement. While I'd rather have money in my name as guys say, I also know that the way to become is millionaire as a pilot is start with 3 million. If we all know not to take financial advice for each other, then we should know we should not be managing our own money. I do what I want with the B fund/IRA and I always know I'm backstopped by the A Plan.