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Very wise speaking from an old Jedi warrior!
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Originally Posted by kwri10s
(Post 3724910)
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.
I don't buy the $3 million valuation for the pension. Google US life expectancy. Published this week: "The picture is especially concerning for men, whose life expectancy is now 73.2 years, compared with women’s 79.1". There are annuity calculators online. Use those numbers I just published with 4% interest rate. For a woman, assuming to live 14 years after age 65, it's worth $1.5 mil. That doesn't include her likely getting less than 100% of the pension when you pass. I think 50% is the standard option. The pension is great if you want to work hard for only 5 years of your career and want to retire at 60. It's a QOL game changer in that regard. BUT. Even then, it's not worth 3 million, at least at current interest rates. Check out: https/www.bankrate.com/investing/annuity-calculator/. I think people overvalue the pension and think it's a risk free retirement, which is not the case. The problem is, it is holding us back in negotiations. The legacies added 2% contribution their DC funds over several years and a MBCBP to catch the cash over cap. TA1 focused on raising the pension from 130k to 169k. Which is a 30% increase. That's massive compared to the legacy retirement increases. But it came at the cost of pay and QOL for us. Yet here we are, in the wake of that, and people are talking about increasing the pension even more! How about we focus on getting more money now, that we can enjoy with our families while healthy, versus selling out for deferred income that depends on a whole lot of future uncertainty. |
Nice email from the NC. It should have come out 3 months ago. But Pat still has to go!!!! There are two other guys and they can just as easily step up.
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While I appreciate the re-organization and communication effort, this is still the same guy that sold this TA as having No Concessions. The fatigue he cites in the letter was no doubt real as it affected his ability to identify a concession when he saw one. This, in my humble opinion, is unpardonable. Thank you for the effort but I think we need a change of leadership of the committee.
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Why is Pat so afraid to go back to the line?
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Originally Posted by bitwiser
(Post 3724958)
Why is Pat so afraid to go back to the line?
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Originally Posted by TomAce
(Post 3724925)
I agree, it's not our problem- which is the major benefit of the pension. But it's smart to understand the motivations of your negotiating opponent.
I don't buy the $3 million valuation for the pension. Google US life expectancy. Published this week: "The picture is especially concerning for men, whose life expectancy is now 73.2 years, compared with women’s 79.1". There are annuity calculators online. Use those numbers I just published with 4% interest rate. For a woman, assuming to live 14 years after age 65, it's worth $1.5 mil. That doesn't include her likely getting less than 100% of the pension when you pass. I think 50% is the standard option. The pension is great if you want to work hard for only 5 years of your career and want to retire at 60. It's a QOL game changer in that regard. BUT. Even then, it's not worth 3 million, at least at current interest rates. Check out: https/www.bankrate.com/investing/annuity-calculator/. I think people overvalue the pension and think it's a risk free retirement, which is not the case. The problem is, it is holding us back in negotiations. The legacies added 2% contribution their DC funds over several years and a MBCBP to catch the cash over cap. TA1 focused on raising the pension from 130k to 169k. Which is a 30% increase. That's massive compared to the legacy retirement increases. But it came at the cost of pay and QOL for us. Yet here we are, in the wake of that, and people are talking about increasing the pension even more! How about we focus on getting more money now, that we can enjoy with our families while healthy, versus selling out for deferred income that depends on a whole lot of future uncertainty. |
Originally Posted by NotMrNiceGuy
(Post 3724727)
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.
Originally Posted by NotMrNiceGuy
(Post 3724824)
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.
Originally Posted by kwri10s
(Post 3724849)
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.
Originally Posted by TomAce
(Post 3724856)
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.
Originally Posted by TomAce
(Post 3724866)
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.
Originally Posted by NotMrNiceGuy
(Post 3724903)
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.
Originally Posted by kwri10s
(Post 3724910)
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.
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Originally Posted by threeighteen
(Post 3725003)
Bingo. It's all about having money in multiple pots. Honestly we should keep A fund with the modest increase from TA1 (that likely didn't cost the company anything), do a modest increase to DC fund, and then bring in cash over cap with spillover into MBCBP. |
Originally Posted by NotMrNiceGuy
(Post 3725007)
I’m not sure it’s allowed to have both a traditional A-Plan and an MBCBP (technically a DB) simultaneously.
Having both would seem like the logical place to start. Maybe fix the A plan for prior years lost inflation on this TA, then tie it going forward to inflation. Add an overflow option where you can select for your DSA or vacation buy back or cash over cap flows into a new MBCBP. Then the next contract we would have actual ROI numbers to educate and plan from. Also there would already be an IRS approval in place for the plan not the hopes that it will be approved. Reducing the number of unknowns next contract would help us make an informed decision about if there should be a tweak in the total retirement direction. |
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