Bill80

IRC 411(d)(6).

"In general, the anti-cutback rules protect a participant’s accrued benefits, early retirement benefits, retirement type subsidies, and other forms of optional benefit offered under qualified retirement plans. Section 411(d)(6) generally provides that the accrued benefit of a participant may not be decreased by an amendment to the plan."

https://www.irs.gov/retirement-plans...rement%20plans.

https://www.law.cornell.edu/cfr/text/26/1.411(d)-4

kwri10s

Thanks for the quote, but I think you cherry picked. So let me do the same thing. Here's a quote from farther down the page. "The final regulations provide guidance on the circumstances under which a qualified retirement plan can be amended to eliminate or reduce early retirement benefits, retirement-type subsidies, or optional forms of benefits. Specifically, the final regulations provide rules under which a plan may be amended to eliminate benefits that are burdensome to the plan and participants and have minimal value to plan participants."

Yes I also picked a quote that really does not add to the discourse either. But that's what you did. Posting an answer you knew did not answer the question. In full disclosure, I cannot find any reference where an employee group amended their contract to reduce a benefit. But I also cannot find any reference that says an employee group is prohibited from decreasing their benefit. Ball is still in your court. Where does it say an employee group cannot decrease their own benefit??? That is the posed question. Could the A plan be contractually diminished down the road by the pilots?

Bill80

Your accrued benefit cannot be reduced. By law. Simple as that. If you had 20 years at 338k earnings cap, you can’t suddenly have 20 years at 200k.

Future accruals of benefits in a pension, conceivably could be reduced. This would have to be agreed upon by the Union per the CBA.

This is highly unlikely as it wouldn’t be fair to that group relative to another group of pilots, which goes against the whole point of a union.

Nothing is risk free. There’s a risk of not getting a pension increase without ending it for new hires. There’s a risk of the pension being frozen or terminated regardless of what we decide for TA2.

kwri10s

Again, please give me a reference that says if the employee group agrees to lower their benefit it cannot be reduced. I agree the company cannot reduce your benefits. However, the split retirement concern is whether the majority of the pilots who don't have an A plan can lower the A plan benefits if those that still have it, in order to increase their cash balance or B fund later. In a TA years from now. Is it possible or not? Reference please.

tnkrdrvr

I don’t have the reference at my finger tips, but A plan benefits already earned are yours. A Plan benefits you could earn are open for “negotiation“. This isn’t really new. The legacy pensions that were “lost” to bankruptcy didn’t actually disappear. The beneficiaries retained what was already earned, but lost the ability to add on. It is true that some companies dumped already accrued benefits onto the PBGC which has a cap on benefits. However, even then, most of the plans were well enough funded to pay out most of what was earned up to the point PBGC assumed responsibility. Pensions are not a risk free place to park company paid money. However, when you measure it against the risks of a 401k the only significant plus for the 401k is the ability to pass unused money to your heirs.

Bill80

The anti cutback rule I quoted literally says you can’t have your accrued benefits reduced by an amendment to a plan. It doesn't matter if the union agreed to it or not, it’s an amendment. We’re talking about benefits protected by federal law. The union could only agree to reduce the accrual of FUTURE benefits. Which even then, that is unlikely, because it’s not fair to reduce one groups benefits for another.

At this point I don’t think you’re legitimately asking. You’re just being obtuse and demanding a reference from me, which I provided, that is not good enough for you.

Why don’t you reach out to an ERISA attorney, and ask your question? I suspect you’d refuse to believe them anyway because it conflicts with your view of reality.

We spent most of our negotiating capital in TA1 raising the pension. And you now think in the follow on contract we’re going to negotiate that away, as if that’s allowed by law?

If you wanted a pension increase, you got it. Take the win, man. It doesn’t happen without splitting the retirement. And your benefits are protected. Talk to an attorney before you spread fear, uncertainty, and doubt about retirement plans.

kwri10s

[size=0pt]Seriously READ YOUR OWN POSTED LINKS. Here "Section 411(d)(6) generally provides that the accrued benefit of a participant may not be decreased by an amendment to the plan." This is what we are discussing or questioning. Benefits that have NOT YET BEEN ACCRUED. Let's try a different very specific example. If TA1 had passed as advertised and all pilots with less than 5 choose the CBP. You had 5 years and 1 day and you chose to stay in the A plan. In 10 years, all the pilots with less than 15 YOS (greater than 50% of the voters) want to change the years of service credit to .5% per year, is that allowed? You will still have your 15 years and 1 day of credit at 2% per year, but your ongoing forward benefit (NOT YET ACCRUED) has been decreased by amendment. Amendments to the plan are allowed you just cannot lose accrued benefits. Can the employees voluntarily reduce their own retirement by amendment? It looks to me like they can, and that's the rub.

https://www.law.cornell.edu/cfr/text/26/1.411(d)-4

"(a)Reduction or elimination of section 411(d)(6) protected benefits—(1) In general. A plan is not permitted to be amended to eliminate or reduce a section 411(d)(6) protected benefit that has already accrued, except as provided in § 1.411(d)–3 or this section. This is generally the case even if such elimination or reduction is contingent upon the employee's consent. However, a plan may be amended to eliminate or reduce section 411(d)(6) protected benefits with respect to benefits not yet accrued as of the later of the amendment's adoption date or effective date without violating section 411(d)(6).[/size]

plzdontfireme

Amigo, you are wasting your time, unfortunately. He's here to sell TA1.0 retirement as a win, even though for most FedEx pilots it wasn't. He's trying to hold on to it at all costs. My guess from his username is that he is a service academy guy, class of 1980, and is getting realllll close to retirement and needs that TA1.1 very very soon.

sailingfun

Having been through a chapter 11 and losing a pension I can assure you that is the only way to reduce or eliminate a earned and accrued benefit. Even in chapter 11 it must be shown that the pension is grossly underfunded and but for that obligation the company can not reorganize. The Delta pension could have been saved with some changes to the lump sum option but pension law prohibited it. You have been quoted the law but for some reason can't grasp it. Think about it this way. Without the law protecting a earned and accrued benefit it would lose much of its worth. Any non union company could cancel a pension at any time. A union could decide to cut benefits to older workers to increase them for younger workers ect... It would also impact the PBGC.
How much clearer can this statement be from pension law?
"Employers are generally free to change retirement plan rules for the future as long as most benefits earned up to the date the plan is changed are protected."

BoilerUP

Maintaining the current contractual 2% FAE/$260k defined benefit, but adding a Flat Dollar Amount (FDA) option of $6500/YOS that increases $200/year to cover inflation would 1. provide an immediate 25% increase in pension to crewmembers retiring in the next decade while 2. not being costed nearly as high for future pension funding liability and 3. maintaining the existing FAE defined benefit as a baseline for the future, continuing diversified DB/DC retirement for current and future FDX pilots.

FDA would allow for a redistribution of TA1 retirement 'pie' toward a higher defined contribution and cash over cap, benefitting crewmembers of all ages and seniority.

The downside is a Flat Dollar Amount defined benefit would require negotiating capital to extend/increase in subsequent contract cycles.

Just one thought to avoid a divisive "either/or" battle on retirement structure.