What should A-plan sunset be worth?
 

At a recent hub turn meeting a block rep stated we got zero credit for splitting and sunsetting of the A-plan in TA 1.0. As in the $3.8B that PM and ALPA touted didn't include ANY added money for pilots in exchange for releasing (in the future) the company from this subtantial obligation. Reason given was it's too hard to cost out the benefit to the company 10-15 years from now, when the a-plan would likely be fully phased out. If this was discussed in the sales pitch or on bookface, I missed it. IF we sunset the a-plan, it should be an enormous windfall for the pilots.

Windfall is a poor choice of words. Every cent of A plan value currently held and into the future has been either earned or negotiated. It is an asset (owned by the collective we) that must only be sold at what WE view as a fair price. We agree that this price is ENORMOUS. It is certainly not something that should be sunsetted for free because it's too difficult to do math.

"We're switching you to a new plan that will give you way more money and cost us a lot less"

Must be weird to live in a fairy tale.

Random Thoughts on Retirement
 

We had two retirement options with the failed TA. Option 1 improved upon the pension by 30% and left the DC of 9% capped unchanged. For anyone retiring in the next ten years, this is a no brainer. Best in class among all airlines.



Option 2, when viewed through the lens of history as well as contrasting with other existing retirement schemes, is not as cut and dry. Option 2 was a split between MBCBP and DC into the 401(k), 11% and 9%, respectively. Both of these contributions are capped at IRS Compensation Limits ($345,000 in 2024). In addition, the fiduciary would be FedEx with a target rate of 6.5%.



Before we look at other airlines, some questions are worth raising.

• The first is the value of the A-Plan in option 1 compared with the value of the MBCBP in Option 2. With a conservative investment portfolio in the MBCBP, is 11% capped contributions equivalent to a pension that is valued at $169K? Not from my perspective.
• The second question is allocation of company funds. Is it more beneficial to put a higher percentage of contributions into the MBCBP as opposed to a DC into your 401(k)? If the goal is to take advantage of tax advantaged accounts, would it not be better to have more going into the 401(k)? The company would still contribute 20% of until IRS limits. But if the higher contributions were to the 401(k), you would ultimately be able to max out your 401(k) with less of your personal dollars, resulting in more discretionary income. Not to mention the fact that returns in the MBCBP are likely more conservative for younger investors given the proposed portfolio mix.
• The third question highlights the fiduciary. I see no benefit to having FedEx serve as the fiduciary. It’s just that simple. Any fiduciary should be third party.

(Sidebar: I can’t remember this last highlight exactly, but the allowance of an annual transfer from the MBCBP to the 401(k) must also be available starting at 59 ½ ).



The next phase of this discussion concerns the existing retirement schemes and how they came to be. As a result of the turmoil in the early 2000’s, the pension plans for the legacy carriers were largely decimated and used to pay off bankruptcy debts. Seeing the large expenses associated with pensions, the legacies decided to choose non-diversified DC into the 401(k) leaving the brunt of risk onto the employee. In order to bridge the gap, the carriers also offered to throw profit sharing into the mix (also happens to be pensionable). Recently, all legacy carriers and SWA (Big 4) added the MBCBP as another offering for further diversification of their retirement achieved in negotiations (SWA has not been ratified yet). As it stands today, the Big 4 all have a mix of DC, MBCBP, and Profit Sharing. In addition, they all have cash over IRS contribution and compensation limits.



Below is a snapshot of the retirement offerings for the Big 4 in 2026:



DAL, AAL, and UAL

DC: 18% Cash over Cap

MBCBP: Excess Spillover Cash directed here

PS: 18% of Profit Sharing pensionable into 401(k)



SWA

DC: 18% Cash over Cap

MBCBP: Two Funding Mechanisms

#1 - Excess Spill Cash from NEC (Non-Elective Contribution) is directed here.

#2 - 2% of Income will be directly deposited in the MBCBP

Note: Contributions stop at IRS Limits and the remainder is paid out as cash.

PS: Not Pensionable.



The first item that should jump out at you is that every single carrier is paid cash over the IRS limits. Even now with our current 9% DC, every December we have to monitor our after tax contributions to make sure we don’t miss out on free money from the company into our DC. Meanwhile, the other carriers have been cash over cap for the better part of a decade. This becomes a major issue considering the climbing pay rates. Next year, the top WB CA rate is $447 for the legacies. If 1000 credit hours are earned, that means their companies will contribute $80,450. This does not include profit sharing which has averaged another 1.8% retirement contributions at Delta. That’s nearly 20% uncapped. If FedEx ALPA achieves that same pay rate with our current capped setup, that means a total contribution of $69,000. That’s 16.5% more for in tax advantaged retirement for the legacies. That difference will only be exacerbated anytime inflation is less than their 4% raises over the next three years.

We had the best retirement in 2015, bar none. BOTH of our retirement options should be the best going forward considering retirement is our primary focus. Handling it during this set of negotiations will ensure that we can focus on QOL the next time around.



The next point I’d like to highlight is Profit Sharing. Part of the price the companies were willing to pay for the loss of the pensions in bankruptcy was profit sharing. Delta’s was famously the most generous and now the legacies all share this plan. Not only is it pensionable, but it ultimately boosts the hourly rate. I’m not necessarily saying that we should aim for profit sharing, but it is a value that came by way of those airlines losing their pensions to make up for that loss. We are sunsetting our pensions by only valuing it at a capped 11%. That is insanely low for the value it brings to the company by getting rid of it.


To bring all this minutiae to a close, I would say that the market average right now is:

DC: 20% Cash Over Cap (when you include pensionable profit sharing)

MBCBP: Spillover cash

Profit Sharing: Yes



SWA added a nice nice automatic 2% into the MBCBP. Something to consider.



To accept anything less is to fall behind our peers and undervalue the sunsetting of our Traditional A-Plan.

I would like to nominate NotMrNiceGuy for a seat on the negotiating committee.

Wonderful post.

Well written and well thought out.

We have some very smart people in our crew force, and even though the "SM" people seem to think otherwise, there are even some smarter than they.

work it backwards
 

Long time stalker... first time poster:

Very good analysis of what the current contracts can offer... but I encourage everyone to work backwards from an end date, assuming we are all lucky enough to reach that without an illness.

disclaimer: I'm in year 24.... I was a no vote as I do not want to see the pension sunsetted w/o an option.

The calculations above look great but it is all predicated on a healthy career with max earnings and significant hour accumulation... where a pension is based on a high five and yos

I estimate I will retire with around 2.5MM in my 401k(maxing it most yrs) with slightly above conservative returns/under s&p avgs. I believe I will be able to take 10k per month out plus a full pension of 10.4k(hopefully more in TA 2.0) for a total of 20.4k pretax w/o social security.... or about 245k/yr income w/o decreasing my 401k balance. I bought a term life policy to cover my wife if I die early or I may also take a survivor benefit w/ less income generation tbd.

I ran some finance calc estimations ... having zero and having the company and yourself add a total of 7k per month for 25yrs at a conservative but reasonable 8% ... you will have 6.14MM in your account. To generate an income, if you withdraw 4% per year, you will have 246k per yr income pretax. Very similar income... except, yes it's your money if you die... but, you have to work(fly) and have a healthy career. You also can't spend large chunks because you need the balance for income generation.

Some different perspective as I get closer to the endgame. Be nice, first time poster here 🤣

Pensionable?
 

Sorry to be "slightly" off topic here, but can someone explain to me what "pensionable" means? Or at least what the implications are when it comes to earnings that are pensionable vs. non-pensionable? I've looked at the MW definition of the term and it doesn't really give insight into what it means as far as benefits like the MBCBP are concerned. TIA.

Per diem is non pensionable, and ALPA does not collect dues from it, which is one reason why it does not increase to US government per diem rates, as it should.

Back when we could claim "lost per diem" on our taxes, mine was over 10K per year. I am sure it is twice that now. The company writes this off as a business expense and we should get full per diem, indexed by the government rates, every year. Oh, and that money is TAX FREE TO US.

Just another one of many things wrong with our contract.

I’m sure there’s a more complicated, specific definition, but I’ll try to simplify it. It’s basically any form of income that can earn credit for direct contributions by the company.

For example, take the profit sharing at SWA and DAL for example. Let’s say that both companies have pilots that earn $20,000 in PS. Since PS is pensionable at DAL, their pilots will earn 18% DC in 2026. That means that their PS will credit another $3,600 (20,000 X 0.18) into the 401(k). OTOH, SWA PS is not pensionable, so they do not earn any extra credit to the 401(k).

As another poster pointed out, per diem is not pensionable and FDX doesn’t not include it in per diem DC calculations.

Thats my understanding of it anyway. Maybe a DAL pilot can chime in.

401k and B fund contributions are seperate contributions and have different limitations. B fund is percentage( delta 18%, Fedex 9% x pensionable earnings capped by the ESRA, IRS limits funded by the company. 401k Is capped dependent on age and is funded by the pilot and possibly partialy funded by the company(fedex match first $500).

On the Fedex Fidelity account statement it only shows the combined 401/B fund but you can ask your advisor and they can give you the break down of the amount in both accounts.Vanguard use to show it. I forget the reason why it show combined accounts.

The 401k is not predicated on having a healthy career. However, it does require the company to double-down on the employer retirement contribution when a pilot goes out on LTD to make them "whole" (Ex: 17% goes to 34%). That is how they are successfully utilized at other airlines.