Death of the DB retirement (A plan)
09-04-2015, 06:20 AM
#11
Gets Weekends Off
Joined APC: May 2006
Posts: 1,804
Originally Posted by Sloper
I just quickly created a spreadsheet to show the value of an 18% B fund over a 30 year career. I have yet to triple check the math (disclaimer). I've tried to use conservative estimates.
Based on averaging the following incomes with no cap on contributions:
Years 1-4 $100k, years 5-8 $200k, years 9-12 $250k, years 13-16 $300k, years 16+ $350k.
Averaging a 6% return you would have about $3.6 million after 30 years.
8% return would leave you with $4.9 million
3% return would leave you with $2.3 million.
My goal is to just start a discussion on this subject. The writing is on the wall. My first goal would be an inflation adjusted A fund, but I just don't see it happening. We've already seen the company's first offer on this subject. I think we could find a way to transition to this type of plan that would be fair for EVERY pilot on the property.
In my own situation, I think the A fund will be worth around $70k/year in present day dollars when I hit 65. The small B fund increases in the TA do not come close to replacing the $60k/year in lost purchasing power and are the biggest reasons I will be voting no.
Based on averaging the following incomes with no cap on contributions:
Years 1-4 $100k, years 5-8 $200k, years 9-12 $250k, years 13-16 $300k, years 16+ $350k.
Averaging a 6% return you would have about $3.6 million after 30 years.
8% return would leave you with $4.9 million
3% return would leave you with $2.3 million.
My goal is to just start a discussion on this subject. The writing is on the wall. My first goal would be an inflation adjusted A fund, but I just don't see it happening. We've already seen the company's first offer on this subject. I think we could find a way to transition to this type of plan that would be fair for EVERY pilot on the property.
In my own situation, I think the A fund will be worth around $70k/year in present day dollars when I hit 65. The small B fund increases in the TA do not come close to replacing the $60k/year in lost purchasing power and are the biggest reasons I will be voting no.
Also I think your income projections are a bit high.
09-04-2015, 06:33 AM
#12
Gets Weekends Off
Joined APC: Aug 2015
Posts: 180
Originally Posted by Sloper
I just quickly created a spreadsheet to show the value of an 18% B fund over a 30 year career. I have yet to triple check the math (disclaimer). I've tried to use conservative estimates.
Based on averaging the following incomes with no cap on contributions:
Years 1-4 $100k, years 5-8 $200k, years 9-12 $250k, years 13-16 $300k, years 16+ $350k.
Averaging a 6% return you would have about $3.6 million after 30 years.
8% return would leave you with $4.9 million
3% return would leave you with $2.3 million.
My goal is to just start a discussion on this subject. The writing is on the wall. My first goal would be an inflation adjusted A fund, but I just don't see it happening. We've already seen the company's first offer on this subject. I think we could find a way to transition to this type of plan that would be fair for EVERY pilot on the property.
In my own situation, I think the A fund will be worth around $70k/year in present day dollars when I hit 65. The small B fund increases in the TA do not come close to replacing the $60k/year in lost purchasing power and are the biggest reasons I will be voting no.
Based on averaging the following incomes with no cap on contributions:
Years 1-4 $100k, years 5-8 $200k, years 9-12 $250k, years 13-16 $300k, years 16+ $350k.
Averaging a 6% return you would have about $3.6 million after 30 years.
8% return would leave you with $4.9 million
3% return would leave you with $2.3 million.
My goal is to just start a discussion on this subject. The writing is on the wall. My first goal would be an inflation adjusted A fund, but I just don't see it happening. We've already seen the company's first offer on this subject. I think we could find a way to transition to this type of plan that would be fair for EVERY pilot on the property.
In my own situation, I think the A fund will be worth around $70k/year in present day dollars when I hit 65. The small B fund increases in the TA do not come close to replacing the $60k/year in lost purchasing power and are the biggest reasons I will be voting no.
20 years X 130,000 = 2.6 mil
8% return = 2.45 mil...2.45 + 2.6 = 5.05 mil total value.
5% return = 1.52 mil...1.52 + 2.6 = 4.12 mil total value.
3% return = 1.13 mil...1.13 + 2.6 = 3.43 mil total value.
In any case, it's something we'll have to discuss going forward for sure. I prefer the balance of an A/B fund, but I understand where people would like an all B fund. I just think it would have to be much higher than 18% to make sense.
09-04-2015, 06:36 AM
#13
Line Holder
Joined APC: Nov 2006
Posts: 59
Not that the other sections of the contract are not important but I am glad to see so much attention being given to the retirement section. IF we live that long, it will have a significant affect on ALL of us for the rest of our lives. WE NEED TO GET THIS RIGHT, THIS TIME! Too many of us will retire under this contract and to change it down the road is not the answer and probably won't happen. I sincerely doubt that management has a retirement that erodes in value/purchasing power every year. Ask yourself if your contribution to the success of FEDEX after 25 or 30 years of being gone half a month warrants a retirement that loses purchasing power every year.
09-04-2015, 06:43 AM
#14
Gets Weekends Off
Joined APC: Jul 2008
Position: MD CA
Posts: 705
Originally Posted by Rum Runner
Good discussion! I think with 4200 of us, we'll have 4200 different opinions on what the retirement should be. Using your career assumptions above, retiring at 65 and living to 85, and using our proposed 2%A / 9%B, here's what I come up with.
20 years X 130,000 = 2.6 mil
8% return = 2.45 mil...2.45 + 2.6 = 5.05 mil total value.
5% return = 1.52 mil...1.52 + 2.6 = 4.12 mil total value.
3% return = 1.13 mil...1.13 + 2.6 = 3.43 mil total value.
In any case, it's something we'll have to discuss going forward for sure. I prefer the balance of an A/B fund, but I understand where people would like an all B fund. I just think it would have to be much higher than 18% to make sense.
20 years X 130,000 = 2.6 mil
8% return = 2.45 mil...2.45 + 2.6 = 5.05 mil total value.
5% return = 1.52 mil...1.52 + 2.6 = 4.12 mil total value.
3% return = 1.13 mil...1.13 + 2.6 = 3.43 mil total value.
In any case, it's something we'll have to discuss going forward for sure. I prefer the balance of an A/B fund, but I understand where people would like an all B fund. I just think it would have to be much higher than 18% to make sense.
An 18% B Plan is NOT funded to 18% for 80% of the workforce. There is a Gov't. Maximum Cap to the 401K and B-plan contributions. So the 18% is really a 11% B-Plan. This is why FDX wants it. They stop all contributions once the Gov't. limit of 52K is hit.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
Don't fall for the B-plan BS.
And a Future Gov't. action CAN reduce the Limits at any time. Think about it. The A-plan can not be changed by the gov't. The B-plan and 401K max. can be.
09-04-2015, 06:46 AM
#15
Gets Weekends Off
Joined APC: Aug 2015
Posts: 180
Originally Posted by Commando
An 18% B Plan is NOT funded to 18% for 80% of the workforce. There is a Gov't. Maximum Cap to the 401K and B-plan contributions. So the 18% is really a 11% B-Plan. This is why FDX wants it. They stop all contributions once the Gov't. limit of 52K is hit.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
Don't fall for the B-plan BS.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
Don't fall for the B-plan BS.
09-04-2015, 06:50 AM
#16
Line Holder
Joined APC: Sep 2015
Posts: 26
USMCFDX,
Everyone's income and time on property will be different, which is why I would hope we insist on something fair to everyone. I think an immediate switch to this type of plan (with a hard/soft freeze of A plan) would benefit those most that are at the beginning or end of their career. Those in the middle are the toughest to make whole. I just think it is something we should at least be able to talk about.
When the union completely threw out this type of switch, like many, I assumed there was going to be an increase in the A plan caps. I feel like the NC/MEC should have seen this "line in the sand" coming and at least started polling/discussing this issue. This TA is a wake up call for many, myself included.
The incomes that I picked were a complete wag, I will admit. I thought they were realistic given the TA and future seat progressions. Maybe I'm off, but I think a new hire today can expect to make $350K plus as a wide body Captain in 16 years. I know there are lots of assumptions here, but I'm at least in the ballpark.
The younger pilots are the ones who suffer most because inflation is killing the A plan value. I feel like the NC considers it a victory to keep new hires on the current retirement, when I think we completely screwed them.
Everyone's income and time on property will be different, which is why I would hope we insist on something fair to everyone. I think an immediate switch to this type of plan (with a hard/soft freeze of A plan) would benefit those most that are at the beginning or end of their career. Those in the middle are the toughest to make whole. I just think it is something we should at least be able to talk about.
When the union completely threw out this type of switch, like many, I assumed there was going to be an increase in the A plan caps. I feel like the NC/MEC should have seen this "line in the sand" coming and at least started polling/discussing this issue. This TA is a wake up call for many, myself included.
The incomes that I picked were a complete wag, I will admit. I thought they were realistic given the TA and future seat progressions. Maybe I'm off, but I think a new hire today can expect to make $350K plus as a wide body Captain in 16 years. I know there are lots of assumptions here, but I'm at least in the ballpark.
The younger pilots are the ones who suffer most because inflation is killing the A plan value. I feel like the NC considers it a victory to keep new hires on the current retirement, when I think we completely screwed them.
09-04-2015, 07:19 AM
#18
Line Holder
Joined APC: May 2015
Posts: 54
An 18% B Plan is NOT funded to 18% for 80% of the workforce. There is a Gov't. Maximum Cap to the 401K and B-plan contributions. So the 18% is really a 11% B-Plan. This is why FDX wants it. They stop all contributions once the Gov't. limit of 52K is hit.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
I agree. The 52k federal Highly Compensated Employee limit (actually 53k for 2015 I believe) creates a situation where if the A-plan doesn't include an increase or a COLA, then when the B-plan eventually hits the federal limit there is no way to avoid a decrease in the aggregate benefit going forward, even if inflation is something less than 3%. This is particularly true for junior guys looking 20+ years out. Under this TA it is clear that you will need to create another stream of income to maintain quality of life, be it via property rentals, the markets, or making up the difference by selling excess hotel soaps and pens.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
I agree. The 52k federal Highly Compensated Employee limit (actually 53k for 2015 I believe) creates a situation where if the A-plan doesn't include an increase or a COLA, then when the B-plan eventually hits the federal limit there is no way to avoid a decrease in the aggregate benefit going forward, even if inflation is something less than 3%. This is particularly true for junior guys looking 20+ years out. Under this TA it is clear that you will need to create another stream of income to maintain quality of life, be it via property rentals, the markets, or making up the difference by selling excess hotel soaps and pens.
09-04-2015, 07:28 AM
#19
Line Holder
Joined APC: Sep 2015
Posts: 26
Miso,
You seem to have a much deeper understanding of this subject. Like many I'm finally spending some time to increase my understanding of these issues. I've never met the cap and that hasn't been an issue yet (but hopefully it will be in the future).
I've heard "cash above cap" thrown around as a way around this issue. I'm assuming that means once IRS limits are hit, we would get the rest back (taxed) as pay.
Any thoughts on that type of solution?
You seem to have a much deeper understanding of this subject. Like many I'm finally spending some time to increase my understanding of these issues. I've never met the cap and that hasn't been an issue yet (but hopefully it will be in the future).
I've heard "cash above cap" thrown around as a way around this issue. I'm assuming that means once IRS limits are hit, we would get the rest back (taxed) as pay.
Any thoughts on that type of solution?
09-04-2015, 07:33 AM
#20
Line Holder
Joined APC: Jun 2014
Position: 11CA
Posts: 47
Originally Posted by Rum Runner
I agree 100%
Originally Posted by Commando
An 18% B Plan is NOT funded to 18% for 80% of the workforce. There is a Gov't. Maximum Cap to the 401K and B-plan contributions. So the 18% is really a 11% B-Plan. This is why FDX wants it. They stop all contributions once the Gov't. limit of 52K is hit.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
Don't fall for the B-plan BS.
And a Future Gov't. action CAN reduce the Limits at any time. Think about it. The A-plan can not be changed by the gov't. The B-plan and 401K max. can be.
The A-plan needs to be raised and the B-plan needs to be around 12%. To Maximize one's retirement.
Don't fall for the B-plan BS.
And a Future Gov't. action CAN reduce the Limits at any time. Think about it. The A-plan can not be changed by the gov't. The B-plan and 401K max. can be.
Don't forget our lovely government is broke and is looking for sources of revenue. It has already been proposed (several times) to lower the limit that can be contributed to a B plan. What good does a ??% B plan (pick a number: 18% 24%, 12%, etc.) if the government limits the contributions to $??,000 (pick a number $22,000, $15,000, etc.)?
I am convinced that if we had a 24% (any big number) FedEx would aggressively lobby to lower the limit to $12,000 (some small number). Then we are screwed by both the government and our employer!
Only if there is a work around (FedEx has to make up the difference between the government limit and our B plan contracted change) to the above issue, would I even begin to consider some sort of A plan phase out.
.
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