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Special Executive Retirement Plan

Old 10-01-2015, 02:42 AM
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Originally Posted by FamilyATM View Post
I would like to suggest that interested crew members review the FedEx 2015 Proxy Statement starting on page 45. I believe you may find the answer to why the corporation is never going to increase the $260,000 cap. The corporation maintains only one plan for everyone covered by the "Pension Plan" which we refer to as our "A-Plan". Page 45 will explain: "FedEx maintains a tax-qualified, defined benefit pension plan called the FedEx Corporation Employees' Pension Plan (the “Pension Plan”)." So if they change the cap for us they change it for everyone and they are not going to do that. The executives have found a way to work around the $260,000 cap through the "Parity Plan". Again refer to the Proxy Statement page 45: "FedEx also maintains a supplemental, non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan (the “Parity Plan”). Benefits under the Parity Plan are general, unsecured obligations of FedEx." Which we would refer as a "B-Plan" but with cash over cap. You want to see improvement in retirement, this is the avenue to pursue. But to many refuse to even entertain the thought. The company has been telling us since 2003 but we just haven't been listening.
I believe FamilyATM is on the right track but these Executive Pensions would never be available for employees.

These Executive Retirement Plans have no benefit limits and are not funded. When reported the liability is lumped together with the normal pension plans so an over funded pension plan may appear underfunded. These non funded Executive plans have been used to show employees at numerous US Corporations reasons to reduce or eliminate their pensions. It sound like it in now working with FedEx pilots.
http://www.jec.senate.gov/archive/Do...s06oct2005.pdf
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Old 10-01-2015, 06:02 AM
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Originally Posted by FoxHunter View Post
I believe FamilyATM is on the right track but these Executive Pensions would never be available for employees.

These Executive Retirement Plans have no benefit limits and are not funded. When reported the liability is lumped together with the normal pension plans so an over funded pension plan may appear underfunded. These non funded Executive plans have been used to show employees at numerous US Corporations reasons to reduce or eliminate their pensions. It sound like it in now working with FedEx pilots.
http://www.jec.senate.gov/archive/Do...s06oct2005.pdf
Boiling down the 5 page paper FoxHunter linked (correct me where needed): when executives switch to non qualified plans (they are not on the same plan with the workers) the WSJ investigation showed there is a correlation with the company then ending or freezing DB plans as that elimination of liability is now counted as a positive towards earnings. And, a lot of executive compensation is tied to earnings and stock so it really boosts executive compensation when DB plans die.
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Old 10-01-2015, 07:22 AM
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Originally Posted by Raptor View Post
Boiling down the 5 page paper FoxHunter linked (correct me where needed): when executives switch to non qualified plans (they are not on the same plan with the workers) the WSJ investigation showed there is a correlation with the company then ending or freezing DB plans as that elimination of liability is now counted as a positive towards earnings. And, a lot of executive compensation is tied to earnings and stock so it really boosts executive compensation when DB plans die.
True, the pension issues are very complex and even FedEx hires outside experts to guide them. Experts like Mercer teach management how to play Three Card Monty with retirement plans according to the book "Retirement Heist". In the TA case the victims are the FedEx pilots, but most have failed to notice.
http://www.mercer.com/services/retirement.html
“SCAPEGOATS

Combined, executive legacy liabilities have grown to multi-billion-dollar obligations. General Electric owes an unknown number of executives a total of $5.9 billion in retirement, which amounts to 15 percent of the total pension liability for more than 500,000 workers and retirees. Currently, executive legacy liabilities account for 8 percent to as much as 100 percent of pension obligations at some of the largest Fortune 500 companies.
For accounting purposes, executive liabilities are no different from regular pensions and retiree health benefits. They’re debts, and can drag down earnings. There’s a critical difference, though. Unlike pensions (which employers fund) and 401(k)s (which employees fund), supplemental executive pension and savings plans are unfunded. This is due to taxes: If a company set up a pension fund for executives, it wouldn’t be allowed to deduct the money, and the assets wouldn’t grow tax-deferred.
With no pool of assets that are earning returns, which offset the annual interest cost on the debt, the IOUs for executives always have an interest cost, which can hit earnings hard. But guess which pensions get the blame?
Employers typically aggregate their regular pensions and executive pensions when reporting pension liabilities and “costs, so even if the only costly pensions are for the executives, the public doesn’t know. Nor do many analysts, whose reports overstate the amount of underfunding, because the pension obligations include executive pensions, which aren’t funded. The data, which comes from SEC filings, also includes pensions at companies like Nordstrom. Its pension tables indicate that it owes $102 million in pensions and is 100 percent underfunded. That’s because the cheery shoe clerks and store managers don’t have pensions. The pensions are only for “certain officers and select employees.”
But don’t expect employers to bemoan their spiraling executive obligations. In a letter to stockholders dated March 16, 2006, the chief executive of Unisys, Joseph McGrath, blamed “higher pension expense” for the loss the company had reported the previous year. This was partly true: Financial filings show that pension expenses reduced Unisys’s earnings by $104 million. “But he left out a critical detail: Most of the increase in cost was from a half-dozen supplemental pension and savings plans for top Unisys executives. The regular pension plan had actually been a benefit to the company. From 1995 to 2001, the company’s pension plans actually increased corporate earnings—by an average of $91 million a year. That was because the income on assets set aside for regular workers’ pensions more than covered all of Unisys’s pension expense, with the remainder flowing to the bottom line. In 2003, however, Unisys started to incur pension expenses, because of investment losses, falling rates, and because its executive pensions had become so costly that the gains produced by the regular pension plan were no longer enough to make up for it.
The day after McGrath’s report to shareholders, Unisys announced that it would freeze the regular employees’ pension plan to control “the level and volatility of retirement costs.” McGrath said that “we think these changes have struck the appropriate balance between controlling our pension costs and continuing to help our employees prepare for retirement.” On balance, it was good for Unisys: Freezing the regular pensions generated a quick gain of “$45 million and will add a total of about $700 million to earnings over ten years.
A variety of companies froze their pensions in 2006, taking advantage of low interest rates, which had inflated their obligations. Curtailing pensions at a time when the obligations are artificially high results in a larger drop in the obligation, and bigger gains.
Even when a company postpones the effective date of the freeze, it can reduce its obligation immediately. In early 2006, IBM announced that it would freeze the pensions of about 117,000 U.S. employees starting in 2008, citing pension costs, volatility, and unpredictability. Only by drilling into its pension filings would one notice that $134 million, or a quarter of its U.S. pension expense the prior year, resulted from pensions for several thousand of its highest-paid people. The rest of IBM’s U.S. pension expense, $381 million, related to pensions for 254,000 workers and retirees. The only U.S. pensions dragging down earnings are the executive pensions, which have continued to rise. The freeze didn’t hurt CEO Sam Palmisano’s retirement: He’ll receive at least $3.2 million a year in retirement.”

Excerpt From: Ellen E. Schultz. “Retirement Heist.” Portfolio/Penguin, 2011-09-15. iBooks.
This material may be protected by copyright.

Check out this book on the iBooks Store: https://itun.es/us/nuBWw.l
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Old 10-01-2015, 11:19 AM
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Just a little more of the story all FedEx pilots should know. Most employees do not have the protection of a Union. You pay the dues. Are you getting the protection you paid for?

Profit Center: HOW PENSION AND RETIREE
HEALTH PLANS BOOST EARNINGS


IN ACTUARIAL CIRCLES, there’s a joke that goes something like this: A CFO is interviewing candidates for a job as a benefits consultant. He calls the first one, an accountant, into his office and asks, “What’s two plus two?” The accountant says “Four.” The CFO sends him away, calls an actuary into the room, and asks, “What’s two plus two?” The actuary closes the door, pulls down the blinds, then leans in and whispers, “What do you want it to be?” He gets the job.
As much as this anecdote unfairly maligns the vast majority of actuarial professionals, it nonetheless sums up the view that some in the profession have toward their more aggressive brethren. Until the 1990s, benefits consulting firms generally handled standard pension tasks, like helping companies figure out how much to put into their pension plans, based on the ages and life expectancies of their employees, plus other factors. More closely aligned with the human resources department, they were one of the costs of operating a business, like accountants and the janitorial staff. But over the next two decades, large benefits consulting firms began aggressively marketing “themselves to the finance departments. Their pitch? They could help employers turn pension plans into profit centers.
Their primary tools included the new accounting rules* that employers implemented in 1987, which require employers to disclose the size of their pension obligations, as they do other kinds of debts, and show how these pension debts affect income each quarter. Though the new accounting standard, FAS 87, was intended to increase transparency—allowing shareholders to see the full liability on a company’s books—it was the beginning of the end for pensions. Before the new rules went into effect, employers got only one benefit from cutting pensions: The money that would someday have been paid to retirees would instead remain in the pension plan. Under the new accounting rules, employers got a second benefit when they cut pensions: Reducing the liability generated gains. These are paper gains, not cash, but when it comes to calculating earnings, the gains are treated the same as income from selling software or trucks. IBM’s pension cuts in 1999 reduced its pension obligation by $450 million, resulting in a pot of gains worth roughly $450 million that the company could add to income either right away “or over time. IBM added $200 million of these gains to its 1999 income.
The ability to convert pension benefits that would have been paid out to retirees over the coming decades into immediate profits for shareholders, today, changed the game: Pension plans weren’t just piggy banks to tap for cash. They were also cookie jars of potential earnings enhancements.
It works something like this: Let’s say a person earns $1,000, but he and his employer agree that he won’t be paid until next year. Under FAS 87, this IOU is a debt, which the employer records on his books: Deferred compensation, $1,000.
But what if the employer decides to cut the employee’s salary to $600 after the company has already recorded this debt on his books? Two things happen. The following year, the employer pays only $600—a cash savings of $400—and enjoys a secondary benefit: It has reduced its debt by $400. Under accounting rules, a forgiven debt is recorded as a gain, and boosts income.
To see how this plays out in the retirement heist, add a few zeros to the $400 and think of the deferred pay as a pension: You’re earning it today, “but it will be paid later. Add ten thousand colleagues and the resulting obligation is billions of dollars. Reducing that obligation by $400 million generates gains.

PENSION TEMPTATION

There’s nothing magical about these accounting rules. What made pension debt different from other kinds of debt was that it was easier to erase. A company that borrows $100 million to build a factory can’t later wave a wand and make the debt go away; it can restructure the debt, or shed it in bankruptcy, but otherwise it’s sticking around.
Pensions are different. Companies have a lot of leeway to change the benefits, and thus the size of the pension debt—but not all of it: A company can’t touch the retirees’ monthly checks. And it can’t take away amounts people have already earned. But it can slow the growth of their pensions or halt it altogether by freezing the plans or laying off workers. This explains why, even when a pension plan has plenty of money, a company will profit if it cuts benefits.

It didn’t take benefits consultants long to realize that every dollar a company had promised a retiree—for pensions, prescription drugs, dental coverage, life insurance, or death benefits—was the equivalent of a dollar that could potentially be added to a company’s income. Suddenly, the $1 trillion that companies owed three generations of employees and retirees for pensions and retiree health benefits became potential earnings enhancements. Cuts generate gains, which lift earnings, which help the stock price, which boosts the compensation of the executives whose pay is based on performance. What CFO could resist that?”

Excerpt From: Ellen E. Schultz. “Retirement Heist.” Portfolio/Penguin, 2011-09-15. iBooks.
This material may be protected by copyright.

Check out this book on the iBooks Store: https://itun.es/us/nuBWw.l

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Old 10-01-2015, 11:53 AM
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We may have the protection of a union...But, our union's leaders have told us that the company drew a line in the sand. Right after the boat sailed. A real deep one. And long too, I guess.
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Old 10-01-2015, 11:59 AM
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A line in the sand is made of ... sand.


What type of line is less permanent, less effective, less permeable a barrier?



.
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Old 10-01-2015, 12:11 PM
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Originally Posted by Busboy View Post
We may have the protection of a union...But, our union's leaders have told us that the company drew a line in the sand. Right after the boat sailed. A real deep one. And long too, I guess.
Sounds like some horses I know. If I draw a line across a trail or lay down a chalk line across it some horses refuse to cross it or jump over it like it was three feet high. Eventually, even with their small brain they realize they just have to step over that line to get to where you want to go. Where do FedEx pilots really want to go?
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Old 10-01-2015, 12:25 PM
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You guys did catch the, , right?
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Old 10-01-2015, 12:28 PM
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Originally Posted by Busboy;1983441

You guys did catch the, , right?

Yessir, even though it's miniaturized. My post was intended as a reinforcement, not a rebuttal.






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Old 10-01-2015, 12:29 PM
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Originally Posted by TonyC View Post
Yessir, even though it's miniaturized. My post was intended as a reinforcement, not a rebuttal.






.
Carryon...
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