DLax85

I think Tuck is correct here - the DB plan didn't go from 6% to 7% until 2007

However, that does not change the fact (opinion??) that the 1% + 1% DB pumps in this TA are clearly insufficient given their timing and length of the contract

If we are going to accept the story that the new accounting methods and assumed internal rates of return are making the A fund virtually impossible to fund above the $260K level , then we still need to see a much more substantial, and much earlier, B fund bump

Such a fix, with a cash over cap clause, is arguably the biggest stumbling block in this TA --- and it's a pure $$$ issue

This, along with slightly bigger pay raises and a fairer signing bonus, can be renegotiated very quickly if the TA is voted down

We shouldn't seek these improvements outside of Section 6, because it clearly reduces and delays our leverage

RedeyeAV8r

The $260K Cap isn't really The deal breaker. All that means is you can't make more than $260K from your pension.The issue is the Multiplier.

What if we changed the DB multiplier to 2.2% or 2.5% or 2.8% a year. A 2.2 yields 55% and 2.5% multiplier would yield 63% of 260K. A 2.8% would yield 70% of 260K. 143,000K, or 163.500 or 182K /yr pension would be an improvement without changing any of the caps.

ALPA and the Company raised the multiplier in 2006 to 2.2% for a Segregated group of Membership to make up for the loss of years for their 1% B plan bump which shows that this can be done. It should have been done in 2011. Yes, I know it is expensive, but it can be done.

TonyC

I wonder how Alaska Airlines and Hawaiian Airlines can afford to keep their Defined Benefit plans. They must be more financially stable than FedEx.






.

The Walrus

Aren't they both frozen?

RedeyeAV8r

I believe HAL's is frozen. Hawaiian was also in bankruptcy or close to it.

ALA's was frozen to everyone hired after 2009 or 2010? I thin.
I believe the ALA Pilots now have a 3 tiered plan, they have Pilots with a Full and growing Pension, they have Pilots with a Frozen Pension and they have Pilots with Zero Pension or DC only.

Both of the above carriers, like the rest of the PAX carriers, were losing tons of money in the early 2000's. The Pilots helped out with concessions.

FedEx on OTOH is and was making money every year. We did have a few years where the profit margin was thinner circa 2008-10, but we have always been in the Black.

This is why I do not like to compare our contract to theirs, with the exception of when theirs is better!

FoxHunter

Yes, the $260,000 should be the deal breaker. That was the IRS limit in 1998 when the max DB benefit was $130,000. The IRS max DB benefit in 2015 is $210,000 so the earning limit should be $420,000. The $260,000 limit limits only Pilot's pensions. Unlike all other airlines there is NO Pilot Pension Plan only the old FedEx Employee Retirement Plan that existed pre Union. Every ramper, station manager, and the rest are still in that plan if they chose that option. Every higher paid Executive is in the Parity Plan with no limits and I believe I read their pension is based on the best three years. If they earn $2,000,000 in pay and incentives their pension is $1,000,000 a year at age 60 if they have 25 years.

RedeyeAV8r

Foxhunter:

My point was we were told the Company wouldn't raise the $260 Cap i.e it was their Line in the sand.

My point was, in 2006 , the Contract I believe you retired under, Raised the Mulitiplier for some, I assume you got a piece and good for you.

While I would love to see the CAP raised to $265 the Current limit or even indexed up to 280.

But just keeping things simple and since the precident has already been set to increase the mulitplier.

Would you rather retire with a 50% (2%) mulitplier of a $265,000 IRS CAP

Or retire under a 60% (2.21% mulitplier of our current $260,000?

There are many ways to skin a cat.
I am just using what MGT and ALPA have already done in the past.

This conversation could be a moot point in 13 days.

GetRealDude

Once again, the PSP model has left the building years ago. The parity plan shows where the company places value - executives placed on a pedestal and shareholders in the FIRST tier. The frontline employees are second and third tier. That model only creates animosity and disdain followed by a lack of motivation on the job. Issues with recruitment soon follow.

Work your arse off at FedEx ... the execs and shareholders benefit. We get a BZ and empty communications thanking us for a stellar annual and peak performance. No thanks - Keep the BZs and thank you letters.

Now that we know the arena and game rules in which we play, then I can work with that. Show me the money. TA1 ain't gonna get it done.

Going the extra mile for the purple and orange team is a lost cause versus 20 years ago. Just ask ANY non-executive employee across the globe. Maintenance, rampers, sorters, admin personnel, drivers, and pilots see massive corporate success with nothing more than a trickle of financial gain. Pathetic and shameful.

The company has an opportunity to do the right thing via their employees. Reward them all with a portion of the success they've generated. The result is significant productivity gains. Without it, people get jaded and recruitment falters.

But that doesn't fit the corporate greed model. FS and the top executives have left the core of the company behind. I acknowledge this job is a result of Mr. Smith's brilliance and dogged determination to grow his vision.

Now it's just a job and just a paycheck. Pretty sad narrative to be honest. There is no esprit de corps here. It's just a paycheck. Apparently we're supposed to believe there are no more funds available. YGTBSM.

FoxHunter

My understanding is for a defined benefit pension plan the max benefit is $210,000. To get to that limit with 25 YOS you get 50% of FAE which would require a CAP of $420,000. When the $260,000 CAP was put in in 1998 the DB benefit limit was $130,000. Management has the Parity Plan which has no limits. It is not funded at all, but it pays management any money due over the CAP.
Overview of Pension Plans for FedEx (FDX)

Overview of Pension Plans

FedEx maintains a tax-qualified, defined benefit pension plan called the FedEx Corporation Employees’ Pension Plan (the “Pension Plan”). In 2006, the maximum compensation limit under a tax-qualified pension plan is $220,000. The Internal Revenue Code also limits the maximum annual benefits that may be accrued under a tax-qualified, defined benefit pension plan. In order to provide 100% of the benefits that would otherwise be denied certain management-level participants in the Pension Plan due to these limitations, 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.

Effective May 31, 2003, FedEx amended the Pension Plan and the Parity Plan to add a cash balance feature, which is called the Portable Pension Account. Eligible employees as of May 31, 2003 had the option to make a one-time election to accrue future pension benefits under either the cash balance formula or the traditional pension benefit formula. In either case, employees retained all benefits previously accrued under the traditional pension benefit formula and will continue to receive the benefit of future compensation increases on benefits accrued as of May 31, 2003. All eligible employees hired after May 31, 2003 are only eligible to participate in the Portable Pension Account feature.