What would you have to contribute yearly at a 7% ROR for 25 years to get an annuity worth $130 per year for 15 years?

We currently have an 8% B fund.

So how much per year would you have to make to so that 9% equalled that yearly contribution?

If you do get cash over cap, how much would you need to cover the taxes on that cash over cap?

I'm really thinking about new hires. Again, the variables are endless here. How old are you when you got hired? How long will you live? What are market returns? Will Fedex be here when you retire? Bankruptcy? Good to have the conversation though...

Any offers they (you mean the company right?) want to talk about, will be in the company's best interest, not in ours. Do you really think otherwise???Negotiations are over.

I honestly do understand why anybody would entertain the idea of giving up a pension, especially during great times for the company. It shouldn't even be a thought and giving a listening ear to any thought of it could send a wrong message. Six years away from negotiation and already people are talking about it. And to those who think that not getting PBS and keeping your retirement is a gain you're sadly mistaken. How can you gain what you already had by giving up something else.

You would have to average $290k per year at a 7% market return for a 25 year career for a 17% B fund to equal our current plans. That doesn't even consider any tax implications for cash over cap.

How many years do you have to work until you make $290K? Would you ever be able to catch up for the years you weren't even close to $290K

Well, maybe if we get PBS and the company schedules all of us for min days off, you could get there faster. That's an incentive.:roll eyes:

FWIW, the vacation change on vto's is only a request to burn more vacation than scheduled. It will only be approved if they don't need you. Good luck with that.

Negotiations never end. Don't kid yourself. We should have handled this with this contract but we folded. It's not the last you'll hear about retirement, but you are right, we lost our chance to use any leverage we might have had...

So, if you are 30 and just hired, what choice would you make? Take the 17% or gamble that your 130k (less survivor benefit if you go that route) will be there in 30-35 years? Again, it'd only consider cash over cap. I think 290k is a very low figure. Not sure if 290k is an accurate estimate, but even getting 3% raises, I'd say $290k average for a new hire is beyond attainable.

I'm not in favor of giving a damn thing up. But, in our very noble attempt to not screw over new hires, we may have done just that. I've asked several new hires what they'd rather have, and they all said a higher B fund. That's no scientific study, as I'm sure a great many would prefer the A fund. Don't get me wrong, I totally agreed that we keep them on the plan. That assumed that we'd get a significant A fund bump though. If I were a 30 year old new hire, I'd take the larger B fund. If I was a 50 year old new hire, I'd probably want the A fund. That's just me, I'm sure others in the exact same situation would choose the opposite. Many of us have lost a pension already, so we are a little gun shy.

30 years is a lot of time in a business cycle. We all know of hundreds of businesses that seemed strong at one time but failed later. Fedex isn't immune to bankruptcy or failure.

In my view, ANY negotiating outside of Section 6, without even considering the phenomenal leverage we had (and were mostly excersising), would be FOOLISH = less golfing, more flying.

Thread drifting out of the stadium. Oh well ... carry on.

Check annuity calculators and quicken.

To have the same payout as the max A fund requires a net present value of over $2M. Can you save & invest that well?

A 35 year old pilot would have to contribute an average of $43000 annually thru age 65 to reach the sum that would enable him to have an annual payout equivalent to the A fund cap. (max qualified pensionable earnings now $265 & 25 yos- Doesn't matter if your FAE is $3XX the cap is $265k now. the retirement office stated that the IRS has historically raised the cap about $5k every 3 years- ). This $43k annual contribution assumes earning 6% ROI each and every year, 2% inflation. The pilot assumes ALL risk factors, market, portfolio, systemic, inflation etc. So a bear market just prior to retirement could be devastating, a conservative portfolio would limit the necessary ROI- The Schwab financial planner that ALPA is coordinating with used 5.2% ROI for my plan, and I'm pretty heavy in equities.

To accumulate this necessary sum would require a B fund of ~22%. However the IRS caps limit how much the company can contribute- so once he is a wide body capt he will reach the IRS limit before the end of the year, so even if he did have a contractual 22% B fund he would not be able to get the full amount into his tax sheltered 401-Bfund (unless he had cash over cap- but then it would be taxable and still couldn't go in the 401k anyway- an post tax ira possibly).

IMHO, there is no realistic way that we can replace the value of our contractual DB plan by a DC plan. The $$ required+ IRS caps/restrictions + all risk is on the pilot.

There are only two ways the DB A fund can go away. 1) Distress termination approved by a Federal judge and the PBGC iaw Federal ERISA laws in a bankruptcy court. 2) we give it away in contractual collective bargaining negotiations. The federal ERISA laws mandate contribution levels based on the number of annuitants, actuarial factors and more. The company cannot just take it, nor arbitrarily decide not to fund it. Additionally executive management's DB plan is with ours, so they have a collective interest in resourcing it and staying in compliance with the fiduciary responsibilities.

There is a valid point that the IRS caps limit the future DB payouts value wrt inflation. But as long as the IRS continues with increasing the max pensionable earnings cap $5k every 3 years (~2-3%) that will provide some downside protection. (i.e. $265k in 2016, 270 in 2019...)

The math is nice but really all you need to ask yourself is: Would the company prefer to drop the A-plan and go with an increased B-plan?
You then have your answer of what is best for the employee.

+1,000,000

Therefore, if they tried to freeze and get rid of it, and we fought that off successfully, that would be a.......

.... a miserable failure.

Not increasing our A fund by either an improved multiplier or FAE number was a complete fail. This was quite possibly the best opportunity we will ever have to improve this area. Hundreds of pilots short. Peak. And we are patting ourselves on the back for keeping a 1998 benefit.

That, again, is why we fail. It's basic negotiations. They will alway "come after" what we really think is important. This time it was retirement and PBS. Next time they'll probably go for vacation. They know their chances of getting concessions in these areas are next to impossible, but people like you will think we scored by just keeping them..

It would be fun to watching you purchase a car....

Sure the company would prefer a B fund. It's very difficult to forecast costs in regards to the AFund. I doubt they are concerned so much about those of us on property, but what about the next generation? It's not impossible to believe that our life expectancy will greatly improve over the next 30-50 years. Actuarial tables do a pretty decent forecast, but it's hard to go that far in the future. And you'll need to when you hire a thirty year old tomorrow. Will he live to 80 or 100?

Some people think the best way to effectively kill off Social Security is by eliminating cost of living adjustments. We just did that to ourselves. 130k today is a pretty decent amount of money. What will it be worth in 35 years when the 30 year old retires (the retirement age will probably go away by then)?

There was a time when we thought companies like GM would always rule the world. I doubt people thought they'd lose pensions years ago. A funds are great if they are there when you retire. Renewing money is a great thing. Ask all the people that are receiving checks from the PBGC which plan was best for them? You'd get differing responses, but if you were getting 130k in retirement, and now getting 30k, you may have opted for the B fund. B funds can swing wildly with the stock market depending on your investment choices. You can assume a nominal rate of return, but it's really just that, an assumption.

I'm looking at retiring in about 10 years, so my outlook isn't as long term. But if planned retirement date was 2050, I have to say I'd take the cash. You'll only know which choice was best when you die.

Aaaaand you let me know when Delta gets another TA. They got the company right where they want em!

Big deal. They wait a year or two. We waited a long time here for this POS. With our pilot shortage, I think it wouldn't have been too long. Of course we'll never know. It's not like we would be on strike now, we'd just work under our current contract...

Meanwhile, Delta pilots are cashing their profit sharing checks. Ones that were going to be greatly diminished with their new contract. So were they idiots for voting it down?

So, if Delta pilots voted a TA down which diminished their profit sharing, and in the next TA they get to keep the profit sharing they have now, they've lost, right?

Do you want to bet if Delta pilots' profit sharing formula gets better, gets worse, or stays the same in the next TA presented to the membership?

Ok, let's put it this way. They had a TA, they turned it down. If they would have approved said TA, their profit sharing would be less.

I never said every part of our contract had to be improved. Much of it wasn't. We still get 6 hours of sick leave per month. We still get the same vacation days. I could go on and on with this, but much of our contract is exactly the same. We definitely lost by capitulating on retirement.

I'll bet you this. Their pay will go up significantly. I can't tell you about every piece of their contract including profit sharing.

Hopefully, we'll all live a long time. Hopefully, we'll collect many years of retirement. We left a very significant part of our contract virtually untouched. Again, the B fund increase will net me 40k over the next 10 years, assuming I hit 265k every year. Bumping FAE up to 320k would add 30k/year assuming I could average 320k. Think I'd take the A fund improvement.

I read the lawsuit from the guys suing ALPA. I'm not going to remotely consider suing our own organization, but they do make some very good points.

The math is imperative. An understanding of the ERISA laws, is helpful to balance the "conventional wisdom" that corporate America has so successfully espoused in getting rid of DB plans.

Of course the company would prefer to "drop" the DB plan. Fortunately, the ERISA laws prohibit them from doing so, and unless ALPA "gives" it away, it is not going to happen outside of a distress termination in bankruptcy pending approval by both a Federal judge & the PBGC.

If the company provided 25% I personally might reconsider my position on the issue if I was in my 30's. You will need that much to even have a "chance" of getting close to the current DB plan payout. That assumes that you have the skill, execution ability and fortitude in managing ALL risk factors, and have positioned your >$2M portfolio to withstand a bear market just prior to retirement.

We now have a 3 legged stool of retirement, DB, DC, and Soc Sec. I had the ALPA provided Schwab planner provide an analysis and retirement plan. The DB pension annuity is a KEY and foundational component of retirement (even if it hasn't been indexed for inflation contractually- the IRS is increasing the max qualified pensionable earnings $5k every 3 years). If you were down to just two- DC and SS, and had a bear market like 2009 with 3-4 years to retire, how healthy would your portfolio be??? If you had an asset allocation to target up to 6% ROI (and would need to keep equities even after retirement to sustain the growth while withdrawal) you would be heavy in equities. Equity heavy portfolios lost 35-45% in the bear market of 2008/9. That would set that $2M back so significantly that there would be some hard decisions (without a DB plan to cover non-discretionary spending). That is the market risk you take with an "all-in" DC only plan.

ERISA laws mandate funding minimums to cover obligations smoothed over time periods. So you -the gear yanking pilot do not have to sweat or manage market, portfolio or systemic risk. Your bet is that the company will remain profitable (out of BK court), and your representative collective bargaining agent would not be foolish enough to give away the DB "leg" of the 3 legged stool of retirement support. It matters little of what the company "wants", as long as there are contractual obligations, profits, and stability in the ERISA law.

Again IMHO, the company has been adroit financial managers thru the biggest economic downturn since the great depression, as well as previous recessions. Past history is no guarantee of future results, but that is how most bet.

Sure we would have all taken an increase in our A plan. The company wasn't going to give it. It was their line in the sand. Believe it or not, biatch about it all you want. Guys who thought the A fund retirement was going to be improved were delusional. If you honestly thought that I can imagine why you won't let it go. I personally was shocked that we got an increase (however small) in the B fund.

This are simply my opinions, and I was a no vote, but it certainly wasn't because of the lack of improvements in the A fund. That wasn't going to happen, and if anything the union NC probably should have tempered those expectations because that was the source of a lot of angst over the new contract. Live and learn.

The old "line in the sand". Is that all it takes? We should have drawn one too. Not just over hard fought items we wanted to keep.. How about a 20% raise? Ruth's Chris catering?

Next time they should use that early.

Well, if they truly had a line in the sand, how about putting it somewhere else? Waiting 9+ years for a 3% raise??

I hear ya. I voted no. Not real pleased with the contract but it passed. And yes, that is all it takes. Just like ours was PBS. It takes 2 sides to agree, I am of the opinion they would never have agreed. I will spell it out for you now that its over. $130K in todays or 2050 dollars is a lot of money, indexed or not. It leads the industry, indexed or not. They froze the "A plan" for the rest of the company in 2008 (or so) and there is no way they could justify not only keeping ours, but increasing it as well.

Could they afford to increase it? Financially, probably. Company politics and appearances, no way. So I will say it again, it was never going to happen, no matter what we gave up. They had to find some other vessel to use to sweeten the pot and I wish they had sweetened it more than they did, but we got what we were willing to stand up for, and it wasn't that much.

Its on the pilot group as much as the NC and the MEC, if not more so.

Once the court case is won, you'll be happy.

Again, if Delta tried to get rid of or significantly diminish their profit sharing and the Delta pilots fought that off successfully, that would be a...miserable failure?

Only the lawyers will be happy.

Oh good lord... If the price is right elsewhere, I'm sure they'd give up part of it. Ask them...

To my knowledge, while the hourly compensation was significantly increased, they lost badly in this area. The pilots didn't see the value in the TA.

As I tried to tell you before, we didn't improve many areas of our contract. So what? Were these real cornerstone items? Retirement was, remember that? Probably not...

Our retirement is an extremely important piece of our contract. Huge. I hope to live a long life after Fedex. While it's easy to overlook the future, it will be there before you know it.

We got 3% raises. After 9 years. In an outstanding negotiating environment. Retirement was an end game negotiating topic and we let them go with "it's our line in the sand". We also ran out of money. I'd say that's a fail...

Apparently Southwest came back to SWAPA with less money and PBS on their second go round. Things that make you go hmmmmm. Will be very interesting to see how that plays out.

If you think that's winning, then we were winning before we even saw a TA. Outside of bankruptcy, nobody can take away our "A"-Plan ... unless we vote for it.


Do you also teach your sons the best way to not lose is to not play the game? Perfect record: Zero losses (and zero wins)



By the same logic, The Company should begin bargaining next time around with a demand that we take a 30% pay cut. When we settle for only a 10% pay cut, we can credit ourselves with a huge victory. :rolleyes:




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I teach my kids not to let the perfect be the enemy of the good.
I teach my kids the time value of money.
I teach my kids to never ever rely on a pension, because I watched my uncle lose his at UAL.
I teach my kids that when you negotiate for four years, it's not realistic to go back to the table and say, "We changed our minds, we want more, and this time we REALLY mean it."

I don't think Delta should have signed their TA. And not because of the loss of profit sharing. Because of the access Flight Ops was given to their medical records.

But I do think their timeline is relevant. If we had turned down our TA we'd still be waiting, just like them. And with all this strife and litigation with our MEC, I wouldn't at all have been surprised if it had been three years or more to get another TA.

Go back and look at your retirement summary from FDX that you got last fall. The company had already funded for what they forcast would cost for the increased A fund. They were 4 Billion over funded for the current retirement obligation, since we did not increase the retirement. It will be interesting to see where that 4 B moves to now that it is not needed to fund retirements. Maybe it will counter balance the 4.8 Billion cash purchase price they agreed to pay for TNT.

You really believe that? With us being undermanned by close to 1,000 pilots? (Number from instructors in AOTC).

It's more than just a catch phrase. There's math involved. Try these numbers on for size. A 55-year-old pilot with 20 years of service plans to retire on his 60th birthday and live to 90 with a spouse living to 90 and a month. (She'll die of a broken heart.) How much of a pay raise is required, with its time value, to make up for the failure to raise the FAE cap to twice the IRS limit (as it was originally intended to be)?

How much can he make up by changing his mind and working (and delaying your rise in seniority) until his 65th birthday?


I was making enough money per month BEFORE we ratified the TA. Higher pay rates wasn't even in the Top 5 priorities most pilots expressed in polls and surveys. The paychecks that concern me the most are the ones that start upon retirement. I'm going to need a lot more time value on my 10% to make a dent in the damage done in our "A" plan by abandoning a Top 3 goal.

But you won't refuse your pension checks, right?






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No.

But I'm not planning on them being there either.

The funding for the current employees was never the issue. IMHO the issue was the funding for the 1000 new hires with a projected retirement beyond 2040. Perhaps there was a reason hiring was delayed and the company was willing to outsource until after the contract was settled.

Why would that ever be an issue? You know, time value of money and all that jazz.





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I noticed you avoided the "time value of money" math problem.



Is it just a mantra for how short can I sell myself, or can you attach a real dollar value?






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Someone has to put up the money upfront to get the time value of it. And if the cap were unlimited it is a lot more up front. Precisely the point. Thanks.

The benefit is not, and never has been unlimited. It's based on earnings, which is based on work performed. Nothing is at risk "up front." The employee performs a unit of work, a proportion is set aside to fund the "A" Plan, and a proportion is directed to the "B" Plan. When it's the "B" Plan, The Company has no choice but to incur the entire expense immediately and repeatedly. In the case of an "A" plan, the money still belongs to The Company and the obligation can be spread over time.

Why do people believe it's too expensive for The Company to save the money, but the pilot will have no trouble?






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