Looking for clarification on what exactly the B fund is at the majors.

I know the A fund was the pension. What is the B fund?????

What is the C fund at UAL????

Just curious.

Thanks.

 

An A-Fund is a defined benefit plan, where you earn retirement benefits through longevity and salary. As the name says it pays a defined benefit at retirement until you die. Some defined benefit plans pay a reduced benefit in exchange for a survivor's benefit in case you die before your spouse.

A B-Fund is a defined contribution plan, where money is placed in a retirement account in your own name, usually as a percentage of your monthly pay. You can invest the money in 401K type accounts. The money is yours and when it runs out it runs out. It is always a part of your estate and will go to your heirs in full.

A C-Fund is the same as a B as far as I know, but there must be some difference.

 

At CAL, speaking strictly to the B-Fund.....It is managed by Charles Schwab (as is the 401K). Company paid funds are deposited monthly (at the Mid-Month Paycheck) into your B-Fund account. Think of it as 'matching' so to speak on the ground that the company will take the monthly pay-period and contribute 12.75% of your monthly pay (for that period) into your Charles Schwab B-Fund account.

IE: For the August 2010 pay period your made $10K. The company will contribute $1,275 (12.75% of $10K) to your B-Fund Account at Schwab on the mid-month pay check of the following month (aka - September 16th pay date).

This account (B-Fund) is completely separate from your 401K.....and the B-Fund contributions that the company makes does not play/count towards the $16.5K annual (under age 55)/ceiling limit that are imposed by the 401k account.

As stated above, the 401K and B-Fund are NOT company held like an A-Fund.....so there is some semblance of security in having these fund 'free-standing' out of the companies control so to speak.

Clear as mud??

 

Thanks everyone.

I thought I understood, but somebody mentioned I might have it incorrect.

 

alfa and SoCal-
Excellent explanations.

alwaysflying-
"A,B and C" funds are not legal terms. Its just contract shorthand.
The exact meaning varies from airline to airline.
Delta has a "C" fund. Its called DPSP. Its a 401k. Separate from the defined contribution "B" plan. At most companies this is the fund where the company "matches" the employee's contributions of pre-tax income up to a certain amount. Delta does not match, but instead just gives everyone a flat 2%. The employee can also contribute his own money up to the IRS limit or nothing at all if he so chooses.

We use a lot of jargon and acronyms in these threads that must make it hard for people new to the industry to follow. Maybe we need a separate thread for definitions and explanations of these terms and where newbies could ask questions. I nominate alfaromeo as moderator.