DAL and UAL guys: Was your A plan "bought"?
 

Question for DAL and UAL folks who had their A-plan's stolen:

Do you feel that your A-plan was purchased from you? Yes or no-

Thanx!

From my perspective at DAL... No, it was stolen. We did get some claim and note money. Officially, that was a token in exchange for the massive pay cuts we took, not for loss of retirement. But most of it went tax free into our 401k and DC Plans. So, in effect, it was a boost to our "new" retirement. For me personally, I'll have to fly to age 65 to do it... but I think my 401k and DC Plan will end up providing an income in retirement comparable to what I would have had with the pension. (No guarantees, of course.) Would have been nice to have both... and to be able to retire at 60 as originally planned. But the good news is that I should still have a decent retirement.

Thanks for the feedback on what must have been emotionally devastating. I would be curious as to an estimate of the percentage of people who contributed to 401Ks and amounts while the pension was in place. Thx, 88.

I have no idea what percentage of people contributed to the 401k while we still had the pension. For me personally, I never contributed to it and I never paid much attention to it. I used a financial advisor to (mis)manage it for me. I don't remember the percentage, but when the tech bubble burst I lost something like almost half of it. I remember thinking it was a bummer but not being particularly upset about it because the pension was going to be my main retirement.

When we lost the pension, that was a MAJOR shock to someone like myself who was halfway through my career and (in hind sight) foolishly counting on it. I had to get real serious about my 401k and the DC Plan. I guess the silver lining is that the money now belongs to me... no one can take it away. And it's forced me to learn about investing and figure out a good, solid plan for my retirement.

The A-Plan at Delta was a victim of poor government regulation and a poorly designed lump sum option (both the pilots and management's fault there). Airlines typically make hay while the economy is good and stocks are up. They were prevented from building up the A-Plan during the good times by IRS regulations for tax free plans. When the economy tanked, the airline lost money at the same time as the assets in the plan lost value. 9/11 only magnified that problem.

As the company sank further and further in 2003-2005, we had a number of pilots retire and take the 50% lump sum. This further depleted the plan and forced the administrators to basically sell assets low in the market. The plan was poorly designed as there were no circuit breakers build into the lump sum option, basically, lump sums could be withdrawn until the plan went critical. As the company hit bankruptcy the DAL plan was so depleted that it went into liquidity shortfall, meaning they didn't have enough cash to continue making payments and paying lump sums.

Every airline that went into bankruptcy required an exit loan to have enough working capital to operate out of the protection of the courts. There was no sane investor or bank that would lend an airline that kind of money knowing that it could all get sucked into the pilot's pension, leaving the company in the same condition that forced bankruptcy. That was why the DAL MEC concluded early on that the pension was lost, and our only hope was to negotiate everything together and get the best returns possible to make up for the pension loss.

As of termination, the active pilots at Delta lost about $900 million in value from the qualified pension plan. We recovered about $450 million of that loss from the PBGC in the form of PC-5 payments (basically a share of the PBGC's bankruptcy payments). We also were given $650 million in cash and and a $2 billion bankruptcy claim that netted us about $1.3 billion after we sold it. The claim and note were also intended to cover other bankruptcy losses including pay cuts, sick leave changes, etc, but in the end we recovered more money than the we lost in the pension termination.

I don't know what you mean by purchased or stolen, it was what it was. Sort of like losing both engines after takeoff, you can cry about your fate or you can look for a place to land. We found a place to land and came out as well as could be expected.

It was more like being carjacked and the thief let you keep your wallet

What brings this up is a conversation regarding pensions in the "Cargo" forum of this website. I was debating another individual, and he stated that the pensions that were deleted [my term] from the pilots at Delta and United were actually purchased away, something that I had never heard of. Here's a link to the thread:

http://www.airlinepilotforums.com/ca...tml#post965162

What actually happened?

I think what he's referring to in that other thread, is he'd like to see his FDX DB pension bought out - meaning an insurance company would pick up the commitment to pay his benefit rather than FDX. That can theoretically be done, if there's enough money in the pension fund to purchase annuities for every participant; but I doubt it has that much money, particularly at today's historically low interest rates.

Seriously? No really, alfaromeo's explanation is a pretty good one except that he forgets that the PBGC is about as likely to pay off as Social Security, and it is every bit as big a ponzi scheme as a Bernie Madoff hedge fund.

Yeah, that's why I left out anything about the PBGC in my earlier post. I do not expect to ever see any of that money.