A/B Funds
05-22-2007, 08:01 PM
#1
Gets Weekends Off
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Joined APC: Jan 2007
Posts: 171
A/B Funds
On the APC website down with 401k's etc... it lists A/B Funds. What is an A/B Fund? And for instance under Delta it says 9% by the B fund, is that a 9% match? predicted return? How does an A/B Fund relate to your 401k etc...
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-SS
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-SS
05-22-2007, 09:23 PM
#2
APC co-founder
Joined APC: Feb 2005
Position: B777
Posts: 5,853
A-Plan
A defined benefit plan, also known as a pension, that is typically defined by years of service and highest final average earnings (FAE). Specific terms, years of participation, and payout options may be defined in a collective barganing agreement (CBA).
Different plans compute the FAE portion differently. One company might use the last three or five years' earnings, while another might use the three consecutive years with the highest earnings, or another might let the pilot pick any three or five years with the highest earnings.
The Defined Benefit is a promise from the Company to pay the retiree a set amount (computed above) every month until the retiree dies (or sometimes, to the spouse if certain options are exercised.) The A-Plan performs like, and in most all cases is, an annuity. It does not depend on the health of the stock market as the pilot reaches retirement age, but it does depend on the health of the Company, not only at the time of retirement, but up until the time he and his spouse die (See UAL
).
****************************************
B- Plan : Defined Contribution
A certain portion of the pilot's wages are contributed by the Company to selected securities, and they belong to the pilot. Their value at the point of retirement depends not only on how much has been contributed throughout the career, but how the stock market fared from the point the contributions were made up until the point of retirement. If the Stock Market was generally low throughout the career, and then skyrocketed the week before retirement, the "B" fund could be quite large. On the other hand, if the Stock Market performed an October 11th crash the day before retirement, the "B" fund could be rather paltry.
The biggest advantage to the "B" fund, expecially for faltering companies, is that the "B" fund does not depend on the health, or even the existence of the Company for its value. Whether it's a pittance or a fortune, it owes its value to the value of the stocks on which it is based, and it is the property of the pilot, free and clear.
A defined benefit plan, also known as a pension, that is typically defined by years of service and highest final average earnings (FAE). Specific terms, years of participation, and payout options may be defined in a collective barganing agreement (CBA).
Different plans compute the FAE portion differently. One company might use the last three or five years' earnings, while another might use the three consecutive years with the highest earnings, or another might let the pilot pick any three or five years with the highest earnings.
The Defined Benefit is a promise from the Company to pay the retiree a set amount (computed above) every month until the retiree dies (or sometimes, to the spouse if certain options are exercised.) The A-Plan performs like, and in most all cases is, an annuity. It does not depend on the health of the stock market as the pilot reaches retirement age, but it does depend on the health of the Company, not only at the time of retirement, but up until the time he and his spouse die (See UAL
).****************************************
B- Plan : Defined Contribution
A certain portion of the pilot's wages are contributed by the Company to selected securities, and they belong to the pilot. Their value at the point of retirement depends not only on how much has been contributed throughout the career, but how the stock market fared from the point the contributions were made up until the point of retirement. If the Stock Market was generally low throughout the career, and then skyrocketed the week before retirement, the "B" fund could be quite large. On the other hand, if the Stock Market performed an October 11th crash the day before retirement, the "B" fund could be rather paltry.
The biggest advantage to the "B" fund, expecially for faltering companies, is that the "B" fund does not depend on the health, or even the existence of the Company for its value. Whether it's a pittance or a fortune, it owes its value to the value of the stocks on which it is based, and it is the property of the pilot, free and clear.
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