I doubt if they would get anything back after the retiree kick's the bucket. The guys exiting early pay for the guys sticking around forever.

You do understand the concept of an annuity, right? The money is paid over time into a fund and is paid out over time based on the type of payment option you select. It is all based on actuarial data. If you chose not to have a survivor option and elected not to have a "refund" option and die at age 68, the excess funds remain in the account to pay benefits to someone who is fortunate enough to live to 93. There is no refund to FedEx.

The union is paying for consultants to "model" Fedex's A fund to determine the true cost to FEDEX --- i.e. Does it really cost them $3 to $4 to increase the benefit $1?

Of course the main factors are:

1. Assumed # of payments "paid into the fund" for each pilot (Assumed retirement age minus assumed hire age)

2. Assumed fund yield

(Which we have insight via published financial statements. This appears to currently be in the 4.5%-5.0% range)

3. Assumed # of payments "paid out to the retire"

(Assumed life expectancy minus assumed age at retirement. I believe the IRS assumes approximately 85 years; meaning the company has anywhere from 20-30 years of payouts, on average, given possible retirement ages from 55-65. I feel this distribution is nowhere near uniform; as few pilots retire early, and more and more are going close to 65.)

Given these assumptions, they can model/determine the cost of providing an additional $1 of pay out in retirement

Over the past 10 years a number of factors has changed:

Historical rates of return have dropped, mainly due to a decrease in US bond yields --- which make up approximately 50% of the funds investment portfolio

But, I'll suggest the # of assumed "payments in" has increased, while the # of assumed "payments out" has decreased --- due to the change in the regulated age, and a majority of our pilots choosing to work beyond 60

The big question is then --- how much have each of these changes affected the model?

Has funding the A fund truly become more expensive?

If so, by how much?

Haven't the lower investment return rates been somewhat offset by longer periods to pay in, and shorter periods to pay out?

I sincerely hope the union discloses the data, model, and underlying assumptions they ultimately utilize

Transparency is needed for trust....and we're paying for it.

Of course, it's easy to see why the company bean counters would prefer a straight B fund --- it's far simpler, and eliminates their investment & actuarial risk

Actually, as I understand it (not well at all), the 3 main factors you listed are not what's driving the increase at all. It's the pension funding legislation and its requirements in addition to the additional insurance required by the PBGC.

The factors I listed clearly drive the math, but I agree government regulations have also had an affect (....and it's always convenient to point the finger at a third party)

I believe one of the significant changes in the pension funding legislation was a decrease in the allowable "assumed rate of return"

The values they must use today are far less than those allowed in the 80s and 90s --- which immediately forces them to contribute more

However, the company cannot deny guys are retiring later and that has benefited the A fund in two ways

I'm highly confident, flying 5 more years doesn't increase your longevity 5 years

And if increased PBGC insurance rates have raised the cost, so be it

Not a reason to kill the whole A fund --- keep our hybrid approach with increased B fund benefits

First off ....... Anything passed along on the crew bus is BS
Second ...... Why would ALPA do such a thing ? Who here is crazy enough to trust this Union with this fiscal responsibility ?
Third ....... Hell No

Any changes that negatively impact the A fund will definitely force me to retire before the current contract is amended. I can't believe people are actually considering any reduction of the A plan, I don't care how high you make the B fund. Very short sighted in my opinion.

Yep, I'm in the same spot. We need to be getting everyone as close to 54K a year without selling back sick leave. Never heard of a bigger 401K match....

No change made to our retirement system outside of section 6 negotiations will benefit the crew force more than it does the company. The only motivation the company has is to increase their bottom line. We had the upper hand before we caved on the current contract, that horse is now out of the barn. I will also take my money and run before any changes take effect.