How's our A Fund Doing? 10 year History
05-21-2018, 11:03 AM
#111
Gets Weekends Off
Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Originally Posted by OKLATEX
During one the FOCUS meetings, the Union claimed that AA, DAL and UAL all want it/will have it in their openers.
Go over to the Delta side of APC and they have no desire for the VB.
I've got friends at all the previous mentioned. I'm curious what the mood really is regarding them.
Go over to the Delta side of APC and they have no desire for the VB.
I've got friends at all the previous mentioned. I'm curious what the mood really is regarding them.
The VB is touted to as “better” to employees who only have a traditional defined contribution plan (B fund), because the fund is professionally managed and the sponsor assumes the longevity risk.
That’s simply not our case - our A fund already has both of those positive attributes, along with many others (High 5, disability, etc)....AND we have a B fund too.
It’s the fixed $260K Earnings Cap and 25 YOS Cap that should (...CAN...) be improved upon.
The VB attempts to do that by trading away the “High 5” model and trading away “a 100% guaranteed defined benefit payout”, regardless of market perfirmance
The VB accepts a lesser value “Career Average Earnings” model, gains unlimited YOS, but then forces the pilots to accept the investment risk
It’s funny that some argue the company absolutely won’t negotiate on the Earnings Cap and on extending YOS beyond 25 years, but that is IN FACT exactly what our Negotiating Committee is proposing to change.
Nothing is free guys - can we be transparent about that?
05-21-2018, 11:47 AM
#112
Gets Weekends Off
Joined APC: Mar 2006
Position: B767 FO
Posts: 421
Originally Posted by DLax85
Yes - Because they only have a B fund (...and some have profit sharing)
The VB is touted to as “better” to employees who only have a traditional defined contribution plan (B fund), because the fund is professionally managed and the sponsor assumes the longevity risk.
That’s simply not our case - our A fund already has both of those positive attributes, along with many others (High 5, disability, etc)....AND we have a B fund too.
It’s the fixed $260K Earnings Cap and 25 YOS Cap that should (...CAN...) be improved upon.
The VB attempts to do that by trading away the “High 5” model and trading away “a 100% guaranteed defined benefit payout”, regardless of market perfirmance
The VB accepts a lesser value “Career Average Earnings” model, gains unlimited YOS, but then forces the pilots to accept the investment risk
It’s funny that some argue the company absolutely won’t negotiate on the Earnings Cap and on extending YOS beyond 25 years, but that is IN FACT exactly what our Negotiating Committee is proposing to change.
Nothing is free guys - can we be transparent about that?
The VB is touted to as “better” to employees who only have a traditional defined contribution plan (B fund), because the fund is professionally managed and the sponsor assumes the longevity risk.
That’s simply not our case - our A fund already has both of those positive attributes, along with many others (High 5, disability, etc)....AND we have a B fund too.
It’s the fixed $260K Earnings Cap and 25 YOS Cap that should (...CAN...) be improved upon.
The VB attempts to do that by trading away the “High 5” model and trading away “a 100% guaranteed defined benefit payout”, regardless of market perfirmance
The VB accepts a lesser value “Career Average Earnings” model, gains unlimited YOS, but then forces the pilots to accept the investment risk
It’s funny that some argue the company absolutely won’t negotiate on the Earnings Cap and on extending YOS beyond 25 years, but that is IN FACT exactly what our Negotiating Committee is proposing to change.
Nothing is free guys - can we be transparent about that?
And to be fair, all the Big 3 Pax airlines have Profit Sharing. I wish we had it; doubt it though because then the company would feel compelled to offer it to all employees. Goes against their Labor Strategy, in my opinion.
Frankly, at the meeting I attended, they said the Current "A" Plan can be improved each negotiations. However the VB addresses the issues without having to address it in the next Section 6. As they said, takes resolve to do it in each negotiations.
I'm not arguing against your points; I agree with them. I'm very much a keep what we have and improve the "B" Fund. Maye a Bump to the Bump for the old guys or some other way to help them. I'll am willing to listen to all proposals though, including this one.
Transparency; funny you mention that. I'm all for that.
While I'm not sold on the VB at all, I'm willing to listen and will admit it has positives, but large negatives as you said. But, not only am I one of the "middle/doughnut hole", I'm also perplexed as to how we got to this point with the retirement to begin with. You know as well as I that we had a Block Rep melt down over Retirement during the last contract. He represented who? Now he's Secretary Treasurer? He stayed in office how? Was he willing to listen?
A large problem I have with this VB is how we got here and who is now pushing for it.
Transparency indeed.
Last edited by OKLATEX; 05-21-2018 at 12:13 PM.
05-27-2018, 06:01 PM
#113
Gets Weekends Off
Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Back to the original intent of this thread.
How's our A Fund doing?
Let's ask the company. These excerpts are straight from the 2017 Fedex Annual Report:
(Some statements bolded and italicized for emphasis!)
- For 2018, we anticipate making contributions totaling $1.0 billion (approximately $700 million of which are expected to be required) to our U.S. Pension Plans.
As noted in our discussion of critical accounting estimates below, we have a credit balance related to our cumulative excess voluntary pension contributions over those required that exceeds $3 billion.
The credit balance is subtracted from plan assets to determine the minimum funding requirements.
Therefore, we could eliminate all required pension contributions to our principal U.S. Pension Plans for several years if we were to choose to waive part of that credit balance in any given year.
Our U.S. Pension Plans have ample funds to meet expected benefit payments.
- 2017 - The actual rate of return on our U.S. Pension Plans assets of 9.6% was higher than our expected return of 6.50% primarily due to a rise in the value of global equity markets and favorable credit market conditions.
The weighted average discount rate for all of our pension and postretirement healthcare plans decreased from 4.04% at May 31, 2016 to 3.98% at May 31, 2017.
The demographic assumption experience in 2017 reflects an update in mortality tables for U.S. pension and other postemployment benefit plans.
- 2016 - The actual rate of return on our U.S. Pension Plan assets of 1.2% was lower than our expected return of 6.50% primarily dueto a challenging environment for global equities and other risk- seeking asset classes.
The weighted average discount rate for all of our pension and post retirement healthcare plans declined from 4.38% at May 31, 2015 to 4.04% at May 31, 2016.
The demographic assumption experience in 2016 reflects a change in disability rates and an increase in the average retirement age for U.S. pension and other postemployment benefit plans.
- 2015 - The implementation of new U.S. mortality tables in 2015 resulted in an increased participant life expectancy assumption, which increased the overall projected benefit obligation by $1.2 billion.
The weighted average discount rate for all of our pension and post retirement healthcare plans declined from 4.57% at May 31, 2014 to 4.38% at May 31, 2015.
PLAN ASSETS. The expected average rate of return on plan assets is a long-term, forward-looking assumption that effects our segment level pension expense. It is required to be the expected future long-term rate of earnings on plan assets.
Our pension plan assets are invested primarily in publicly tradable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers.
As part of our strategy to manage pension costs and funded status volatility, we follow a liability-driven investment strategy to better align plan assets with liabilities.
- Establishing the expected future rate of investment return on our pension assets is a judgmental matter, which we review on an annual basis and revise as appropriate. Management considers the following factors in determining this assumption:
> the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets
> the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and
> the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.
- For consolidated pension expense, we assumed a 6.50% expected long-term rate of return on our U.S. Pension Plan assets in 2017 and 2016 and 7.75% in 2015.
We lowered our EROA assumption in 2016 as we continued to implement our asset and liability management strategy. In lowering this assumption, we considered our historical returns, our current capital markets outlook and our investment strategy for our plan assets, including the impact of the duration of our liabilities.
Our actual returns in 2017 and 2015 exceeded our long-term assumption. Our actual return in 2016, however, was less than the expected return.
- FUNDING. The funding requirements for our U.S. Pension Plans are governed by the Pension Protection Act of 2006, which has aggressive funding requirements in order to avoid benefit payment restrictions that become effective if the funded status determined under Internal Revenue Service rules falls below 80% at the beginning of a plan year.
- All of our U.S. Pension Plans have funded status levels in excess of 80% and our plans remain adequately funded to provide benefits to our employees as they come due.
Benefit payments for our U.S. Pension Plans for 2017 were approximately $2.3 billion, or 9.0% of plan assets. Benefit payments were higher in 2017 because our U.S. Pension Plans were amended to permit former employees with a vested traditional pension benefit to make a one-time, irrevocable election to receive their benefits in a lump-sum distribution.
Approximately 18,300 former employees elected to receive this lump-sum distribution, and a total of approximately $1.3 billion was paid in May 2017.
Over the past several years, we have made voluntary contributions to our U.S. Pension Plans in excess of the minimum required contributions.
Amounts contributed in excess of the minimum required can result in a credit balance for funding purposes that can be used to reduce minimum contribution requirements in future years.
Our credit balance exceeded $3.1 billion at May 31, 2017. For 2018, we anticipate making contributions to our U.S. Pension Plans totaling $1.0 billion (approximately $700 million of which are expected to be required).
The funding rules used to establish minimum required pension contributions in the U.S. require any credit balance to be deducted from plan assets to calculate the funded status of the plan.
Plan sponsors may irrevocably waive some or all of their credit balance to reduce the required funding. We have chosen to preserve our credit balance since the required level of contributions are within our planning parameters for contributions.
See Note 13 of the accompanying consolidated nancial statements for further information about our retirement plans.
- The investment strategy for our U.S. Pension Plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations.
Our largest asset classesare Corporate Fixed Income Securities and Government Fixed Income Securities (which are largely benchmarked against the Barclays Long Government, Barclays Long Corporate or the Citigroup 20+ STRIPS indices), and U.S. and International Large Cap Equities (which are mainly benchmarked to the S&P 500 Index and other global indices).
Accordingly, we do not have any significant concentrations of risk.
Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices.
Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk.
In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.
The following is a description of the valuation methodologies used for investments measured at fair value:
> Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. These Level 2 investments include short-term investment funds which are collective funds priced at a constant value by the administrator of the funds.
> Domestic, international and global equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. These Level 2 investments include mutual funds.
> Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. and non-U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.
> Alternative Investments. The valuation of these Level 3 investments requires signi cant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments in private equity, debt, real estate and other private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables and performance multiples.
Research Broadly, Think Critically
In Unity,
DLax
How's our A Fund doing?
Let's ask the company. These excerpts are straight from the 2017 Fedex Annual Report:
(Some statements bolded and italicized for emphasis!)
- For 2018, we anticipate making contributions totaling $1.0 billion (approximately $700 million of which are expected to be required) to our U.S. Pension Plans.
As noted in our discussion of critical accounting estimates below, we have a credit balance related to our cumulative excess voluntary pension contributions over those required that exceeds $3 billion.
The credit balance is subtracted from plan assets to determine the minimum funding requirements.
Therefore, we could eliminate all required pension contributions to our principal U.S. Pension Plans for several years if we were to choose to waive part of that credit balance in any given year.
Our U.S. Pension Plans have ample funds to meet expected benefit payments.
- 2017 - The actual rate of return on our U.S. Pension Plans assets of 9.6% was higher than our expected return of 6.50% primarily due to a rise in the value of global equity markets and favorable credit market conditions.
The weighted average discount rate for all of our pension and postretirement healthcare plans decreased from 4.04% at May 31, 2016 to 3.98% at May 31, 2017.
The demographic assumption experience in 2017 reflects an update in mortality tables for U.S. pension and other postemployment benefit plans.
- 2016 - The actual rate of return on our U.S. Pension Plan assets of 1.2% was lower than our expected return of 6.50% primarily dueto a challenging environment for global equities and other risk- seeking asset classes.
The weighted average discount rate for all of our pension and post retirement healthcare plans declined from 4.38% at May 31, 2015 to 4.04% at May 31, 2016.
The demographic assumption experience in 2016 reflects a change in disability rates and an increase in the average retirement age for U.S. pension and other postemployment benefit plans.
- 2015 - The implementation of new U.S. mortality tables in 2015 resulted in an increased participant life expectancy assumption, which increased the overall projected benefit obligation by $1.2 billion.
The weighted average discount rate for all of our pension and post retirement healthcare plans declined from 4.57% at May 31, 2014 to 4.38% at May 31, 2015.
PLAN ASSETS. The expected average rate of return on plan assets is a long-term, forward-looking assumption that effects our segment level pension expense. It is required to be the expected future long-term rate of earnings on plan assets.
Our pension plan assets are invested primarily in publicly tradable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers.
As part of our strategy to manage pension costs and funded status volatility, we follow a liability-driven investment strategy to better align plan assets with liabilities.
- Establishing the expected future rate of investment return on our pension assets is a judgmental matter, which we review on an annual basis and revise as appropriate. Management considers the following factors in determining this assumption:
> the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets
> the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and
> the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.
- For consolidated pension expense, we assumed a 6.50% expected long-term rate of return on our U.S. Pension Plan assets in 2017 and 2016 and 7.75% in 2015.
We lowered our EROA assumption in 2016 as we continued to implement our asset and liability management strategy. In lowering this assumption, we considered our historical returns, our current capital markets outlook and our investment strategy for our plan assets, including the impact of the duration of our liabilities.
Our actual returns in 2017 and 2015 exceeded our long-term assumption. Our actual return in 2016, however, was less than the expected return.
- FUNDING. The funding requirements for our U.S. Pension Plans are governed by the Pension Protection Act of 2006, which has aggressive funding requirements in order to avoid benefit payment restrictions that become effective if the funded status determined under Internal Revenue Service rules falls below 80% at the beginning of a plan year.
- All of our U.S. Pension Plans have funded status levels in excess of 80% and our plans remain adequately funded to provide benefits to our employees as they come due.
Benefit payments for our U.S. Pension Plans for 2017 were approximately $2.3 billion, or 9.0% of plan assets. Benefit payments were higher in 2017 because our U.S. Pension Plans were amended to permit former employees with a vested traditional pension benefit to make a one-time, irrevocable election to receive their benefits in a lump-sum distribution.
Approximately 18,300 former employees elected to receive this lump-sum distribution, and a total of approximately $1.3 billion was paid in May 2017.
Over the past several years, we have made voluntary contributions to our U.S. Pension Plans in excess of the minimum required contributions.
Amounts contributed in excess of the minimum required can result in a credit balance for funding purposes that can be used to reduce minimum contribution requirements in future years.
Our credit balance exceeded $3.1 billion at May 31, 2017. For 2018, we anticipate making contributions to our U.S. Pension Plans totaling $1.0 billion (approximately $700 million of which are expected to be required).
The funding rules used to establish minimum required pension contributions in the U.S. require any credit balance to be deducted from plan assets to calculate the funded status of the plan.
Plan sponsors may irrevocably waive some or all of their credit balance to reduce the required funding. We have chosen to preserve our credit balance since the required level of contributions are within our planning parameters for contributions.
See Note 13 of the accompanying consolidated nancial statements for further information about our retirement plans.
- The investment strategy for our U.S. Pension Plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations.
Our largest asset classesare Corporate Fixed Income Securities and Government Fixed Income Securities (which are largely benchmarked against the Barclays Long Government, Barclays Long Corporate or the Citigroup 20+ STRIPS indices), and U.S. and International Large Cap Equities (which are mainly benchmarked to the S&P 500 Index and other global indices).
Accordingly, we do not have any significant concentrations of risk.
Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices.
Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk.
In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.
The following is a description of the valuation methodologies used for investments measured at fair value:
> Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. These Level 2 investments include short-term investment funds which are collective funds priced at a constant value by the administrator of the funds.
> Domestic, international and global equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. These Level 2 investments include mutual funds.
> Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. and non-U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.
> Alternative Investments. The valuation of these Level 3 investments requires signi cant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments in private equity, debt, real estate and other private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables and performance multiples.
Research Broadly, Think Critically
In Unity,
DLax
09-26-2020, 09:44 AM
#114
Gets Weekends Off
Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Bumpty, Bump, Bump....
I started this thread in 2017....just updating the data for last three years.
Each fall, every pilot will receive a paper copy of "Information About the Fedex Corporation Employee Pension Plan"
It's the ANNUAL FUNDING NOTICE for Fedex Corp Employee Pension Plan. Federal Law requires the Plan Administrator to tell us how well the plan is funded using FTAP - Funding Target Attainment Percentage.
FTAP = Net Plan Assets / Plan Liabilities (expressed as a percentage)
In general, the higher the percentage, the better funded the plan.
Latest report covers June 1, 2019 thru May 31, 2020, and was mailed out last week. Despite the springs market turmoil, the fund was still doing well - 100.38%
One reason the fund didn't take a huge hit during the stock market volatility, was it's significant reduction in exposure to equities over the past 12 years. The Funds Asset Allocation has gradually shifted from 71% Stocks / 28% Bonds / 1% Other in 2009 to 32% Stocks / 60% Bonds / 8% Other in 2020.
This reduction in stock exposure is reasonable, and expected, as the Fedex Retirement Plan must pay out more and more retirees. It differs significantly from the asset allocations the fund invested in the 1980 and 1990s when there were far fewer actual Fedex retirees drawing a pension. (Note: I'll post some of the asset allocation data in a separate thread)
2008 - 83.19%
2009 - 90.38%
2010 - 80.00%
2011 - 82.72%
2012 - 99.09%
2013 - 95.16%
2014 - 101.22%
2015 - 105.35%
2016 - 100.63%
2017 - 108.10%
2018 - 103.46%
2019 - 100.38%
Note: Prior to 2008, a slightly different accounting metric was utilized and reported - the Funded Current Liability Percentage (FCLP)
2006 - 73.63%
2007 - 83.32%
Take Away = Our Current Pension Plan is healthy, and adequately funded. However, the asset allocation is (correctly) shifting to a more conservative asset allocation as more employees retiree and receive benefits. Separate post on historical allocations coming soon,
In Unity,
DLax
I started this thread in 2017....just updating the data for last three years.
Each fall, every pilot will receive a paper copy of "Information About the Fedex Corporation Employee Pension Plan"
It's the ANNUAL FUNDING NOTICE for Fedex Corp Employee Pension Plan. Federal Law requires the Plan Administrator to tell us how well the plan is funded using FTAP - Funding Target Attainment Percentage.
FTAP = Net Plan Assets / Plan Liabilities (expressed as a percentage)
In general, the higher the percentage, the better funded the plan.
Latest report covers June 1, 2019 thru May 31, 2020, and was mailed out last week. Despite the springs market turmoil, the fund was still doing well - 100.38%
One reason the fund didn't take a huge hit during the stock market volatility, was it's significant reduction in exposure to equities over the past 12 years. The Funds Asset Allocation has gradually shifted from 71% Stocks / 28% Bonds / 1% Other in 2009 to 32% Stocks / 60% Bonds / 8% Other in 2020.
This reduction in stock exposure is reasonable, and expected, as the Fedex Retirement Plan must pay out more and more retirees. It differs significantly from the asset allocations the fund invested in the 1980 and 1990s when there were far fewer actual Fedex retirees drawing a pension. (Note: I'll post some of the asset allocation data in a separate thread)
2008 - 83.19%
2009 - 90.38%
2010 - 80.00%
2011 - 82.72%
2012 - 99.09%
2013 - 95.16%
2014 - 101.22%
2015 - 105.35%
2016 - 100.63%
2017 - 108.10%
2018 - 103.46%
2019 - 100.38%
Note: Prior to 2008, a slightly different accounting metric was utilized and reported - the Funded Current Liability Percentage (FCLP)
2006 - 73.63%
2007 - 83.32%
Take Away = Our Current Pension Plan is healthy, and adequately funded. However, the asset allocation is (correctly) shifting to a more conservative asset allocation as more employees retiree and receive benefits. Separate post on historical allocations coming soon,
In Unity,
DLax
09-26-2020, 10:22 AM
#115
Line Holder
Joined APC: Jul 2013
Posts: 98
Originally Posted by DLax85
Bumpty, Bump, Bump....
I started this thread in 2017....just updating the data for last three years.
Each fall, every pilot will receive a paper copy of "Information About the Fedex Corporation Employee Pension Plan"
It's the ANNUAL FUNDING NOTICE for Fedex Corp Employee Pension Plan. Federal Law requires the Plan Administrator to tell us how well the plan is funded using FTAP - Funding Target Attainment Percentage.
FTAP = Net Plan Assets / Plan Liabilities (expressed as a percentage)
In general, the higher the percentage, the better funded the plan.
Latest report covers June 1, 2019 thru May 31, 2020, and was mailed out last week. Despite the springs market turmoil, the fund was still doing well - 100.38%
,
In Unity,
DLax
I started this thread in 2017....just updating the data for last three years.
Each fall, every pilot will receive a paper copy of "Information About the Fedex Corporation Employee Pension Plan"
It's the ANNUAL FUNDING NOTICE for Fedex Corp Employee Pension Plan. Federal Law requires the Plan Administrator to tell us how well the plan is funded using FTAP - Funding Target Attainment Percentage.
FTAP = Net Plan Assets / Plan Liabilities (expressed as a percentage)
In general, the higher the percentage, the better funded the plan.
Latest report covers June 1, 2019 thru May 31, 2020, and was mailed out last week. Despite the springs market turmoil, the fund was still doing well - 100.38%
,
In Unity,
DLax
The 2020 FTAP is not explicitly stated in the mailing but can be calculated using your formula, and is WAY lower than 100%. 1
09-26-2020, 10:43 AM
#116
Line Holder
Joined APC: Dec 2013
Posts: 30
Originally Posted by Check6Viper
100.38% is the 2019 number, not the 2020 number.
The 2020 FTAP is not explicitly stated in the mailing but can be calculated using your formula, and is WAY lower than 100%. 1
The 2020 FTAP is not explicitly stated in the mailing but can be calculated using your formula, and is WAY lower than 100%. 1
Last edited by Beast of Burden; 09-26-2020 at 10:54 AM.
09-26-2020, 10:44 AM
#117
Gets Weekends Off
Joined APC: Nov 2013
Posts: 2,756
Originally Posted by Check6Viper
100.38% is the 2019 number, not the 2020 number.
The 2020 FTAP is not explicitly stated in the mailing but can be calculated using your formula, and is WAY lower than 100%. 1
The 2020 FTAP is not explicitly stated in the mailing but can be calculated using your formula, and is WAY lower than 100%. 1
09-26-2020, 11:23 AM
#118
Line Holder
Joined APC: Jul 2013
Posts: 98
Originally Posted by busdriver12
For those of us too lazy to figure it out, what percentage did you come up with?
09-26-2020, 11:51 AM
#119
Gets Weekends Off
Joined APC: Nov 2013
Posts: 2,756
Originally Posted by Check6Viper
I calculated 78% based on the information in the "Year end assets and liabilities" paragraph as of May 31st, 2020. I'm not smart on this stuff, so hopefully someone will correct me on this.
09-26-2020, 06:57 PM
#120
Gets Weekends Off
Thread Starter
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,191
Originally Posted by Check6Viper
I calculated 78% based on the information in the "Year end assets and liabilities" paragraph as of May 31st, 2020. I'm not smart on this stuff, so hopefully someone will correct me on this.
I believe you are referring to the "Fair Market Values" of the Pension Plan assets and Pension Plan liabilities as of 31 May 2020, found at the end of paragraph 6 on page 3 on the most recent Annual Funding Notice (Sept 2020)
These values are: Assets - $25,874,720,117 Liabilities - $28,465,181,046
Which would yield 90.90%. (please check my math)
With that said, we must understand there are two methods by which the Pension Plan Administrator must tell us how well the plan is funded.
The Funding Target Attainment Percentage (FTAP) uses "Actuarial Values" based on the first date of the plan year. (e.g. Jun 1, 2019) - 100.38%
The second method, which you quoted, uses "Fair Market Values", on the last day of the plan year (e.g. May 31, 2020). That ratio is not explicitly calculated, but the values are provided.
The funding notice explains that "Actuarial Values" differ from "Market Values" in that they do not fluctuate daily based on changes in the stock or other markets. "Actuarial Values" smooth out those fluctuations and can allow for more predictable levels of future contributions.
"Actuarial Values" rely on statistical inference and assumptions that are part of the overall pension model. Actuarial Value models rely on long-term projections that include discount rates, employee contribution rates, wage growth rates, inflation rates, mortality rates, retirement ages, and disability projections.
The "Actuarial Values" are the ones prominently displayed in each Annual Funding Notice as FTAP (Funding Target Attainment Percentage)
However, here's my research on both methods from the past 12 Annual Funding Notices:
Plan Year - FTAP (Actuarial Value) vs Fair Mkt Value
2019 - 100.38% - 90.90%
2018 - 103.46% - 97.61%
2017 - 108.10%. - 102.66%
2016 - 100.63% - 93.93%
2015 - 105.35% - 82.86%
2014 - 101.22% - 88.63%
2013 - 95.16% - 89.06%
2012 - 99.09% - 82.27%
2011 - 82.72%. - 80.49%
2010 - 80.00% - 91.89%
2009 - 83.19% - 93.96%
Of course, we can now debate which method is more accurate, however, it's already clear the PBGC requires the use of FTAP, which is a more detailed "Actuarial Value" model. This is why those values, and those ratios, are prominently displayed in the Annual Funding Notices.
Thus, I'll restate my current assessment that our current A Plan is healthy, and adequately funded.
However, the asset allocation is (correctly) shifting to a more conservative asset allocation as more employees retiree and receive benefits. See my separate thread on historical asset allocations.
Research Broadly, Think Critically, and Demand Transparency,
In Unity,
DLax
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