A Plan, B Plan, Huh???

[Falconjet]

Well, its not mine either, so I pulled it out and tried to make sense of it. That section is amazingly sparse and I think the stuff in the benefits book is much more detailed and easier to understand.

Anyway, the best thing about our pension is that the company is doing well, and hopefully will continue to be profitable long term so we can enjoy our pension benefits, enhanced as they will be with the new agreement.

FJ

 

[LarryinTN]

One point that hasn't been mentioned in the A-plan/B-plan comparison is investment risk.

With the A-plan, the company takes the investment risk. If the investments under-perform then they must contribute more. If the investments do well then they benefit and can contribute less.

With the B-plan the company contributes a fixed amount and then they are done. All of the investment risk falls on the employee.

With the A-plan, however, there are no guarentees that the pension is fully funded so there is the risk that the plan itself will fail (as is happening now). With the B-plan the money is invested separate from the company so the only risk of failure is if the underlying investments fail. (i.e. don't put your b-fund in company, or any single, stock)

This is where the UAL pilots got hit with a tripple whammy. They lost much of the pension, they were forced to invest their B-plan in UAL stock which is now nearly worthless and they have been hit with big pay cuts and career regression.

 

[skykid]

This is where the UAL pilots got hit with a tripple whammy. They lost much of the pension, they were forced to invest their B-plan in UAL stock which is now nearly worthless and they have been hit with big pay cuts and career regression.

When you say they were forced to invest their B-plan in UAL stock, I think you are referring to the ESOP, which has nothing to do with the B-plan. I've never been forced to invest any of the B-plan in anything - in fact I can invest it in anything I want.

 

[Falconjet]

One more cap at FedEx

One more cap I should mention about the FedEx A fund. Currently, the maximum your FAE can equal is $260K. So even if you worked your arse off and averaged $300K somehow your top 5 years, your FAE for your retirement computation would equal $260K. Assuming you had been on board for at least 25 years, your maximum retirement would be 25X2= 50% of $260K, or $130K per year. That is the current maximum A Fund retirement benefit.

FAE = final average earnings (high 5)
25 = years of service (hypothetical)
2 = % earned for each year of service

Retirement beni = FAE X years of service (max 25) X 2%

There are provisions for early retirement at age 55, but there are some penalties involved in doing so, but aren't too bad if you have more than 25 years of service.

FJ

 

[ClearRight]

Benefits Rep: "So you have the A Plan at 2.15% times your FAE average over the last 3 years barring the cap on the A Fund multiply it by 2%x20 at 50% resulting in a yearly payout of $160,000 at 10% with a 15% chance of a 6% return. Add to that the 5% B Fund directed 40% toward company stock, 20% mutual funds with an average of 8% payout over the life of the 27 year fund, and 40% in your personal discretionary investments limited to company managed funds...."

Deer-in-the-headlights green airline pilot: "Uh.. yeah.. okay.. that sounds good... when's lunch?"

 

[LarryinTN]

Yes, ESOP, that is what I was talking about.