The Pension formula is 1.9% times your Final Average Earnings times your years of service.
So assuming you retire as a Captain at the top rate at the end of this contract with 25 years of service and that you had been a Captain for 5 years your calculation would look like this...
Top rate under TA is $180. So to find your FAE I'll assume you flew 80 hours for 5 years. So basically $180 times 80 times 12 = $172,800
.019 times $172,800 times 25 = 82,080
In other words your A fund would pay you $82,080/year for the rest of your life. There are several other options that have relatively minor effects on the calculation that can reduce the amount that I won't get into depending on the payout method (50% survivor, 75% survivor, how old is the survivor, did you opt out of QPSA, etc.)
But anyway, for simplicity your pension is $82,080/year. The concept behind the lump sum is they calculate how much cash it would take to give you that income per year. You take $82,080 and divide it by the "going" interest rate (how they determine that is probably already a subject of another thread as we are in a transition which has the intent of shrinking all of our lump sums) which right now is actually very low...say 6% which gives you $1,368,000. Because our plan only allows a 50% withdrawl then you would get a check for $684,000 and the company plan would pay you $41,040 a year until you or Alaska Airlines died whichever occured first.
I ran a spreadsheet on the 3 options for someone like me with 25+ years left to go and if you're in the same boat as me, option C is a really bad idea. I based it on putting the IRS maximum into your 401K which as best as I could find out right now is $16,000/year from the pilot or 25% of pilot income total from company and pilot...and assuming I upgrade 10 years from now...option B breaks even with option A if you can get a return of about 6% in your DC. Option C doesn't break even in my estimation until you get about a 12% return. Don't take these calculations to the bank, as I still have to let someone smarter then me in these kinds of things look at what I did.
In any case it is no wonder the MEC did not want to release the numbers too early because everyday I think about this I am leaning more and more toward "no" in fact, right now I am trying desperately to hang on to the fence so that I will at least have somewhat of an open mind when I get to the road shows.
One other reason to put in the no colum that is having sway with me is that if we get this raise, it will encourage some of the 60+ guys to stay even LONGER to get their FAE up. I've got 30 years to get this thing settled...I have some savings built up...I'll be just fine...the guys close to retirement are probably itching to get this passed ASAP. This might be a strong enough argument for me to vote no all by itself.
later
So assuming you retire as a Captain at the top rate at the end of this contract with 25 years of service and that you had been a Captain for 5 years your calculation would look like this...
Top rate under TA is $180. So to find your FAE I'll assume you flew 80 hours for 5 years. So basically $180 times 80 times 12 = $172,800
.019 times $172,800 times 25 = 82,080
In other words your A fund would pay you $82,080/year for the rest of your life. There are several other options that have relatively minor effects on the calculation that can reduce the amount that I won't get into depending on the payout method (50% survivor, 75% survivor, how old is the survivor, did you opt out of QPSA, etc.)
But anyway, for simplicity your pension is $82,080/year. The concept behind the lump sum is they calculate how much cash it would take to give you that income per year. You take $82,080 and divide it by the "going" interest rate (how they determine that is probably already a subject of another thread as we are in a transition which has the intent of shrinking all of our lump sums) which right now is actually very low...say 6% which gives you $1,368,000. Because our plan only allows a 50% withdrawl then you would get a check for $684,000 and the company plan would pay you $41,040 a year until you or Alaska Airlines died whichever occured first.
I ran a spreadsheet on the 3 options for someone like me with 25+ years left to go and if you're in the same boat as me, option C is a really bad idea. I based it on putting the IRS maximum into your 401K which as best as I could find out right now is $16,000/year from the pilot or 25% of pilot income total from company and pilot...and assuming I upgrade 10 years from now...option B breaks even with option A if you can get a return of about 6% in your DC. Option C doesn't break even in my estimation until you get about a 12% return. Don't take these calculations to the bank, as I still have to let someone smarter then me in these kinds of things look at what I did.
In any case it is no wonder the MEC did not want to release the numbers too early because everyday I think about this I am leaning more and more toward "no" in fact, right now I am trying desperately to hang on to the fence so that I will at least have somewhat of an open mind when I get to the road shows.
One other reason to put in the no colum that is having sway with me is that if we get this raise, it will encourage some of the 60+ guys to stay even LONGER to get their FAE up. I've got 30 years to get this thing settled...I have some savings built up...I'll be just fine...the guys close to retirement are probably itching to get this passed ASAP. This might be a strong enough argument for me to vote no all by itself.
later
Anyway....
