ALPA/401k revisited

[DX Rick]

I'm sure there were plenty of bright/glossy/shiny photos of some ALPA guys sitting around a table somewhere involved in some kind of "conference" or calling themselves some kind of "team" or "taskforce" resolving some issue.
.

Ah, you forgot to mention the one where they were all picketing, and posed for the photo. Looks like the National Mouth Breather Convention.

 

[Nevets]

Dear Board of Directors:

Starting on July 28, you will be asked to vote on an important change to the ALPA Constitution and By-Laws. If approved by two-thirds of the Board of Directors, this change would make all pilot salary deferrals to 401(k) pension plans subject to dues. This would replace current policy, which contains an outdated patchwork of exemptions that do not treat all ALPA members fairly and fail to account for massive changes in how pilots are paid under negotiated contracts. The proposed revision was endorsed by the Executive Council and Executive Board, which consists of the pilot representatives you elected to consider any updates to our policies and procedures.

Before you cast your vote, I am asking you to review this letter and the attached information points. Additionally, ALPA’s vice president of administration, Capt. Bill Couette, and vice president of finance/treasurer, Capt. Randy Helling, will be taping a video message for you and all ALPA members. This video will explain the reasons behind this recommended change and should help you explain to your pilots why this vote is so important. In case you have any further questions, Captains Couette and Helling are available to discuss this important matter with you.
Before you make a decision, please consider the following points:

• The Executive Board and Executive Council studied this issue for more than two years before passing this resolution;
• Making 401(k) deferrals subject to dues will not reduce a pilot’s 401(k) contribution, and there will be no dues on company contributions to 401(k) plans;
• Current policy does not treat all members the same, both within and between pilot groups, since many already pay dues on their defined-contribution plans;
• For those pilots affected by this change, the average per-pilot increase in dues would be around $7 per semi-monthly paycheck;
• Leaving the current provisions in place will cause dues income to further erode as DC plans are consolidated into 401(k) plans;
• The current policy is too complex for airline payroll departments to administer accurately, and does not permit ALPA to verify what airlines report as income subject to dues;
• In accordance with Spending Limit Policy, much of the additional dues income will flow back to the MECs who represent most of the affected pilots. These MECs historically receive supplemental funding from the OCF to support their activities; and
• The additional dues income is integral to preserving existing services.

When we agree to serve as an elected representative within ALPA, we take on the heavy burden of serving our pilots while protecting the long-term health of our union. This vote is a classic example of how that balancing act can challenge us. I believe that the Executive Council and Board did a solid job of weighing all the alternatives and endorsing a change that will minimize the cost to pilots while protecting the financial health of our union. Now the Board of Directors must decide if it agrees that the proposed policy change treats all our members fairly and protects the association. Please review all the information available and cast your vote in accordance with what you view are the best interests of our members.

In Solidarity,

John Prater

 

[Nevets]

401(k) DUESABILITY INFORMATION​

BACKGROUND​

• Article IX, Section 3, of the ALPA Constitution and By-Laws (CBL) states that all airline income of a member is subject to dues.
• Section 4 identifies the elements of airline income that are exempt from dues, including 401(k) deferrals when the 401(k) plan is a pilot’s only pension plan. This section was adopted more than 20 years ago when 401(k) plans were largely deferred income plans and most pilots had other plans through which they received company-funded retirement benefits.
• In their 2002 contract, ATA pilots got a DC plan, which caused their 401(k) deferrals to become subject to dues. The ATA MEC asked the Executive Council to change the CBL to make all 401(k) deferrals exempt from dues.
• Subsequent to the request from the ATA MEC, the VP-Finance reported to the Executive Council that exempting all 401(k) deferrals would cost ALPA $6 million in annual dues revenue, which in a declining dues environment the Executive Council felt ALPA could not afford if the union was going to preserve the quality and level of service that members receive.
• The Executive Board directed the Executive Council in September 2006 to create a subcommittee to review all the exemptions outlined in the CBL, Article IX, Section 4.
• The subcommittee approached this issue with the intent to:
  1. Ensure fairness of ALPA dues structure within pilot groups and across the association;
  2. Simplify contractually-negotiated airline income reporting to ALPA in order to perform the annual dues reconciliation; and
  3. Analyze the effect on ALPA dues income with any change to the exemptions.
• The subcommittee made several reports to the Executive Council. One recommendation was to eliminate the exemption for 401(k) salary deferrals when the plan is the pilot’s only pension program. This recommendation was unanimously endorsed by the Executive Council and overwhelmingly approved by the May 2008 Executive Board. Since this is a change to the CBL, it requires a two-thirds majority BOD vote.

A MATTER OF FAIRNESS​

• First, it’s about fairness within a pilot group: At an airline where 401(k) income deferrals are exempt from dues, two pilots can fly the same equipment in the same seat and earn the same income. But, if one pilot defers income into a 401(k), he or she pays less in dues than a pilot who does not defer his or her income. Alternatively, at an airline with a frozen defined benefit plan, pilots who are newly hired may be eligible only for the 401(k) plan—not the frozen pension plan. Nevertheless, their 401(k) deferral is subject to dues under current rules, even though the only pension program available to them is the 401(k). This is the only way the provision can be administered because airlines cannot be relied upon to correctly interpret ALPA’s CBL and the airlines are not required to—and therefore do not—report detailed income information to ALPA to verify compliance with ALPA’s CBL.
• It’s about fairness between pilot groups: A growing number of pilot groups have only defined-contribution plans. Under current provisions, pilots at these airlines can receive the same level of company contributions to the retirement plan and defer the same amount of income within their 401(k)—but pay different dues amounts. How? If the company contribution is into a 401(k), the deferred income contributed by a pilot to such 401(k) is exempt from dues. But if company contributions are into a non-401(k) defined-contribution plan, these contributions are subject to dues.
• It’s about fairness across the whole union: The current CBL provisions incentivize pilot groups to consolidate retirement plans under a 401(k) umbrella to qualify for the dues exemption. More pilot groups either have consolidated or are planning to consolidate retirement plans within 401(k)s, with company contributions unrelated to employee contributions. This incentive is creating a growing inequity between pilot groups that have consolidated plans and those that do not. The ability of pilot groups to consolidate is affected by factors outside of their control, including the amendable date of their contract, negotiating timelines, and the willingness of their airline to negotiate changes.

IMPACT ON SERVICES​

• The Executive Council subcommittee estimated that in 2007, exempting all 401(k) deferrals would result in roughly $6 million in lost annual revenue.
• Leaving the current provision in place will put further downward pressure on dues income as pilot groups are incentivized to consolidate DC plans under the 401(k) umbrella. We will eventually lose the amount of dues revenue that would have been lost if the CBL was changed to exempt all 401(k) deferrals from dues.
• The recent loss of $15 million in dues as a result of losing AAA/AWA, KHA, SYX, ATA, ALO, and CHA has caused ALPA to undertake significant reengineering programs to offset the revenue loss. The resultant revenue loss to the Administrative and Support (A&S, or National) Account is, per policy, 60% or $9 million annually. In response to this, ALPA has already completed a reengineering plan, which has included the reduction of more than 100 staff positions and other cost-saving measures since the events of September 11. ALPA is under further pressure from airline capacity reductions and will have to make additional cuts.
• Making all 401(k) deferrals subject to dues would result in around $1.5 million in additional annual revenue.
• Further reductions in dues revenue and concurrent cost/service reductions will have the greatest negative impact on the smaller (Group B) airlines that do not have the MEC financial and internal staff resources of the larger (Group A) airlines.
• Additional revenue will be flowing back to the MECs that historically require supplemental funding by the OCF and MCF. This is more important today than ever because, as dues revenue declines, Group B airlines will receive less in MEC income under the ALPA Spending Limit Policy, and the amount of funding available in the OCF for supplementary MEC funding shrinks.
• The average per-pilot increase in dues would be around $7 per paycheck, for those currently not paying dues on income deferred to a 401(k).
• The additional dues amount to be paid by a pilot have been estimated as follows:

• Annual income of $25,000 or less: $.81/paycheck • $25,000 - $50,000 $2/paycheck • $50,000 - $75,000 $5/paycheck • $75,000 - $100,000 $7/paycheck • $100,000 - $125,000 $9/paycheck • $125,000 - $150,000 $11/paycheck • $150,000 - $175,000 $11/paycheck

 

[XJohXJ]

Thank you, Nevets.

I still can't believe so many pilots think of their union, ALPA, as some wizard of oz like entity hiding behind the curtain in DC.

ATTENTION PILOTS: YOU are ALPA. It is your union. You are wasting your own damn money if you misuse ALPA pac cards. You are wasting your own damn money if you participate in some ridiculous non-payment protest that will only end with you either paying everything owned or losing your job. This is not ALPA money, this is your money which you pay to fund your union so they can do work for you. What do you intend to accomplish by wasting your own money?

Now, although I think there is a great deal of misunderstanding around the whole 401(k) thing, any pilot is free to not like it. It is then your job to let your status rep know your opinion, and then your status rep's job to represent the majority interest. THAT is the way to address this.

Intentionally wasting your own unions money will not assist your union in fullfilling your unions fiduciary responsibilities.

Grow up and use your heads.

 

[Rez O. Lewshun]

Civil disobedience is for causes in which the effected people are not a part of the process. For example the Montgomery Bus Boycott, in AL in 1956.

However, ALPA members are a part of the process. They simply choose to remain aloof....

 

[McNugget]

Civil disobedience is for causes in which the effected people are not a part of the process. For example the Montgomery Bus Boycott, in AL in 1956.

However, ALPA members are a part of the process. They simply choose to remain aloof....

Civil Disobedience is quickly cured with the firetruck hose. A most effective remedy.

 

[BOX OFFICE]

Civil disobedience is for causes in which the effected people are not a part of the process. For example the Montgomery Bus Boycott, in AL in 1956.

However, ALPA members are a part of the process. They simply choose to remain aloof....

I'm interested in hearing your theory of how the membership of ALPA can FORCE their reps to vote no on this through "participation". Shall they all recall all of their reps before next week's vote?

Sounds to me like ALPA membership are NOT part of this process. It was rammed through the leadership by the executive council and hoped the membership wouldn't even find out until it was all over.

So you can stop making excuses for Herndon and blaming the membership for all the problems through a lack of involvement.

 

[sweptback]

I'm interested in hearing your theory of how the membership of ALPA can FORCE their reps to vote no on this through "participation". Shall they all recall all of their reps before next week's vote?

I did my part and talked to the reps and explained the reasons why I was against it. That's pretty much all I can do. If a rep votes against the wishes of their pilot group, then sure a recall is in order -- there's definitely a political risk in going against your constituency. But, a recall is hard to pull off and you have to get a lot of people organized, which is tough at the regional level.

However, if this thing passes and our reps vote against it, it's just us being on a losing side of the battle. If people want to seriously vote out ALPA over $5/paycheck then they're crazy, IMO. There are bigger battles to be fought.

 

[Rez O. Lewshun]

Civil Disobedience is quickly cured with the firetruck hose. A most effective remedy.

For the current date. However, it usually motivates more of the like people to show up in the following weeks and months....

In America firetruck hoses are only catalyst for change.

I'm interested in hearing your theory of how the membership of ALPA can FORCE their reps to vote no on this through "participation". Shall they all recall all of their reps before next week's vote?

Recall elections usually occur for two reasons:

1. The elected rep deserves to be recalled due to poor performance. (this 401k issue is not one as the logic for tapping pre tax 401k money is sound)

2. The membership simply doesn't have political SA. They go from aloofness to instant gratification of change via recall. IOW it is an emotional action.

Sounds to me like ALPA membership are NOT part of this process. It was rammed through the leadership by the executive council and hoped the membership wouldn't even find out until it was all over.

An inaccurate statement on your part and only shows your lack of information on the issue. You are not aloof are you?

So you can stop making excuses for Herndon and blaming the membership for all the problems through a lack of involvement.

The democratic process in alive and well in your airline career. It is your choice to participate. In other threads I've explained what how the membership can initiate a grassroots movement in this case.

The logic is understood as to why ALPA wants to do this, and I agree with that logic. However, I don't think ALPA should go through with this right now. The problem is the membership is too aloof to understand why the change is being made. Since they don't care to understand why and simply use crewroom gossip the political damage to ALPA might be worse.

If only we could have an engaged, informed and savvy membership. But don't fret too much.. participation in other democratic organizations such as HOAs and our gov't itself are lacking as well...

American Democracy: the ideals and much different than the practice. Nothing worthwhile comes easy... there is not much easy about democracy.... but I'd rather work at democracy than be subjected to unilateral rules of gov't, corporations and yes unions.

I did my part and talked to the reps and explained the reasons why I was against it. That's pretty much all I can do.

Wrong. How passionate are you about the issue? Are you willing to draft a resolution? Bring it to your LEC? What about a website? A petition? Leaflets? Crewroom chat sessions... All of this and more is available to us and we have the right to do so.. In non union companies your manager would simply tell you to stand down. In non democratic countries you go to jail. These our our democratic rights. Paid for in blood by many since 1776. Corny... perhaps.. but true...

If a rep votes against the wishes of their pilot group, then sure a recall is in order -- there's definitely a political risk in going against your constituency. But, a recall is hard to pull off and you have to get a lot of people organized, which is tough at the regional level.

Agreed. Is it.... what it is? Is it the reps fault? Or the aloof regional pilots? What if the regional pilots were organized and vocal. The reps would have to listen. When the membership doesn't speak the reps have carte blanc....

However, if this thing passes and our reps vote against it, it's just us being on a losing side of the battle.

Agreed. What is the next level of democracy? What else do we have?

If people want to seriously vote out ALPA over $5/paycheck then they're crazy, IMO. There are bigger battles to be fought.

Foreign ownership/Control....


If we don't protect our jobs and careers, the pay cuts from not having ALPA representation will be much much more than a measly $5.

 

[JoeMerchant]

Can anyone defend why ALPA needs more dues? Have they earned it? Has the President taken a paycut?

It's easier to tax a second year regional FO more than for the President to take a paycut.....

Kinda hard to ask a second year FO to pay more while the President of ALPA makes over $400,000 per year plus gets an ALPA pension plan....