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American pensions

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race#53

Well-known member
Joined
Aug 19, 2002
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183
By tmaxon
[email protected]
10:40 am on November 26, 2012 | Permalink
This weekend I received two complaints about a Friday item, the request of American Airlines to do away with a retiring pilot’s option to get his or her pension as a lump sum.
1. Someone in American management complained that I should have highlighted that the request was a result of consensus between American, the Pension Benefit Guaranty Corp., the Allied Pilots Association and unsecured creditors committee.
That was true – not at the start of the process, but eventually.
American on Feb. 1 proposed terminating all its employee pensions including the A Plan and the B Plan for pilots. The A Plan is the defined benefits pension and the one that draws the PBGC’s attention.
American, as the previous item details, feared that it would have a massive number of pilot retirements if pilots could take their defined-benefit as a lump sum – not so much for the drain on the A Plan but the unmanageable departure of many senior pilots.
Terminating the plan would have meant that the pension would have been turned over to the PBGC, and would have been subject to the annual cap on pensions. In 2012, the maximum would have been $55,836 a year for people who retired at age 65. Earlier retirements or those who elect survivor benefits would get less.
I think many veteran pilots have earned pensions much higher that the PBGC maximum.
The PBGC fought American’s proposal hard with public scoldings. But American said Treasury regulations would not permit it to do away with the A Plan’s lump-sum option, a benefit that had been promised..
In early March, American agreed to freeze pensions for all employees except pilots and to work with the PBGC, APA and the UCC to find a way to freeze the pilot plans as well. In June, the Treasury Department proposed a regulation to let AA do so. It was formally adopted in early November.
The B Plan, the defined contribution plan, is to be terminated Friday and each pilot’s share will be distributed to them in 2013. It wasn’t part of the request.
2. The other complaints were about what I didn’t write and the court filing didn’t cover. The first said I should have stated that it was the A Plan and not the B Plan.
Another was from a pilot who wasn’t happy about what I didn’t write and what the court filing didn’t cover. I think he wanted some editorializing from me about good and evil.
Here’s the gist of his email:
“This report only is about the A-fund, which is smaller than the B-fund (the B-fund is never mentioned in this report about pilot pensions). Do you think it would be important to include in your reporting that AA management unilaterally recently decided to stop funding the B-fund and pay out as a lump sum? What about the “massive wave of pilot retirements” and “pilot shortages” because of the lump-sum payout of the B-fund (which is much bigger than the A-fund) management is paying out soon? What about maybe another reason they don’t want to payout the A-fund lump sum, like because they have underfunded the A-fund and that money and the money to pay out the A-fund as a lump sum would have to come from things like management’s bonuses and golden parachutes? Would it be an important part of the story to report that it was management who asked congress to approve the pension under funding and names of which congressmen and senators in Texas who voted to do just that? Would it be important to report the irony that AA management who failed in their obligation to fund the pilot’s A-fund pension are now blaming the pilots for potentially causing a pilot shortage by getting what management had promised them but management used the bankruptcy laws to break those promises they made?”
There are many writers whose work appears on the Internet who do comment, editorialize, pick the right side and the wrong side, etc. In general, I try not to do that. I attempt to present the information as neutrally as possible so the reader can decide what he or she thinks about it.
So I’m afraid that in my present job, I will continue to disappoint readers who want me to not only report on what’s going on but declare it to be wicked or righteous. It is my limitation, or one of them.


http://aviationblog.dallasnews.com/tag/pension-benefit-guaranty-corp/
 

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