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CAL inching towards ceasing lump sum option

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densoo

Well-known member
Joined
Nov 2, 2004
Posts
2,054
And the eventual value of the Lifetime Annuity "option" with any airline in this day is probably near zero.

CAL declares bankruptcy, hands it over to the PBGC, then the government pays a dime to the dollar, or will zero it out because of the deficit.

"Even with CAL’s assurances, you should be aware of the consequences of a liquidity shortfall. If a liquidity shortfall occurs, and CAL fails to make a contribution to cure it, they would be in violation of applicable pension legislation and would be subject to a ten percent excise tax on the amount of the liquidity shortfall. For example, if at the end of the fourth quarter, there is a liquidity shortfall of $15M, CAL could contribute $15M to the pilot pension fund to make up the shortfall or instead, they could pay $1.5M to the IRS as a penalty. To pay the excise tax rather than make a contribution seems a waste, since the excise tax does not go towards paying benefits or offsetting the shortfall, but rather solely to the IRS’ coffers. It is important to note, however, that if CAL chooses to pay the excise tax in lieu of making the necessary contributions, the lump sum option would not be available for each affected quarter.

CAL has this year contributed $70M into the non-pilot pension fund (the one management is in) and only $32M into the pilot pension fund. The non-pilot pension plan is being funded above the 80 percent level -- the minimum level necessary to protect their lump sum-- while our pension plan has deteriorated and come closer to a liquidity shortfall and the possible resulting suspension of our lump sums."
 
Betcha' the age-60+ guys who decided to stay are kicking themselves now for not taking the early retirement package that was offered 2 months ago.

Gee, you get to work till your 65 (if you can make it that long), pay more taxes, and have pretty much nothing left when finally given the boot.

Can't wait to hear their whining once they really have to hang up flying for good.
 
I will not listen to anyone complain about losing thier lump sum if they were eligible to go under the ERW and didn't. Period.
 
Ya, cuz 75k or whatever it was was HUGE money. Think how much these guys will be losing in their frozen A fund. I don't think this is the case. It was a letter given to Kellner warning him of the shortcomings of their contributions, thus resulting in a possible liquidity of assets. Won't happen. If anything, it's a prod to get moving with it. We'll see.
 
It could have been as much as 150k. Whatever it was the ship has sailed; Will not happen again IMHO. Larry offered the ERW so he can look them in hte eye when it's terminated or the lump sum ends and say he gave them a chance to get out. Too stupid to help themselves.
 
It could have been as much as 150k. Whatever it was the ship has sailed; Will not happen again IMHO. Larry offered the ERW so he can look them in hte eye when it's terminated or the lump sum ends and say he gave them a chance to get out. Too stupid to help themselves.

100K was the top amount.
 
100k, thanks. I wasn't sure.

Did any of these guys not think there wouldn't be a funding disparity when they forced their money out of the single A plan? I have a small amount in there so they wouldn' listen to me. I felt to single out the pilots was to put a bullseye on it.
 
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