continental pension underfunding

[densoo]

For the umpteenth time, if you believe this you are STUPID. Management WANTS the lump sum option as it reduces the plans liability and administration costs once it is exercised. Are you too stubborn to see this? Management has NO right to the money in the plan once its there except if the plan is terminated and you have overfunded funds in there (which is not the case now). Call any ALPA R&I rep and please get FACTS before spouting off.

CAL MEC Blastmail, 11 Mar 09: "We have senior pilots who are rightfully worried about another liquidity shortfall later this month due to management’s refusal to adequately “Fund the Future” of our frozen “A” plan, and we have junior pilots clinging to the bottom of our seniority list who are, as a whole, unified and not afraid to fight. Management has set the stage for a perfect “divide and conquer.” "

 

[SFR]

Yep, CAL is still terrible, just terrible. Actually I wish that anyone who hates CAL would quit if you are senior to Dec 2005!!!!!

I have flown 24.6 hours YTD!!!! Reserve rules and so does CAL!!!!

 

[densoo]

Yep, CAL is still terrible, just terrible. Actually I wish that anyone who hates CAL would quit if you are senior to Dec 2005!!!!!

I have flown 24.6 hours YTD!!!! Reserve rules and so does CAL!!!!

I've got mine, so life must be great for everyone.

 

[Flopgut]

SFR=sniffing Frank's [Lorenzo] rectum.

 

[CitationLover]

CAL MEC Blastmail, 11 Mar 09: "We have senior pilots who are rightfully worried about another liquidity shortfall later this month due to management’s refusal to adequately “Fund the Future” of our frozen “A” plan, and we have junior pilots clinging to the bottom of our seniority list who are, as a whole, unified and not afraid to fight. Management has set the stage for a perfect “divide and conquer.” "

This is not CAL management purposely not funding a pension plan (which would incur IRS levies and fines), but it's asset pool tanking while interest rates are dropping.

Everyone's pension plan is crashing, while a year ago they were booming.

http://news.prnewswire.com/DisplayR...STORY=/www/story/02-12-2009/0004971467&EDATE=

Pension Plan Funding Status Tumbled in 2008, Watson Wyatt Analysis Finds

Asset Drops Aggravated by Fourth-Quarter Plunge in Discount Rates

WASHINGTON, Feb. 12 /PRNewswire-FirstCall/ -- Pension plan funding levels at large U.S. companies reached historically low levels at the end of 2008 due to sharp declines in pension assets and discount rates, according to an analysis by Watson Wyatt, a leading global consulting firm.

"Changes in funded status are wreaking havoc with the projections companies have made," said Alan Glickstein, senior retirement consultant at Watson Wyatt. "Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it."

The analysis looked at pension data for 450 Fortune 1000 companies and projected their pension funding status for 2008.* The results indicate that, on an aggregate level, funded status will decline an average of 32 percentage points, from 106 percent in 2007 to 74 percent in 2008. This represents a total loss of $445 billion, wiping out a 2007 surplus of $78 billion and leaving these companies with a combined $366 billion deficit on their year-end 2008 financial statements.

Pension funding levels are determined by comparing the value of plan assets to liabilities. In 2008, plan assets fell a total of 24 percent; since October this fall has been compounded further by rising liabilities.

For accounting purposes, the present value of future payouts to retirees (plan liabilities) is determined by using discount rates based on high-quality corporate bond yields. When bond rates drop, liabilities go up and pension funding levels go down. The analysis projects the significant decline in corporate bond yields over November and December 2008 increased liabilities in aggregate by $363 billion.

At the end of 2007, 46 percent of plan sponsors realized funding levels between 90 and 110 percent, and only 5 percent had levels between 50 and 70 percent. In contrast, Watson Wyatt estimates that only 5 percent of plan sponsors will have funding levels between 90 and 110 percent at the end of 2008, and that funding for 61 percent of sponsors will fall between 50 and 70 percent.

"Plan sponsors are feeling the effects of a pension funding crisis with both asset values and interest rates dropping," said Jim Shaddy, North American retirement practice leader for Watson Wyatt. "We urge Congress to respond with the appropriate temporary relief for plan sponsors."

* Editor's note: The 450 companies analyzed represent Fortune 1000 firms with December fiscal year-end dates for which complete data was available. These figures are estimates; actual year-end 2008 results will not be publicly available until spring 2009.

For more information, read the Watson Wyatt Insider article:

http://www.watsonwyatt.com/us/pubs/insider/showarticle.asp?ArticleID=20471

Read about employers' increased contributions: http://www.watsonwyatt.com/news/press.asp?ID=20380

While I agree you are worried about the senior folks selling you out, it's airline labor history 101. For the senior folks, who have the A plan. They deferred pay (ie didn't negotiate higher pay rates in lieu of this plan) for these benefits (thats what a pension does) and thus should be entitled to see it. I can also see why a junior person would also not want their pay rates lowered to subsidize this. This isn't some grand management scheme to "divide and conquer" (you give them too much credit for being intuitive and smart), but rather a simple mathematical fact of airline operations due to the seniority system. Once an airline matures, you will have senior and junior groups all with their own self interests.

Management wants deferrals on putting money into the plans, yet how will that solve the problem? The problem is with pensions in and of themselves. They are no longer a useful retirement funding mechanism and are outdated. This is why so much money has shifted into a 401(k) or some other DC plan. Much easier administration and portability for the recipient. Companies like Watson Wyattt completely shifted their business in the 80's and 90's to DC consulting and HR outsourcing as they saw this coming.

 

[tie1on]

March 27th is the magic day that the senior puked have their lump sum option suspended. will it ever be reinstated who knows, doubtful.

they should have retired when they had their large sum of money. too bad for the stupid

 

[luckytohaveajob]

Its official the LUMP SUM retirement option is toast! Just got a call.

So what is the difference between UAL and CAL?

CAL now truly is the MESA of the majors. What work rules does CAL have? What pay rates? What benefits? What vacation rules? What scheduling rules? What safety and training standards? And the answer to those questions, MESA standards!

CAL is MESA without the RJ's.