How does an "A' plan work?

[BoilerUP]

I was just curious how a traditional defined benefit (A plan) works. Say your A plan is 3%. I know the benefit often comes from the highest 5 of the last 10 years. Do they take the average of those 5 years and give you 3% of that?

 

[FatesPawn]

I was just curious how a traditional defined benefit (A plan) works. Say your A plan is 3%. I know the benefit often comes from the highest 5 of the last 10 years. Do they take the average of those 5 years and give you 3% of that?

An A-plan is a pension. Not necessarily a Lump Sum, though some contracts may have stipulations for getting a "chunck of $$" instead of monthly/yearly payouts.

Final Average Earnings (FAE) x negotiated-multiplier x years of service

this is one pretty typical way of figuring your yearly pension payment

Example:

20 year career
Final Average earnings = $150,000
negotiated multiplier = 1.35%

20 x 150,000 x .0135 = $40,500 in annual pension payments.

Fate.

 

[typhoonpilot]

In the good old days it could have been as much as 65% of final average earnings as a yearly benefit, or perhaps a nice lump sum in the millions. Nowadays it is determined by the PBGC after they takeover your underfunded pension scheme, with a yearly max that isn't anywhere close to what you should have received.

TP

 

[Boogie]

Who has the best A-plan in the industry?

 

[typhoonpilot]

Who has the best A-Plan in the industry that isn't in danger of getting terminated ?

TP

 

[Goose17]

FedEx and UPS

Look toward cargo.

Goose17

 

[P3-Adub]

A Plan


Soon to be a thing of the past that is referenced when the good old days of a Major Airline careers are talked about. This as well as 300K salaries are going to be gone forever ! However, there are ample pilots out there that feel 100K is like winning the lottery. The RJ fleet is a breeding ground for the 120K top out salary of Jet Blue and the likes. The downward slide continues and is nowhere near the bottom.

"What is an A plan ?" Too funny. I also like the statement that UAL is dragging down the industry in pay and benefits. Right. The domino effect has begun. Who's next ?

Cheers !

 

[SWA/FO]

The A plan is your first plan of action... then there is plan B, plan C and so on...

 

[densoo]

The B Plan is typically yours, the A Plan is the company's and can be taken away at any time, changed from lump sum to annuity, removed in bankruptcy, etc.

 

[Goose17]

not quite so

A Plan


Soon to be a thing of the past that is referenced when the good old days of a Major Airline careers are talked about. This as well as 300K salaries are going to be gone forever ! However, there are ample pilots out there that feel 100K is like winning the lottery. The RJ fleet is a breeding ground for the 120K top out salary of Jet Blue and the likes. The downward slide continues and is nowhere near the bottom.

"What is an A plan ?" Too funny. I also like the statement that UAL is dragging down the industry in pay and benefits. Right. The domino effect has begun. Who's next ?

Cheers !

Don't count out the A plans and 300k+ salaries. We haven't at FedEx.

Goose17

 

[skykid]

Goose,

I wouldn't count on them either, even at FedEx. Traditional pensions are not part of the future in any industry. I'm working toward a retirement in the Guard, but I'm not even counting on that pension - if the Tricare For Life health care is still there I'll be satisfied. It's great your A plan is not threatened and I don't think it will be for awhile, but I wouldn't factor that money in your retirement plans.

 

[BoilerUP]

I knew the A plan was the company's responsibility (well, in some cases, the responsibility of the taxpayers) and the B plan was money the individual could invest, I just wasn't sure how the final dollar amount was termined.

Thanks for the replies!

 

[densoo]

I knew the A plan was the company's responsibility (well, in some cases, the responsibility of the taxpayers) and the B plan was money the individual could invest, I just wasn't sure how the final dollar amount was determined.

It is negotiated.

 

[FlyChicaga]

Could some people post what types of B-plans they have at their company? What we have here at ExpressJet has been referred to as a B-plan I believe.

 

[AlbieF15]

Kill and bury my A-plan tomorrow. I'll throw flowers on its grave.

Now...take that money you SHOULD have invested in my A-plan and give it to me in a B-plan.

Pros for the company--no hard booking keeping required, no debts piling up down the road, simpler tax accounting

Cons--the "high five" carrot goes away. So...when a guy at 55 looks at his nest egg and sees what he likes, he can say "see ya!" and retire when HE/SHE is comfortable. Also...if you have an A plan and your retiree dies at age 62...guess what? You just won! You only paid a very small percentage of his/her retirement. If you pay out a B plan, the decedents heirs will then have the money instead of your company.

I would LOVE to take the A plan away from FedEx, but I think the older crew force has counted on it too long, and the company knows the math is to its advantage to keep the plan as it is. It encourages a workforce that is very productive, especially in those last 5 years, and it also leads to windfalls when pilots die early. I'll support whatever our union negotiates, but if I were king I'd get rid of it tomorrow and provide some kind of "phase out" for our over 50 crowd.

Standard disclaimer...just a (wounded and DNIF) fighter pilot and I may be wrong....

 

[Dangerkitty]

Could some people post what types of B-plans they have at their company? What we have here at ExpressJet has been referred to as a B-plan I believe.

At AA our B-fund is an 11% Company made contribution of your monthly gross earnings. It is invested in a diversified stock portfolio that is managed by some AMR financial guru. Since inception it has averaged around 9% or so.

The B-fund is heads and tails better than an A-fund. The money is yours and never underfunded. The company cannot touch it once it is in your account.

 

[BluDevAv8r]

Could some people post what types of B-plans they have at their company? What we have here at ExpressJet has been referred to as a B-plan I believe.

Matt,

We actually have a hybrid whereby all company and pilot contributions go into the pilot's 401k which is individually controlled by the pilot. Some B Funds have an administrator that controls all of the assets for the pilot group - we do not. Our pilots have sole control over all of their assets, including the contributions made by the company. Ours is a hybrid because the company puts in a certain percentage whether the pilot contributes or not (the "B plan" portion) and the company also matches dollar for dollar up to a certain amount, depending on longevity. In your case, as a first year pilot, you get 2.5% in the "B plan" portion and a dollar for follar match up to 4% so assuming you put in 4% of your salary, the company will put in 6.5%. In my case, as a 6th year pilot, I get 4% for "free" and another 5% if I put in 5%, for a total of 9% from the company.

-Neal

-Neal

 

[klhoard]

Don't count out the A plans and 300k+ salaries. We haven't at FedEx.

Goose17

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Are they going to raise the Boeing F/O pay rate to $300 / hour??
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[Goose17]

nice poke

That is not what I was getting at, but I would like to eventually be in that ballpark much later in my career.

Goose17

 

[doh]

Nobody has come up with the obvious answer. They don't work very well! The government is involved and management is involved. That's a recipe for disaster if ever I saw one!