LCCs Retirement Plans???

[CitationLover]

That would depend on the contractual obligation the company has. Depending on how your contract is written, I don't see how a company can unilaterally terminate a contractual obligation to a DB anymore than they could unilaterally change your pay rates or work rules.

The contractual obligation is not being broken by a termination. Please understand:

YOU ARE NOT ENTITLED TO FUTURE BENEFIT ACCRUALS UNDER A DEFINED BENEFIT PLAN.

The benefits are frozen at the termination date, by law you cannot take away an ACCRUED benefit.

 

[FDJ2]

The contractual obligation is not being broken by a termination. Please understand:

YOU ARE NOT ENTITLED TO FUTURE BENEFIT ACCRUALS UNDER A DEFINED BENEFIT PLAN.

The benefits are frozen at the termination date, by law you cannot take away an ACCRUED benefit.

What if your contract stipulates that the company must maintain a DB plan, how can the company than cancel that plan. I'm not talking about federal regulations on how an employer can switch plans for non contract employees, but rather how can an employer switch plans for employees that they have a contractual obligation to maintain.

 

[CitationLover]

I'm not talking about federal regulations on how an employer can switch plans for non contract employees, but rather how can an employer switch plans for employees that they have a contractual obligation to maintain.

lots of ways. one extreme example i can think of.

say the old plan was 100% of FAP. the company can terminate the old plan and start a brand new one (0.1% of FAP) on service going forward from the termination date.

they wouldn't be the most popular company but it would still be coverage by a db plan. a popular plan these days is a cash balance plan that mimics a dc plan in a db environment. a lot of employers have been freezing prior benefits (or converting them to balances) and going forward with these. this has sparked some controversy as some think the cb plans are worth less.

anyways, its a good thing to have a db plan. they are good retirement vehicles that are sadly dying.

anyways all this retirement talk most people are ignoring the MORE valuable retirement benefit. that of retirement health insurance. do the major carriers typically provide this? this coverage can be yanked w/o warning (ie no vesting laws)

 

[FDJ2]

lots of ways. one extreme example i can think of.

say the old plan was 100% of FAP. the company can terminate the old plan and start a brand new one (0.1% of FAP) on service going forward from the termination date.

they wouldn't be the most popular company but it would still be coverage by a db plan. a popular plan these days is a cash balance plan that mimics a dc plan in a db environment. a lot of employers have been freezing prior benefits (or converting them to balances) and going forward with these. this has sparked some controversy as some think the cb plans are worth less.

I understand employers converting DB plans to cash balance plans, that's happened to our F/As, and it happens to other employees who do not have collective bargaining agreements. However, the company has not been able to do that with the pilots because the company is requirted to provide a DB plan, a very specifi plan. The company can not change the plan. It is a negotiated benefit covered in our PWA. The pay out methodology and the determination of the amounts owed to a retiring pilot are covered in our contract, just like our pay rates, health insurance and work rules. How can a company, outside of bankruptcy, change a DB plan to a cash balance plan, or change the amounts owed at retirement and pay out methods unilaterally, if those benefits are written into your collective bargaining agreement? If our collective bargaining agreement states that a pilot will receive 60% of his final average earnings for the three highest paid years in the last ten years of service and 50% of that may be issued in a lump sum based on the GATT rate and life expectancy, than how can the company unilatterally change that to 50% or a cash balance plan etc.

Again, we are not discussing federal pension laws, but rather contract law. If a contract says you must pay a retiring pilot "X" than how can the company unilaterally change that to "Y" without violating that contract.

 

[CitationLover]

i dunno. i would have to look at the contract. there might be some language in there stipulating when they can change it.

is your current er changing your benefit(s)?

 

[FDJ2]

i dunno. i would have to look at the contract. there might be some language in there stipulating when they can change it.

is your current er changing your benefit(s)?

No, my current employer is not changing my benefits. I consider myself lucky. For now.

The retirement section is perhaps the most complicated section of our contract, particularly since it also incorporates different pension obligations from acquired airlines that were merged into our operation. It's a difficult section to read and quite lengthy. I think it is safe to say, that if the company could have unilaterally modified our pensions, like they have with the non contract employees, they would have. There is some language that allows amendments to our pension, but it has to be agreed upon by both parties. I believe this has normally been done when blending pensions from acquired carriers into our PWA and in order to keep our pensions in compliance with any changes to federal law. Additionally, if we were to be released for self help at the end of section 6 negotiations the company would be released from their obligations until such time as a new contract is ratified.

Admittedly, quoting one paragraph in a lengthy section may not do the entire retirement section justice, but I'm going to go ahead and post an interesting paragraph from our PWA which I think explains why the company has not unilaterally altered our pension:

"Irrespective of any contrary provisions of the Retirement Plan, the MPPP, the Bridge Plan, the Supplemental Annuity Plan and the D&S Plan, the Company agrees that such Plans will not be amended, changed, varied, modified, or voluntarily discontinued during the term of this PWA and thereafter until the date the parties have been released to exercise self-help after exhaustion of the dispute resolution procedure of the Railway Labor Act, except as agreed by the pilots in the service of Delta Air Lines, Inc., as represented by the Air Line Pilots Association, International, and the Company, or except as otherwise required by law."

I think that we are both in agreement that a company must comply with it's contractual obligations and that the ability of a company to unilaterally amend your pension is dependent on the language contained in your PWA. The stronger the language, the less latitude the company has in amending your pension without your consent.

 

[CitationLover]

I think that we are both in agreement that a company must comply with it's contractual obligations and that the ability of a company to unilaterally amend your pension is dependent on the language contained in your PWA. The stronger the language, the less latitude the company has in amending your pension without your consent.

yes the company should stand by its written words.....but then again, who knows these days.

best bet, save as much as you can from your own pocket. the only one to blame in this would be yourself.

if you want to pm me a pdf of the retirement section i can look it over for you. also keep in mind when you get your final benefits, to have them checked as mistakes are made quite a bit. a lot of times some actuaries will only charge a % of the difference they net.