LCCs Retirement Plans???

[Nandu]

Ah yes, your ValueDeath roots, how could I forget. A terrible accident which was due to the criminality of your sub contractors and the convenient turning the blind eye of your management team.

Absolutely the most disgusting thing I have ever seen on this board!!

I could get into more mudslinging about Delta's accident history, but that would serve no purpose.

FDJ2...you should remove yourself from this board until you can control your emotions, and bring a little more professionalism to the forum.

 

[AA717driver]

I believe you don't have to be in Ch. 11 to terminate an A-Plan. You can do a distress termination and turn it over to the PBGC.TC

 

[canyonblue]

That number comes from our Negotiating Committee's publications and ALPA National's Retirement experts.

Sam

He's right. At my last airline I was on the negotiating committee, and during our talks with the big wigs at ALPA National we had many lengthy discussions with the head of R&I as during this section of the contract we wanted the best we could get (it was 2000 after all). A member of the NC brought up a DB plan and the ALPA National Rep looked at us and said "As management I would rather eat off my right arm than give you guys a DB plan". After all, he had spent years in management with PanAm and his expertise was apparent. He said the new laws requiring funding and oversight were way too costly to warrant a DB plan. The company would have to hire an actuary to oversee the plan and the better route would be to shore up a "B" plan, better 401k match, etc. He said the goal is 75% FAE no matter how you get it.

For those legacy carriers with a DB I would not bend on it at all as it is something that will never appear in an airline contract ever again.

 

[CitationLover]

i'm just saying 75% of FAE is way above average of ALL db plans (market wide, not just the airline industry) and is extremely aggressive. besides alpa could care less about retirement benefits. why would they want to negotiate aggressively for ret bfts when they don't pay any dues? the reason is: it is a bargaining chip to be removed for higher wages.

also keep in mind that there are govt limits (IRC 415) that may not allow the benefit to be 75% of FAE. if that is the case, and it is with most senior retiring airline pilots, then the plan is way too inefficient.

fyi, a company does not have to be in chapter 11 to terminate a plan. they can terminate whenever and pay an excise tax on the excess assets.

 

[Sam Fisher]

i'm just saying 75% of FAE is way above average of ALL db plans (market wide, not just the airline industry) and is extremely aggressive.

...

also keep in mind that there are govt limits (IRC 415) that may not allow the benefit to be 75% of FAE. if that is the case, and it is with most senior retiring airline pilots, then the plan is way too inefficient.

Citation,

What I have read is that the sum of all of one's retirement package should equal 75% of FAE - NOT that the DB plan itself should provide for that. Take your 401k, B-Plan, personal misc. savings, social security, etc...and THAT should equal 75% FAE. This is coming from not only our NC but also from an advisor at ALPA National who has worked in the R&I world for 30+ years...on all sides of the fence.

I don't understand this comment:

besides alpa could care less about retirement benefits. why would they want to negotiate aggressively for ret bfts when they don't pay any dues? the reason is: it is a bargaining chip to be removed for higher wages.

This makes zero sense whatsoever. Who is "ALPA?" Do you mean each individual MEC's NC? Or ALPA National as a whole? Do you have any idea how the bargaining process works? What does paying dues have to do with getting a retirement plan in place?

Sam

 

[CitationLover]

fisher i got you k=now, the three legged stool concept (er, govt, personal). that makes more sense.

as far as alpa negotiating retirement benefits, it is true that this is a carrot that they would easily remove. consider:

active retirees are not represented by alpa (thus no cola's)

the younger members typically give two squats about retirement until they reach their late forties.

pay rates, days off, per diem rates, etc are the items that really drive negotiations (imho) not retirement benefits


i think the benefits are added at the beginning stages or offerings knowing that they will be staged back and viewed as concessions by alpa in the negotiation process.

 

[Sam Fisher]

as far as alpa negotiating retirement benefits, it is true that this is a carrot that they would easily remove. consider:

the younger members typically give two squats about retirement until they reach their late forties.

pay rates, days off, per diem rates, etc are the items that really drive negotiations (imho) not retirement benefits

i think the benefits are added at the beginning stages or offerings knowing that they will be staged back and viewed as concessions by alpa in the negotiation process.

Again, you are showing some true ignorance to the actual bargaining process. I'm at an airline where the median age right now is roughly 32. Yet, retirement benefits is right up there with pay, scope, and work rules. One shouldn't start saving for retirement at age 40. That's ludicrous.

Please remember, it isn't "ALPA" negotiating ANYTHING. It is the pilot negotiating committee doing the decision-making. ALPA National has very little to do with airline's negotiating process. At our airline, retirement is being handled the same as the other economic items from what I can tell. Every economic item is a bargaining chip to some degree.

You need to open your eyes a little and quit buying into the BS, misinformation, and rhetoric.

active retirees are not represented by alpa (thus no cola's)

What do active retirees have to do with anything? If they had an A-Plan, their benefit is taken as either a lump sum or a yearly payout and for the most part (barring a USAIR situation), their retirement is protected. You can't negotiate away an active retiree's package. If there is only a B-Plan, this holds true even more so as the money is protected and is in control by the actual pilot in most of the cases and by a union trustee in other cases.

Happy New Year!

Sam

 

[CitationLover]

sam,

you're not understanding me. im not out to blast alpa....im just saying that as a whole the union would rather have other things. i know it is the mec that negotiates, however isn't duane woerth's signature made on the finalized contract? alpa national has to sign off on it. remember cc air?

ive been involved in numerous union negotiations as a consultant for mgmt and i'm telling you this is the first things we look at:

avg age/svc/inc and base a strategy on that.

airline pension negotiations as a whole are no different than hospital/sen mgmt negotiations.

 

[FDJ2]

fyi, a company does not have to be in chapter 11 to terminate a plan. they can terminate whenever and pay an excise tax on the excess assets.

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.

 

[Sam Fisher]

sam,

you're not understanding me. im not out to blast alpa....im just saying that as a whole the union would rather have other things. i know it is the mec that negotiates, however isn't duane woerth's signature made on the finalized contract? alpa national has to sign off on it. remember cc air?

ive been involved in numerous union negotiations as a consultant for mgmt and i'm telling you this is the first things we look at:

avg age/svc/inc and base a strategy on that.

airline pension negotiations as a whole are no different than hospital/sen mgmt negotiations.

You might not intentionally be out to blast ALPA, but your posts are full of that nonsense frankly. You keep saying "the union".....who are you talking about? Some entity at national? Or each individual pilot? The "union" is about the group...each individual pilot added up, hence the word "union." Duane's signature is not much of an issue on a normal contract. The CC AIR deal was an anomoly and involved a unique set of issues. Don't box in all of ALPA and the normal bargaining process by the Mesa Air/CC Air deal.

Nonetheless, you still make no sense in my opinion.

Sam

 

[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.