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Pilots group to pay $44 Million

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Most actuaries will tell you that, over the long-term, B-plans and 401k plans with high company matches will be more expensive than A-plans. The real problem originated back in the '80s when companies got the conservatives to allow them to underfund their pensions when the market was doing good. If full funding would have always been required, then we never would have had a problem.

Heyas,

PCL is essentially correct. A properly managed 'A' fund costs the company relatively less over the long term.

The rules were stacked against the A funds, and the perfect storm wiped them out. As a whole, the funds represented a GIGANTIC piggybank that fund managers couldn't touch, and like check float and equity in your home, represented an irresistable target for money people.

1) A properly and conservatively managed A fund costs relatively little to fund. But it's not "sexy" (IE profitable) to fund managers to work with DB plans.

2) During the "good" years (high returns), companies are restricted to how much they contribute, because contributions to DB plans are tax deductions for corporations. The government didn't want corporations "hiding" profits from taxes in retirement funds. As a result, there is no "putting away for a rainy day", not because they didn't want to, but because the government prohibited it.

3) But during the "bad" years (zero or negative returns), the bill for funding the DB plans was due RIGHT NOW, despite the fact the inevitable market recovery would more than correct any dips in plan funding. It's like if you lost your job, the bank called in your enitre morgage to be paid, even though you another job lined up in 3 months and had more than enough in savings to cover the months you'd be out of work.

An eventual market recovery would have rescued many of the failed DB plans, or at least placed them on a MUCH better footing with the PBGC, resulting in better overall recovery.

Ironically, during the boom years, many companies refused to convert their DB plans into "real money" plans because the DB plans returns required ZERO funding due to great returns.

401k and other "real money" plans allow people to tinker with their funds, representing nice, profitable "churn" for the money managers to charge fees...and unlike the fees charged to manage DB funds, these fees are charged to the employee.

But the media has the public sheeple so hoodwinked that no one bothers with the facts anymore. Probably the same people that think debit cards and home equity loans are there for "customer convienence".

Nu
 
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These senior pilots just won't go away on any front. They spent most of their careers up until several years ago, earning a fair wage. They had reasonable opportunities for hire at a major airline back in the day, with reasonable advancement in terms of upgrade opportunities, and retiring as a widebody CA's. If after earning the equivalent of over 200 grand a year in the 80's and 90's, they couldn't properly plan for retirement, is pathetic!! Should their pensions have been allowed to be basically stolen by the monkey sh*t that fills the offices of airline management? Absolutely not! But that is the titanic failure of the overwhelmingly pro-business and anti-labor laws of the good ole USA! Not to mention these senior guys holding up everyones already limited career movement thanks to age 65. Something their own career paths were not affected by back when they were trying to hold that left seat job. There are more pilots the age of 60, and 61 at AA than the total combined under 40! I wish these old timers would just go away! Perhaps an intense battery of cognitive tests for anyone 60 or older. From my experience, that would rid us of at least half of the over 60 crowd.
 
http://online.wsj.com/article/SB100...5017482173520698.html?mod=WSJ_latestheadlines

The Air Line Pilots Association International, in a major financial setback, is about to pay $44 million to settle a lawsuit brought by a group of senior United Airlines pilots, according to an attorney for the pilots.

But Thursday the union fought back by suing the pilots' current or former employer, United parent UAL Corp., in state court in New York City. The lawsuit seeks the $44 million that ALPA is paying out in the settlement.

A spokeswoman said the union declined to comment. United said it hasn't been formally served with the complaint and can't discuss pending litigation.

Last month, a U.S. District Court judge in Chicago approved the settlement of the original suit, filed more than three years ago, by some veteran United pilots who objected to the way their local ALPA leadership chose to split up a lump-sum payment related to United's termination of their pension plan in bankruptcy reorganization.

With the window for appeals now passed, the settlement is final, said Myron Cherry, one of the pilots' lawyers, and ALPA is expected to make payment within weeks. After legal fees and expenses, the 2,200 plaintiffs in the class-action complaint are expected to receive a total of $28 million.

A spokeswoman for ALPA, which represents 50,000 commercial airline pilots, declined to comment on the settlement. It is a potentially serious blow to the union, which already is facing reduced dues income amid airline failures, furloughs and lower pilot pay rates. Although ALPA has a large insurance policy, its deductible is believed to be multiple millions of dollars, said one person familiar with the matter.

Now it appears that ALPA thinks it can force United, an intervenor in the original case, to pay up. The crux of this dispute arose when UAL was in bankruptcy proceedings and said it couldn't afford to keep its four employee pension plans, which were underfunded by $9.8 billion. The plans ultimately were assumed by the Pension Benefit Guaranty Corp., which now makes payments to United retirees.

United and its employees agreed to new 401(k)-type pension plans and the airline gave the workers convertible notes to help make up for shortfalls they would experience when the PBGC took over the pension payments. ALPA and United agreed that the pilots would receive $550 million in convertible notes, and the airline indemnified the union from paying damages related to the bankruptcy plan. That agreement could be revisited in light of ALPA's lawsuit Thursday.

The local union branch that represents United's then-6,600 active pilots debated how to allocate the proceeds from the sale of the notes and ultimately voted to use a method that would reward all the pilots. The plaintiffs contended that method provided a windfall to the airline's junior pilots, who were the majority and controlled the local union leadership, at the expense of the senior aviators.

The junior pilots lost little or none of the benefits they had earned under the terminated plan. But the 2,200 senior pilots, who already had accrued sizeable benefits based on their higher incomes and longer years of service, had much money on the line. The suit claimed the union took more than $200 million from the plaintiffs for benefits they already had earned in their pension plan and gave it to junior pilots for benefits they hadn't earned, a breach of ALPA's duty of fair representation.

The federal judge last July denied motions by ALPA and United for summary judgment in the case. Days before the dispute was set to go to a jury trial last October, ALPA agreed to settle, said Mr. Cherry, the plaintiffs' lawyer.

ALPA had $100 million in net assets at the end of 2008, according to its most recent financial report filed with the Department of Labor. That was down from $132.1 million at the beginning of 2008. ALPA took in total receipts, including dues income, of $233.5 million that year, and it disbursed $238.1 million.

John Mansfield Jr., a 27-year United pilot who retired in 2005, was the first named plaintiff in the lawsuit. He receives about $27,000 a year in retirement benefits from the PBGC, he said. Because of a law – now changed – that pilots must retire at age 60, their PBGC payments were reduced from what they would have gotten if they retired at 65. Before United jettisoned the pilot plan, Mr. Mansfield said he had expected to retire on as much as $80,000 a year.

He thinks his part of the $28 million settlement will amount to about 12% to 13% of what he would have received in note proceeds had the union adopted what the senior pilots considered fair. He said that probably will be the case for the others in the class. Mr. Cherry, the attorney, said the payment formula will lead to varying results. A handful of the pilots will receive six-figure one-time payments, many are in line for payments of $25,000 to $35,000 and some will receive much less, he said.

Mike Glawe, a former ALPA leader at United and still an active pilot, said the settlement "isn't going to reestablish anybody's retirement security." But he, another of the named plaintiffs, said it sends a message: "A political majority still has to fairly represent the interests of a political minority."




It seem's I've heard that mentioned somewhere before ......:rolleyes:

PHXFLYR:cool:
 
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