Mr. Irrelevant
Well-known member
- Joined
- Nov 26, 2001
- Posts
- 562
Everyone,
I rarely start threads. I'm much more of a lurker however after reading in the past on here how pilots slam places like SWA for not having a retirement plan because they don't offer a pension or defined benefit plan this article on what is occuring at U.S . Airways will hopefully open some eyes. It came from the Washington Post.
I think everyone should understand that a defined benefit plan like this is only guaranteed to a certain extent whereas a defined contribution plan (401k) like the one offered by SWA (dollar for dollar match on the first 7.3% of salary) is yours for life!! Without going into too much detail, all the plans are different just like airline pension plans but no one walks away with your money if the company has financial issues.
The market will come back as it always has over the last 10 years so the shortfall you read about in the article could possibly be less in only 2-4 years but it won't skyrocket as it did a few years ago and by then, this company will have restructured that pension plan or as it appears may not even be the administrator of it or what is left. I don't mean to be a preacher or an as- - - -e but I think understanding these issues is really important stuff no matter what industry one works in. ok, I'll shut up- here's the article.....
"US Airways will probably have to terminate its pilots' pension fund after a government agency refused yesterday to give the bankrupt company more time to meet its funding obligations.
The Pension Benefit Guaranty Corp. is likely to take over the severely underfunded pension plan and cut benefits by as much as 75 percent.
US Airways pilots, executives and senators from Pennsylvania, where the airline has two major hubs, made a last-ditch effort yesterday to persuade the quasi-public agency to permit the airline to repay the $3.1 billion pension shortfall in 30 years instead of the maximum seven years allowed under federal guidelines. That would allow the Arlington-based company to continue paying retired pilots, at least in the short term, but further drain the pension fund, which currently has 50 cents in assets for every dollar in liabilities.
Pilots have already given up future retirement benefits in recent contract concessions, said Duane E. Woerth, president of the Air Line Pilots Association.
"The danger now is that even benefits that pilots have already earned over many years of service will be slashed dramatically due to a potential plan termination," Woerth said. The pilots union is lobbying Congress to make an exception to the rule for US Airways.
In a hearing before a Senate subcommittee yesterday, Steven A. Kandarian, chief executive of the Pension Benefit Guaranty Corp., said the agency does not have the legal authority to grant relief to US Airways and could not justify giving special treatment to a single company.
The agency is administered by the federal government but receives no public money. It insures the defined-benefit pension plans of 44 million private-sector workers with premiums paid by participating companies. Employers that offer defined-benefit plans promise to pay for a certain amount of benefits.
US Airways probably will terminate the pension plan and shift its liabilities to the pension agency. Tomorrow, a federal bankruptcy judge in Alexandria will begin hearings on the airline's restructuring plan, which is to be sent to creditors.
That plan must address the looming pension obligations if US Airways is to qualify for a $900 million federal loan guarantee. The guarantee is in turn a condition of the company's financing agreement with its lead investor, the Retirement Systems of Alabama, which is providing money to keep the airline operating.
Sen. Rick Santorum (R-Pa.) introduced a bill last week that would have given US Airways permission to stretch out its pension payments, but Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, and other senior senators refused to let it be passed immediately. Several of US Airways' competitors had called members of Congress to say that it would be unfair to single out one carrier for aid when nearly all airlines have financial problems and have let go of thousands of workers to cut costs. Wil Ris, a lobbyist for American Airlines, said he would be more supportive if the bill would allow all airlines to restructure pension payments.
An extension of the airline's payment schedule or a federal takeover of the pension plan would allow US Airways to overcome a huge obstacle to emerging from Chapter 11 bankruptcy protection. How that is accomplished will matter most to the pilots, whose high incomes mean their promised benefits would exceed the maximum insured by the federal pension agency.
"The hearing on Thursday is not on the reorganization plan itself," said Roy Freundlich, a spokesman for the US Airways division of the pilots union. "We still have time to pursue a legislative solution and that's what we're going to be doing."
I rarely start threads. I'm much more of a lurker however after reading in the past on here how pilots slam places like SWA for not having a retirement plan because they don't offer a pension or defined benefit plan this article on what is occuring at U.S . Airways will hopefully open some eyes. It came from the Washington Post.
I think everyone should understand that a defined benefit plan like this is only guaranteed to a certain extent whereas a defined contribution plan (401k) like the one offered by SWA (dollar for dollar match on the first 7.3% of salary) is yours for life!! Without going into too much detail, all the plans are different just like airline pension plans but no one walks away with your money if the company has financial issues.
The market will come back as it always has over the last 10 years so the shortfall you read about in the article could possibly be less in only 2-4 years but it won't skyrocket as it did a few years ago and by then, this company will have restructured that pension plan or as it appears may not even be the administrator of it or what is left. I don't mean to be a preacher or an as- - - -e but I think understanding these issues is really important stuff no matter what industry one works in. ok, I'll shut up- here's the article.....
"US Airways will probably have to terminate its pilots' pension fund after a government agency refused yesterday to give the bankrupt company more time to meet its funding obligations.
The Pension Benefit Guaranty Corp. is likely to take over the severely underfunded pension plan and cut benefits by as much as 75 percent.
US Airways pilots, executives and senators from Pennsylvania, where the airline has two major hubs, made a last-ditch effort yesterday to persuade the quasi-public agency to permit the airline to repay the $3.1 billion pension shortfall in 30 years instead of the maximum seven years allowed under federal guidelines. That would allow the Arlington-based company to continue paying retired pilots, at least in the short term, but further drain the pension fund, which currently has 50 cents in assets for every dollar in liabilities.
Pilots have already given up future retirement benefits in recent contract concessions, said Duane E. Woerth, president of the Air Line Pilots Association.
"The danger now is that even benefits that pilots have already earned over many years of service will be slashed dramatically due to a potential plan termination," Woerth said. The pilots union is lobbying Congress to make an exception to the rule for US Airways.
In a hearing before a Senate subcommittee yesterday, Steven A. Kandarian, chief executive of the Pension Benefit Guaranty Corp., said the agency does not have the legal authority to grant relief to US Airways and could not justify giving special treatment to a single company.
The agency is administered by the federal government but receives no public money. It insures the defined-benefit pension plans of 44 million private-sector workers with premiums paid by participating companies. Employers that offer defined-benefit plans promise to pay for a certain amount of benefits.
US Airways probably will terminate the pension plan and shift its liabilities to the pension agency. Tomorrow, a federal bankruptcy judge in Alexandria will begin hearings on the airline's restructuring plan, which is to be sent to creditors.
That plan must address the looming pension obligations if US Airways is to qualify for a $900 million federal loan guarantee. The guarantee is in turn a condition of the company's financing agreement with its lead investor, the Retirement Systems of Alabama, which is providing money to keep the airline operating.
Sen. Rick Santorum (R-Pa.) introduced a bill last week that would have given US Airways permission to stretch out its pension payments, but Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, and other senior senators refused to let it be passed immediately. Several of US Airways' competitors had called members of Congress to say that it would be unfair to single out one carrier for aid when nearly all airlines have financial problems and have let go of thousands of workers to cut costs. Wil Ris, a lobbyist for American Airlines, said he would be more supportive if the bill would allow all airlines to restructure pension payments.
An extension of the airline's payment schedule or a federal takeover of the pension plan would allow US Airways to overcome a huge obstacle to emerging from Chapter 11 bankruptcy protection. How that is accomplished will matter most to the pilots, whose high incomes mean their promised benefits would exceed the maximum insured by the federal pension agency.
"The hearing on Thursday is not on the reorganization plan itself," said Roy Freundlich, a spokesman for the US Airways division of the pilots union. "We still have time to pursue a legislative solution and that's what we're going to be doing."
