U.S. to Take Over UAL Pilots' Pensions

[FoxHunter]

B-man, I think you are wrong. I think once you get past 65 you get the max benefit. I'm relying on info from the WSJ though and have not done the research myself. I'll look it up.

Maximum Monthly Guarantee from PBGC Web Site

I think you will find that if you wait to age 65 to collect your pension you will get $44,386. Since the FAA mandated retirement age is age 60 I'm not sure that is even an option, or wise since you would be getting no income for at least two years and only the reduced Social Security for the next three. In any case if you read the chart in the link you will find that at age 60 the max the PBGC will pay is $28,851.12 per year in 2004.

I'm not sure that the taxpayer will have to pay anything toward pilot pensions since although they are underfunded for the promised retirements of $100,000+ there may be no underfunding when these payments are reduced by 70-80%.

 

[satpak77]

just curious

how Kit Darby will make out when all the dust settles

 

[FoxHunter]

Questions from the USAIR section of the PBGC web site. You will notice the reduction in MAX Payment if you are married.

US Airways Plan Frequently Asked Questions

 

[CitationLover]

The government never was into backing pensions until there was a law passed by congress (some time back, the date escapes me), that said these large corporations didn't have to fund the pensions 100%. The companies I guess thought it was too much of a burden, and the cash could be used somewhere else, instead of what it was supposed to be used for. I can't believe it ever passed, but here we are. It amounts to fraudulent activity, just my opinion.

Employment Retirement and Income Securities Act of 1973.

The pension "underfunding" is a result of TWO primary reasons:
1) the bull stock market of the late 90's caused most pension fund managers to shift away from the 60/40 traditional asset allocation into a more stock heavy portfolio.
2) lowest interest rates in history

the plans are regulated by ERISA to be funded at 90% of the current liability (which is based on a 4yr moving average of 30yr treasuries, which don't exist anymore). since the stock market bubble burst the assets have tumbled, while the liabilities keep going up due to the lower and lower interest rates. also, lump sum distributions have stripped assets as their payouts increase with the lower interest rates.

db plans have long been on their way out, the airlines are catching up with the rest of the business world.

 

[Mugs]

So taxpayers wind up footing the bill for airline pilot pensions? Well, that pretty much sucks.

Don't worry. When it gets to the point of the taxpayers bailing out the PBGC, the public will have realized a huge benefit from the very inexpensive air travel that has killed airline pensions. It just proves that sometimes low prices have other unintended consequences (like when Wal-Mart comes to town).

Here is another thing to consider. We live in a multi-trillion dollar economy that is continuing to evolve to compete in a now globalized economy. Allowing corporate America to shed its pension obligations will be essential to remain competitive. What has happened in steel and the airline industry will happen to all the remaining industries with defined benefit plans. The cost of terminating and having the PBGC / taxpayers pick up the tab will be a drop in the bucket compared to the competitive benefit on a global scale for corporate America.

 

[tyuwerty]

If the PBGC Web Site doesn't send shivers up your spine what does? It is like walking through a graveyard. I think I will up my 401k contributions.

Some Examples from PBGC:
BRANIFF AIRWAYS INC
EASTERN AIR LINES INC.
PAN AMERICAN WORLD AIRWAYS INC

What is even scarier is that PBGC does not appear to be indexed in anyway to inflation, were the UAL Pension benefits indexed?

Ex: Someone from Eastern is getting a whopping $26,000 a year assuming they were to get the maximum 65 year old benefit.

Addition:
PBGC does not guarantee health and welfare benefits.

There goes another $1000.00 a month to health insurance premiums.

 

[Boeingman]

I mentioned this awhile back that the real danger is the potential the PBGC may start seizing assets to cover the deficiency. Or at the least tie up collateral that may be need to secure loans with.

UAL is not just going to be able to walk away from this unscathed. This is not a good development for UAL.

 

[Mugs]

Statement by the United Master Executive Council, Air Line Pilots Association Regarding Today's Action by The Pension Benefit Guarantee Corporation
"We deplore the PBGC's ill-timed attempt to retaliate against the United pilot group in the United bankruptcy proceeding.

ALPA's tentative agreement with United does not permit the termination of the pilot pension plan without a final judicial determination that pension termination is necessary for the Company to emerge from bankruptcy or at any point prior to May 1, 2005. As the PBGC is well aware, there are no grounds for the termination of the pilot pension plan.

ALPA will vigorously oppose any effort by the PBGC to take over the plan before May 1, 2005 or to single out the pilot group for punitive and vindictive treatment in the United bankruptcy. Under the terms of the tentative pilot agreement, the Company has also agreed to oppose any attempt to terminate the pilot pension plan prior to May 1, 2005.

In addition, the tentative pilot agreement requires United to continue the pilot pension plan if any other United employee group maintains a defined benefit pension program following the bankruptcy. We will vigorously enforce that right against the PBGC or any other party that seeks to single out the pilot group for unfair treatment in the bankruptcy proceeding.

We are equally concerned about the timing of the PBGC action in the midst of a pilot membership vote over the tentative pilot agreement. We question whether the PBGC's action may be designed to confuse the pilot group, undermine the membership ratification process and deprive the pilots of the benefits and protections of the tentative agreement. If so, today's action is an outrageous ploy by the PBGC to harm the very employee interests that the agency is sworn to protect.

The pilots of United Airlines are critical to the reorganization of this Company and, by far have sacrificed the most to save the airline. We demand to be recognized and compensated for our unique contributions, and we will take every lawful action necessary to protect the interests of the United pilots against the PBGC or any other party in this proceeding."

 

[Snoopy58]

In addition, the tentative pilot agreement requires United to continue the pilot pension plan if any other United employee group maintains a defined benefit pension program following the bankruptcy.

There are reasons that they're doing this, but winning friends darned sure isn't among them!

Talk about bad choices & worse choices... dang!

 

[Boeingman]

The timing of this PBGC action is very suspicious. You have to wonder if there is something heinous going on behind the scenes financially to prompt this. If memory serves me correctly, at EAL, they made a similar move when it became clear the airline was going to fail.

Please don't shoot the messenger here.

 

[CatYaaak]

Don't worry. When it gets to the point of the taxpayers bailing out the PBGC, the public will have realized a huge benefit from the very inexpensive air travel that has killed airline pensions. It just proves that sometimes low prices have other unintended consequences (like when Wal-Mart comes to town).

Here is another thing to consider. We live in a multi-trillion dollar economy that is continuing to evolve to compete in a now globalized economy. Allowing corporate America to shed its pension obligations will be essential to remain competitive. What has happened in steel and the airline industry will happen to all the remaining industries with defined benefit plans. The cost of terminating and having the PBGC / taxpayers pick up the tab will be a drop in the bucket compared to the competitive benefit on a global scale for corporate America.

It's still taxpayer money, so it still sucks. Perhaps we should go back to all those who worked for companies that couldn't change with the times and dole some out to them as well? After all, being an "airline pilot" doesn't give one any superior moral standing when it comes to making a claim on someone else's money.

Horse-drawn transport benefited the economy and the public at large, but I'm sure there's descendents of buggy-whip makers who could use some cash, and let's not forget those poor souls who made the lousy decision to go to work for Wang Computers. I mean, even if you never bought a Wang computer, you still benefit from inexpensive computers, don't you?

The fact that individual carriers like United and others held onto Regulation-era business models (which include massive pension funds) in a de-regulated market, burying their heads in the sand for decades, is not the fault of the flying public, let alone the public at large. Competition and pissing-off their customer base lies at the heart of what ails them.

 

[AA717driver]

With the PBGC, you get what you get when you "retire". For pilots, there is no going beyond age 60. $28k/year is it.

The PBGC is in survival mode right now. They are almost bankrupt now and with UAL about to be dumped in their laps, they are on the verge of being insolvent. Congress is apparently unconcerned(they would be more concerned if THEIR pensions were secured by the PBGC...).

The PBGC allegedly went to the court earlier this year and threatened to shut down UAL if they terminated the plans. Again, it's nothing personal, just business.

BTW, I really hope the PBGC doesn't go belly up. I NEED that $109.00/month I'm getting from the terminated TWA plans. I'm counting on the UAL pilots to step up and do the right thing for the good of the industry.TC

 

[tarp]

Sooner or later. American taxpayers are going to get tired of this stuff.

Let's do those numbers again.

The PGBC is 23.3 Billion in the red (as of Sept 2004).

That doesn't count all of US Airways.

They just added UAL which is $2.9 "under funded" by UAL's accounting. However, UAL is probably stating numbers based on a UAL stock price near $60/share which would have a very nice ROI (if true). Usually in these cases, after review the funding and accounting are found suspect and you will see that number double or triple.

So 23.3 plus 6 equals 29.3 Billion dollars. Do you really think the fees paid by the existing and healthy defined benefit plans will pay this? No, sooner or later, the general taxpayer fund will have to be tapped yet again.

HSA, TSA, Prescription Drug Benefit, War in Iraq, War in Afghanistan, Disaster Relief for three Florida Hurricanes, Disaster Relief for Indonesia, Sri Lanka and India, ATSB defaults, Unemployment claims of at least one major and two smaller airlines in 2005 and then PGBC.

So, how's your pocket feeling - a little light? If you have a job and pay taxes in this country - you got to stop and ask - why am I paying 40 cents on the dollar to the government?

And remember, that's just the new stuff. You still pay for Social Security, the DOD, HUD, FAA, Interior, Immigration, Border Patrol, Congress, the Executive Branch, the Judicial Branch, State Department, Agriculture, Commerce, etc, etc.

The stockholders and Directors of United Air Lines thanks you for accepting their debt. You can be sure that in order to "compete", Delta, American, Northwest, etc will be joining the ranks very soon.
$29B, $39B, $49B. Oh heck, why should any American business pay defined benefits? $59B $69B, $79B. Hey nobody is paying "fees" anymore. $100B, $120B, $140B. So I work for a lowly LCC with no defined benefit and I work part time at another job because I can't make ends meet with just the flying gig. Working and paying taxes so others might live the dream. I had a dream once. It's gone.

 

[capt. megadeth]

So taxpayers wind up footing the bill for airline pilot pensions? Well, that pretty much sucks.

Taxpayers are footing the bill for a lot of lazy people that reproduce in mass quantities and never contribute anything to society. Now THAT sucks! I would rather foot the bill for someone's pension who actually worked during their life.

 

[CatYaaak]

Taxpayers are footing the bill for a lot of lazy people that reproduce in mass quantities and never contribute anything to society. Now THAT sucks! I would rather foot the bill for someone's pension who actually worked during their life.

Ah yes, taxpayer-funded Airline Pilot Welfare reserved for those who rode the largest gravy train for the longest time for the most money in a private sector job. After sacrificing themselves in this altruistic endeavor, why, it's only right and fitting that they've earned their seat to feed at the public trough.

Of course, when you write "I'd rather foot the bill for someone's pension" you don't really mean "you". You mean you'd rather see everyone forced to do it, otherwise you'd take these poor downtrodden folks under your roof and take over their mortgage, car, boat, and alimony payments. And your stated criteria is "because they worked", so surely your opinion on this issue has absolutely nothing to do with the fact we're talking about pilots instead of former Wang Computer employees.

Call me selfish, but I'd rather keep more of my earnings in order to fund my own retirement so you don't have to.