U.S. to Take Over UAL Pilots' Pensions

[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.

 

[lowecur]

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%.

Actually, it looks like the younger guys will lose the most. The senior and middle retirees will probably lose very little if they were due to get $100,000 on their pensions. UAL already had $2.8B and the PBGC will just fund the shortfall.

The government calculates that United has promised its pilots pensions worth $5.7 billion but that the pension plan has just $2.8 billion in assets. United has put $55 million into the plan since 1996.

Of the $2.9 billion shortfall, the pension agency said it would shoulder $1.4 billion by taking over some of the benefits for the 14,000 participating pilots.

The remaining $1.5 billion will be borne by the pilots as reductions in their benefits. The government's pension insurance is limited, and many pilots have earned more than the maximum coverage.

The pilots will bear the losses differently depending on their age, years of service and other factors. The oldest, who have either retired or been eligible to retire for at least three years, may be able to get more coverage than the government's basic guarantees. This is because of rules that shift some of a defunct pension plan's assets toward retirement-age participants when the government takes over a plan. Just how much of a boon this will be for United's retirees is difficult to predict, though, because the amount of additional coverage depends on the makeup of an individual plan and its solvency.

United's younger, active pilots stand to lose a larger portion of their anticipated benefits. But United has agreed with the pilots' union to compensate them for their losses by granting them $550 million in notes, convertible to new stock after reorganization, and making larger contributions to a separate retirement plan that is not structured as a traditional, defined-benefit pension plan.

Those terms were reached about two weeks ago, as part of the same agreement in which the airline and union intended to postpone termination of the pension plan until May. The government's legal complaint asked only that the court terminate the pilots' plan immediately and did not address any of the agreement's other terms. But a spokesman for the pension agency said the government planned to file a separate motion in bankruptcy court by today opposing the pledges of convertible notes and enriched retirement plan to the active pilots. The agency does not want to set a precedent that would allow companies to dump their current pension obligations on the government and then set up new plans for their workers.

Delaying the pension termination until May would have been worth tens of millions of dollars to United's active pilots. They would have been able to keep building up their benefits during that time, and the ceiling on insurance coverage would have been higher because the pension agency raises its limits every year to account for inflation.

In addition, the pilots would have achieved the maximum insurance coverage for their most recent pension increase, which was granted as of April 2000. Whenever a company increases the terms of a pension plan, the government phases in its corresponding insurance coverage over five years to keep troubled companies from promising big increases, then defaulting and leaving the government to pick up the tab. By waiting to terminate the plan until May, United and the pilots hoped to have completed the phase-in period.

Meanwhile, however, United would be paying more than $100 million in benefits to existing retirees, probably without replenishing the money. That would lower the funded level of the plan, to the detriment of pilots who had reached retirement age and whose ability to exceed the insurance limits depends on the amount in the plan at termination.

Bradley D. Belt, the executive director of the pension agency, said the agency was operating with a record deficit and "must be vigilant in guarding against unnecessary losses."

"I hope the plight of the participants in airline pension plans puts an exclamation point on the need for Congress to strengthen the funding rules for defined benefit pension plans," Mr. Belt added.

The Bush administration is expected to issue a set of proposals for shoring up the pension system early in the new year.

 

[80drvr]

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.

Taxpayer's would only be on the hook if the PBCG goes BK and congress approves a bailout. IMO, a complete overhaul of ERISA is a more likely solution than a direct taxpayer bailout of PBGC. Also keep in mind that these large deficit projections can change drastically and quickly with improvements to expected market and interest rate returns.

 

[FoxHunter]

Looks like the F/A, or IAM member will still be able to retire at almost $45,000 per year, yet the 747/777 Captain with 30+ years of service will get less than $29,000 because he is subject to the age 60 retirement.

 

[FoxHunter]

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."

Blah, Blah, Blah

The UAL MEC still fails to recognize events are no longer under their control. It is a far cry from the summer of 2000 when they brought managment to their knees and signed the contract that in many ways brought them to where they are today. Looks like the PBGC will not allow any sort of deal that will allow the pilots to be compensated to not fight pension termination.

 

[Mugs]

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.

Oh yes you hit the nail on the head. It is all about the superior moral standing of airline pilots over you corporate guys. Good grief. Can we hear your dissertation on steel workers now? I trust you have been writing to your elected representatives about the injustice of federally insured pension programs for decades, since you saw this coming all along.