United terminates pensions!

[Dizel8]

Wasn't unexpected, but they finally put it in so many words!

Bankrupt United Airlines Reaches Deal for Pensions

10 minutes ago
U.S. National - Reuters
CHICAGO (Reuters) - Bankrupt United Airlines reached an agreement with federal pension insurers on Friday to terminate its four employee retirement plans, which are underfunded by nearly $10 billion, the government said.

Under the deal, the Pension Benefit Guaranty Corp. will assume plans covering 120,000 employees. These include pilots, flight attendants, mechanics and ground workers and other workers at the second-largest airline.

United, the main unit of UAL Corp. has sought to cut huge costs by eliminating its traditional pensions and negotiate cheaper deals. US Airways Group Inc., also bankrupt, also dumped its union plans on the government.

The pension agency said the difference between promised benefits and assets in the four United plans is $9.8 billion. The government will guarantee retirement benefits totaling $6.6 billion.

 

[say again]

There's a shocker!! Didn't see that one coming.

 

[AlbieF15]

I know the A funds are held near and dear by some, but this is probably a warning to the rest of us to push for better B funds or pay rates vice pensions "down the road...." Another option is a third party insurance to cover company pension obligations.

Any smart old craniums with negotiating expereince have any ideas to help future pilots avoid this rug being pulled out from under them?

UAL78 and the rest of you fine folks...sorry its come down to this. Nobody deserves this kind of news.

 

[doh]

Hang on tight! Heeeerrrrre weeeeee gooooo!!

 

[JetMonkey]

I don't get what the deal is? The Government Pension Agency picks up the slack on the pensions for United but what does the Agency get? Life time passes on United?

 

[jetexas]

What does the judge that keeps extending BK get?

 

[drag]

Just one step closer to a Jetblue and Airtran contract.

 

[Yank McCobb]

Just one step closer to a Jetblue and Airtran contract.

It wasn't that long ago, people...probably you were one of them...were b!tching that SWA was bringing down the industry with their contract. I predict one day you will be wishing you had a contract like Jetblue and Airtran, much less SWA.

Good luck to you, sir.

 

[Dizel8]

Just one step closer to a Jetblue and Airtran contract.

Except lower hourly pay!

From top of the hill to bottom of the heap in four short years. No, that was not a slam at the UAL pilots, just goes to show, that bad stuff happens and that hubris is a bad thing.

 

[leardawg]

Look for AMFA to STRIKE now. Ual is done stick a fork in them!!!!!!!!!!!!!!!!!!!!!!!!

 

[PHXFLYR]

Re: "UAL is done ...stick a fork in them.."

Yet another Flight Info imbecile heard from


PHXFLYR

 

[NuGuy]

I know the A funds are held near and dear by some, but this is probably a warning to the rest of us to push for better B funds or pay rates vice pensions "down the road...." Another option is a third party insurance to cover company pension obligations.

Any smart old craniums with negotiating expereince have any ideas to help future pilots avoid this rug being pulled out from under them?

UAL78 and the rest of you fine folks...sorry its come down to this. Nobody deserves this kind of news.

Albie,

You are right on the mark. Even if the A funds don't go away, they will be used as a club forever more, and are the perfect way to whipsaw the junior versus the senior (hmmmm, lets save the pension by giving away 90 seaters!)

The really sad thing is, is that in normal-good years, the 'A' funds cost the companies virtually nothing, since the funds themselves generate enough income to pay benefits and grow. Even the dips in the bad years are somewhat mitigated by usually high interest rates.

A 'B' fund (or Defined Contribution) that would have paid similar benefits would have cost MILLIONS more in the long term.

NWA's pilot 'A' fund cost the company NOTHING from 1991-2000. It was only the perfect financial storm of a stock market in the sh!tter and persistantly abysmally low interest rates (not seen since the 50s) that torpedoed most 'A' funds.

Another factor was the stupid government rules that limited "rainy day" contributions to 'A' funds. DB contributions are tax deductable for companies, but hey, you can't have them "hiding" profits from the government, so they cap the amount companies can contribute if the funds are properly funded. This guarantees funds will be a serious problem if the economy turns sour, because the you can only add money when the funds are doing sucky, but chances are if the economy is in the crapper, you CAN'T afford the money to put into them. Wow, great thinking there...

Nu

 

[ThisistheDream]

So if your airline is in bankruptcy and the airline can do away employees pensions, then why cant they do away CEO bonuses and golden parachutes they get when they leave?? Why cant the judge say no more pensions and no more bouses and million dollars giveaways to CEO who leave?

 

[mjs]

I don't get what the deal is? The Government Pension Agency picks up the slack on the pensions for United but what does the Agency get? Life time passes on United?

i think it had to do with May 1 in which pensions payments were suppose to increase to these groups. by taking them over before then, they are not obligated for the increased.

mjs

 

[Indapool]

Just one step closer to a Jetblue and Airtran contract

Actually I think these guys would need to make a step or 3 UP to meet those contracts

 

[Vref+10]

Here's a solution:

1) Set the A-Fund retirement to whatever the Pension Guarantee Corporation guaranatees at age 60. Approx. $28K/year.

2) Make the B-Fund retirement anywhere from 15 - 20%. I think that most major airlines with B-Funds are around the 10% range. That needs to be bumped up to almost 20%. Now I don't know how a 20% B-Fund would compare to a traditional A-Fund after approx. 30 years of service. But I bet a 20% B-Fund would be pretty close, if not more.

3) And still make the 401K an option (along with a good match).

 

[ivauir]

I'm sorry to hear it's official guys. You've been robbed, it might be legal, but it still looks like stealing to me.

 

[80drvr]

Here's a solution:

1) Set the A-Fund retirement to whatever the Pension Guarantee Corporation guaranatees at age 60. Approx. $28K/year.

2) Make the B-Fund retirement anywhere from 15 - 20%. I think that most major airlines with B-Funds are around the 10% range. That needs to be bumped up to almost 20%. Now I don't know how a 20% B-Fund would compare to a traditional A-Fund after approx. 30 years of service. But I bet a 20% B-Fund would be pretty close, if not more.

3) And still make the 401K an option (along with a good match).[/QUOTE

They already negotiated something along those lines with an additional 6% going into a defined contribution plan after A fund termination.

If an A Fund is anywhere near funded, this solution is actually more expensive for the company.

 

[michael707767]

You are right on the mark. Even if the A funds don't go away, they will be used as a club forever more, and are the perfect way to whipsaw the junior versus the senior (hmmmm, lets save the pension by giving away 90 seaters!)

Nu

You got it! Sadly, thats exactly how it will go, and the senior pilots will bite off on giving away scope to protect their pension. In the end it won't matter though. A funds are a thing of the past, and there will be no way to save them. Management will just try to use that lever a couple more times before they take it away.

 

[G4G5]

I am sorry to see it guys, I would not wish that upon anyone.

401k's are the future, A and B funds are dead.
At least with a 401k all of the company contributions belong to the employee (after they are vested. Their is no need for a PBGC.

IMHO what you will see is a 401K with a variable match based upon the previous years profits.. Ex we made money last year we will match 3%, we made a lot of money we will match 6%, we made no money, do the math.

Most of corporate America has already switched to the 401K as the primary means of retirement. With stick options being used to tie the employees to the growth of the company.

 

[skykid]

G4G5,

I thought you said the PBGC would "liquidate" United rather than take on their pensions?

 

[-9Capt]

Just one step closer to a Jetblue and Airtran contract.

I got news for ya, they're already well below an AirTran contract.

 

[G4G5]

G4G5,

I thought you said the PBGC would "liquidate" United rather than take on their pensions?

I was wrong.

I still feel that something has to give the PBGC reported that they were underfunded by a mer $27 Billion, that money has to come from somewhere.

 

[Mugs]

It wasn't that long ago, people...probably you were one of them...were b!tching that SWA was bringing down the industry with their contract. I predict one day you will be wishing you had a contract like Jetblue and Airtran, much less SWA.

Good luck to you, sir.

Right. Maybe they will just bust up UAL and take applications for a new UAL -- at half current hourly pay rates with token benefits. Do you think they will have any trouble staffing such an enterprise? Just think, you will get to compete with it. Stick a fork in that.

 

[Vref+10]

401k's are the future, A and B funds are dead. At least with a 401k all of the company contributions belong to the employee (after they are vested. Their is no need for a PBGC.

Not true at all. Many major airlines are now converting over to B Fund retirement programs.

With a B Fund retirement program, the money belongs to the employee after the vested point. That employee can even take the money with him/her when they leave to a new company. Or could cash out (with a penalty).

The B Fund is almost identical to a 401K, except the company contributes 100% of the money and you don't have to put in anything.

 

[Mr. Irrelevant]

Any smart old craniums with negotiating expereince have any ideas to help future pilots avoid this rug being pulled out from under them?

I would go for the 401K. Blows my mind how uneducated pilots are on retirement programs outside of their airline. Southwest's match is dollar for dollar up to 7.6% of the money the pilot puts into the 401k. Best match I've ever heard of. You also get the added tax advantage of not paying taxes on the cash you've set aside. Invest that difference for 20-30 years and it'll be a nice sum in your pocket as well. The match should not be a match based on how profitable the company is from year to year. That's horsesh!t. You wait all year for $$$ that could be appreciating for you with each paycheck. No way. Pensions as the major retirement program are going the way of the dinosaur. Good as an added benefit but shouldn't be the major source of retirement savings.

Mr. I.

 

[thruthemurk]

I would go for the 401K. Blows my mind how uneducated pilots are on retirement programs outside of their airline. Southwest's match is dollar for dollar up to 7.6% of the money the pilot puts into the 401k. Best match I've ever heard of.

That must be because you don't understand what a "B" fund is. A B fund is identical to a 401K in terms of ownership and tax deferred status. The main difference is that it is not dependant on you contributing money. Although the "A" fund is in obvious jeopardy at the legacy carriers - no B fund is in jeopardy (outside of poor investmsnt decisions - UAL's B fund can be invested in virtually any stock or mutual fund the owner chooses).

The company has NO access to this money (neither does the PGBC). UAL had an 11% (now 9%) B fund and I believe AA and DAL were within a couple of points of this. This is in addition to your 401 K which has the standard limits.

Even 9% up front beats a 7% match where I come from.

 

[Mr. Irrelevant]

I'd have to run the numbers but 9% vs. 7% and a 100% return with the dollar for dollar match, plus the tax savings generated by not paying taxes on the 7% you put away, plus investing that tax savings.....That 9% may not be what it seems. Paticularly if that company's solvency is at question. Not to mention the average 10% bonus SWA throws out to employees at the end of the year. I get the B Fund idea. I think it should be a secondary program to a good matching 401k and bonus program.

Mr. I.

 

[Huck]

Albie- here's my plan: keep my second officer's house. And pay it off.

It's worth noting too that the airline with the highest reponses on the Age 60 survey was UAL, with FDX second. They want to extend their earning years to cope with all this; we want to retire before we look too much like Betelgeuse from all the hub turns.....

 

[leardawg]

Re: "UAL is done ...stick a fork in them.."

Yet another Flight Info imbecile heard from


PHXFLYR

I just discovered someone used my name to make this post. It wasn't me, nor is this my attitude toward the situation. searching for other stolen posts.