WSJ on SWA/AT Merger

[HRDiva]

You clearly don't understand the difference, and what you "call" it is irrelevant, since words actually mean things.

Defined contribution pension plans include a company contribution without any employee contribution. This is what AirTran had, what Delta has, what United has, etc. A defined benefit plan is typically referred to as an "A Fund," while a defined contribution plan is generally referred to as a "B Fund," while both are actually pensions. At AirTran, the company contributed 10.5% even if the pilot contributed not one penny. At Delta, the company contributes 16%. And so on.

What you have is just a simple 401k plan with employer matching of only 9.3%. If you don't contribute, then you get bupkis. And even if you do contribute, the company is still only kicking in a maximum of 9.3%, which is utterly pathetic by current industry standards.

I'm not contesting you. I'd love to see you give a report of side by side comparisons to see what industry standards are for informational purposes.

 

[PCL_128]

I'm not contesting you. I'd love to see you give a report of side by side comparisons to see what industry standards are for informational purposes.

Ironically, I think SWAPA actually produced such a report (by copying DALPA's, but still). ALPA has a full summary in PDF in the Economics Library, but it's not available publicly, so I can't link to it.

Here's just a quick summary of the highlights so I don't have to type out the whole thing:

United: 16% B & C Fund
Delta: 15% B-Fund (sorry, I was off by a % in the earlier post)
Hawaiian: 15% B-Fund for all newhires (up to 19.4% for pilots hired pre-2005)
Alaska: 13.5% B-Fund
AMR: 14% (match only, thanks to the bankruptcy)
USAirways: 10% B-Fund now, same as AMR when merged
SWA: 9.3% (match only)

 

[HRDiva]

Ironically, I think SWAPA actually produced such a report (by copying DALPA's, but still). ALPA has a full summary in PDF in the Economics Library, but it's not available publicly, so I can't link to it.

Here's just a quick summary of the highlights so I don't have to type out the whole thing:

United: 16% B & C Fund
Delta: 15% B-Fund (sorry, I was off by a % in the earlier post)
Hawaiian: 15% B-Fund for all newhires (up to 19.4% for pilots hired pre-2005)
Alaska: 13.5% B-Fund
AMR: 14% (match only, thanks to the bankruptcy)
USAirways: 10% B-Fund now, same as AMR when merged
SWA: 9.3% (match only)

Thanks! And for the match only, remember the current IRS limit is $17,500. So if you make $150,000 and your match is 14%, it does not matter. That person can't contribute 14% because it is more than the IRS max unless there is a True up clause in the contract.

 

[HowardBorden]

Ironically, I think SWAPA actually produced such a report (by copying DALPA's, but still). ALPA has a full summary in PDF in the Economics Library, but it's not available publicly, so I can't link to it.

Here's just a quick summary of the highlights so I don't have to type out the whole thing:

United: 16% B & C Fund
Delta: 15% B-Fund (sorry, I was off by a % in the earlier post)
Hawaiian: 15% B-Fund for all newhires (up to 19.4% for pilots hired pre-2005)
Alaska: 13.5% B-Fund
AMR: 14% (match only, thanks to the bankruptcy)
USAirways: 10% B-Fund now, same as AMR when merged
SWA: 9.3% (match only)

I have a question. Are B funds or defined contribution funds, distributed to employee accounts and untouchable (like 401K's) in BK proceedings or are they considered "company assets." In other words who "owns" the assets, the company or the individual. We all know that many A funds or, defined benefit plans got raided in bankruptcy and delivered to the Pension Benefit Guarantee Corp and paid out at pennies on the dollar. I guess my question is: Who truly owns the assets in a B fund prior to the individuals retirement, the company or the employee?

SWA is definitely playing catch up in the retirement area which is why it has been identified as a major focus in our current section 6 negotiations. I like the opportunities presented through our 401k program and how much flexibility it allows one to manipulate and invest your own money. SWAPA's 401K was recently ranked number 1 in the 30 best large plans as ranked by Brightscope. If we can up our current matching I will be satisfied with our current set up, but we need to gain parity in this area.

 

[humveedriver]

I have a question. Are B funds or defined contribution funds, distributed to employee accounts and untouchable (like 401K's) in BK proceedings or are they considered "company assets." In other words who "owns" the assets, the company or the individual. We all know that many A funds or, defined benefit plans got raided in bankruptcy and delivered to the Pension Benefit Guarantee Corp and paid out at pennies on the dollar. I guess my question is: Who truly owns the assets in a B fund prior to the individuals retirement, the company or the employee?

SWA is definitely playing catch up in the retirement area which is why it has been identified as a major focus in our current section 6 negotiations. I like the opportunities presented through our 401k program and how much flexibility it allows one to manipulate and invest your own money. SWAPA's 401K was recently ranked number 1 in the 30 best large plans as ranked by Brightscope. If we can up our current matching I will be satisfied with our current set up, but we need to gain parity in this area.

5 year vesting period was my understanding. After five years of employment all of the funds are yours. And that included time on mil leave. In fact the company used a look back when I returned from my deployments and deposited lump sum amounts for the time I was gone. So that is one example of a defined contribution advantage.

 

[redflyer65]

Ironically, I think SWAPA actually produced such a report (by copying DALPA's, but still). ALPA has a full summary in PDF in the Economics Library, but it's not available publicly, so I can't link to it.

Here's just a quick summary of the highlights so I don't have to type out the whole thing:

United: 16% B & C Fund
Delta: 15% B-Fund (sorry, I was off by a % in the earlier post)
Hawaiian: 15% B-Fund for all newhires (up to 19.4% for pilots hired pre-2005)
Alaska: 13.5% B-Fund
AMR: 14% (match only, thanks to the bankruptcy)
USAirways: 10% B-Fund now, same as AMR when merged
SWA: 9.3% (match only)

How did that workout for the bankruptcy guys in the last 10-12 year? PBGC? They got basically nothing.

vs. SW 9.3% plus profitsharing.....and stock options (for those in the same era). The differences are stark.

Does SW need to do better? Of course, but to say other carriers over the same years did fine with pensions is ludicrous.

 

[redflyer65]

You clearly don't understand the difference, and what you "call" it is irrelevant, since words actually mean things.

I'd love for you to tell the IRS that it's irrelevant.

 

[Full of LUV]

How did that workout for the bankruptcy guys in the last 10-12 year? PBGC? They got basically nothing.

vs. SW 9.3% plus profitsharing.....and stock options (for those in the same era). The differences are stark.

Does SW need to do better? Of course, but to say other carriers over the same years did fine with pensions is ludicrous.

Red,
Those plans are what is in place due to the BK's. Your right in the pre bk days the contract had the company on the hook for up to 60% of your final pay for the rest of your life from 60 yrs on. Heck, the DAL contract even had company picking up medical to the point that a retired pilot wasn't even required to use medicare!!!!
All this time, SWAPA was lobbying for 60 to 65 change to cover their medical prior to medicare.
Fastforward a couple of decades, post BK, ALPA is wiser and the B funds are now the adopted practice as they are the employees money and invested per the employees direction. DAL even has a 401K that all employees can use on top of the B plan for the pilots.
Just pointing out that even now, post BK, there is still room in the SWAPA pay system for retirement improvements without breaking the competitive edge.
LUV

 

[redflyer65]

Red,
Those plans are what is in place due to the BK's. Your right in the pre bk days the contract had the company on the hook for up to 60% of your final pay for the rest of your life from 60 yrs on. Heck, the DAL contract even had company picking up medical to the point that a retired pilot wasn't even required to use medicare!!!!
All this time, SWAPA was lobbying for 60 to 65 change to cover their medical prior to medicare.
Fastforward a couple of decades, post BK, ALPA is wiser and the B funds are now the adopted practice as they are the employees money and invested per the employees direction. DAL even has a 401K that all employees can use on top of the B plan for the pilots.
Just pointing out that even now, post BK, there is still room in the SWAPA pay system for retirement improvements without breaking the competitive edge.
LUV

Excellent post LUV, and I agree. It's come full circle with the ALPA carriers and maybe they've learned after getting crushed. And that's a good thing.

Right again about SWAPA making improvements. Not doubt we need a B fund. ANY increase in the 401k doesn't help the Captains at all....they are already maxed out on the IRS 401k limits.

 

[PCL_128]

Thanks! And for the match only, remember the current IRS limit is $17,500. So if you make $150,000 and your match is 14%, it does not matter. That person can't contribute 14% because it is more than the IRS max unless there is a True up clause in the contract.

True! Which is another benefit of B-Funds, which have a much higher max contribution limit. I haven't looked at the numbers in a few years, but I believe it was a total (both company and employee) of $49k at the time.

 

[PCL_128]

I have a question. Are B funds or defined contribution funds, distributed to employee accounts and untouchable (like 401K's) in BK proceedings or are they considered "company assets."

They're untouchable. Each employee has an account setup in his own name, and he owns the assets contained in the account (provided that he's reached the vesting time, typically 3-5 years).

I like the opportunities presented through our 401k program and how much flexibility it allows one to manipulate and invest your own money. SWAPA's 401K was recently ranked number 1 in the 30 best large plans as ranked by Brightscope.

Agreed. The SWA plan is excellent. The company just isn't contributing enough, and you shouldn't have to contribute anything to get a base number of around 13-15%.

 

[PCL_128]

How did that workout for the bankruptcy guys in the last 10-12 year? PBGC? They got basically nothing.

You're still not paying attention. B-Funds can not be taken in bankruptcy, and have nothing to do with the PBGC. It's your money. The company is just required to make a contribution even if you don't, and their contributions are not limited by the 401k contribution limits.

 

[PCL_128]

I'd love for you to tell the IRS that it's irrelevant.

I don't need to, because the IRS knows better than you and calls it a pension. Because ERISA calls it a pension.

 

[HRDiva]

True! Which is another benefit of B-Funds, which have a much higher max contribution limit. I haven't looked at the numbers in a few years, but I believe it was a total (both company and employee) of $49k at the time.

It's $51,000 in 2013

 

[waveflyer]

PCL--agree 100% I'd much rather see retirement improvements than a rate increase-
For me, that and reserve improvements are my issues this contract

 

[HowardBorden]

PCL--agree 100% I'd much rather see retirement improvements than a rate increase-
For me, that and reserve improvements are my issues this contract

We need all three of the R's in my opinion. Rates, Reserve and Retirement.

 

[zymotic]

Ironically, I think SWAPA actually produced such a report (by copying DALPA's, but still). ALPA has a full summary in PDF in the Economics Library, but it's not available publicly, so I can't link to it.

Here's just a quick summary of the highlights so I don't have to type out the whole thing:

United: 16% B & C Fund
Delta: 15% B-Fund (sorry, I was off by a % in the earlier post)
Hawaiian: 15% B-Fund for all newhires (up to 19.4% for pilots hired pre-2005)
Alaska: 13.5% B-Fund
AMR: 14% (match only, thanks to the bankruptcy)
USAirways: 10% B-Fund now, same as AMR when merged
SWA: 9.3% (match only)

For what it's worth, the day the "New American" merges we will get a 14% defined contribution and the first of 2014 16%. I don't know if the AA guys are currently working off a match or defined contribution. However, after merger date (coming this quarter) it's not a match.

 

[jonjuan]

They're untouchable.

Until they're not.....it all may be a mute point

http://online.wsj.com/article/SB10001424127887324050304578412932073225110.html

REVIEW & OUTLOOK Updated April 12, 2013, 12:13 p.m. ET
Now He's After Your 401(k)
The White House pulls a switcheroo on retirement savings accounts.

The White House explanation is that some people have accumulated "substantially more than is needed to fund reasonable levels of retirement saving." So Mr. Obama proposes to "limit an individual's total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013."

The Occupy Wall Street crowd (Wave, PCL)will be cheering this ideological assault, but the occupiers who mature into productive citizens will someday find themselves in the cross-hairs.

The Administration's political motive here is two-fold: First, it's a redistributionist play and a revenue grab. But for many on the left it's also about reducing the ability of individuals to make themselves independent of the state. They have always disliked IRAs, just as they oppose health-savings accounts, because over time they make Americans less dependent on federal entitlements or transfer payments.

 

[PCL_128]

PCL--agree 100% I'd much rather see retirement improvements than a rate increase-
For me, that and reserve improvements are my issues this contract

If I were sticking around for the polling, those would be my top priorities, as well. The SWAPA CBA has a lot going for it in rates of pay, benefits, and line holder work rules. The deficiencies are in retirement, and definitely in reserve work rules. I'd probably put the latter as the highest priority, in fact. People are going to be spending years and years on reserve now, so the idea that there isn't even a preference for call first or last, aggressive pickup, a bucket list viewable online, etc., is really not a good thing. When reserve was a few months or a year, that could work, because at least they were giving you 15 days off, but I can't imagine living with those rules for years at a time. Especially if you're upgrading in your 50s.

 

[PCL_128]

Until they're not.....it all may be a mute point

The only thing they're talking about is taxing the contributions, not taking the money. Nice try.