Pension funding
03-06-2009, 06:38 PM
#1
On Reserve
Thread Starter
Joined APC: Dec 2008
Posts: 11
Pension funding
Yesterday a Merrill Lynch analyst put out in a subscription analysis on
FedEx's pension funding. Did any of you receive this? My source cifers that with the fall in the market the pension fund is now approximately 4 billion, yes I said billion underfunded. If this is verified then expect the company to to do a number of things; first being to go to congress for relief from pbgc funding requirements and followed shortly by management coming to the pilots for concessions. Expect this anyway with the furlough scare. ALPA will put on the game face, but eventually be impotent, because pr will pull out the same message they pulled out against GMs teamsters. Our message should be strong and unequivocal that the shareholders need to suffer too, we have a CONTRACT!
The share price has factored some of this in the past two days as well as the bill changing the RLA against FedEx, but expect another drop when the general public finds out about the pension shortfall. This is what happens when FedEx has for years had inflated assumptions tied to our pension. This helped pump up earnings by not needing to fund the pension at more conservative assumptions.
FedEx's pension funding. Did any of you receive this? My source cifers that with the fall in the market the pension fund is now approximately 4 billion, yes I said billion underfunded. If this is verified then expect the company to to do a number of things; first being to go to congress for relief from pbgc funding requirements and followed shortly by management coming to the pilots for concessions. Expect this anyway with the furlough scare. ALPA will put on the game face, but eventually be impotent, because pr will pull out the same message they pulled out against GMs teamsters. Our message should be strong and unequivocal that the shareholders need to suffer too, we have a CONTRACT!
The share price has factored some of this in the past two days as well as the bill changing the RLA against FedEx, but expect another drop when the general public finds out about the pension shortfall. This is what happens when FedEx has for years had inflated assumptions tied to our pension. This helped pump up earnings by not needing to fund the pension at more conservative assumptions.
03-06-2009, 07:02 PM
#2
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Funny you should mention that, I just looked in the PBGC box and it only contains dust, cobwebs and a rapidly increasing debt. Ah well we still have Social Security. Or maybe not.
Ann Hynek
FOXBusiness
The federal government agency that insures the pensions of nearly 44 million Americans has a multibillion-dollar deficit -- and if its problems continue to worsen, it could be stepping into the long line of groups asking for a bailout from taxpayers.
The Pension Benefit Guaranty Corporation has $11 billion of red ink on its books, and if it should need to take over any more pension plans in the near future, its financial situation would only become worse.
But, says Jeffrey Brown, a finance professor at the University of Illinois, there is a difference between the solvency of the PBGC and its cash flow, so its situation may look more dire than it actually is.
"What we know is that the PBGC's assets are inadequate to meet the long-term liabilities that it has absorbed. Thus, eventually, something has to give -- most likely, a taxpayer bailout," says Brown. "But this does not mean that the PBGC will have difficulty meeting its obligations in the short run."
Not all of the PBGC's liabilities need to be paid immediately, as pensions are distributed over a number of years, so it isn’t necessary to compare the liabilities with the actual amount of money it has at one time.
For the last two decades, the company has bounced around between surpluses and deficits. In 2000, for example, the PBGC had a surplus of $10 billion. In 2004, it had a deficit of $23 billion.
But if recent history is any indication, the number of PBGC participants will only increase. According to the Government Accountability Office, the PBGC had 500,000 participants in 2000. Last year, it had 1.3 million participants, and paid $4.3 billion in benefits to 631,000 retirees.
Adding to that, Frank Todisco, Senior Pension Fellow at the American Academy of Actuaries, says "we'll probably see a deterioration next year because of the economic situation right now."
Just to take one industry with a lot of pensions: General Motors (GM: 1.52, -0.37, -19.58%) and Chrysler received a $17.4 billion government loan package in December. That money is expected to sustain the companies only through March 31. If GM, Chrysler, and Ford (F: 1.7, -0.14, -7.61%) were to declare bankruptcy and roll their pensions over to the PBGC, it would mean 1.3 million more pensions for an agency that's already operating at a loss.
"We know that the Big Three's pension plans are underfunded by about $41 billion and that we would be responsible for about $13 billion of the underfunded benefits should they terminate," says Jeff Speicher, a spokesman for the PBGC.
The PBGC also has limits on the amount of benefit increases that it can insure, which "would mean a loss to the PBGC and also a loss to the workers and retirees," says Speicher.
"The PBGC is in a very volatile business," says Todisco. "It's similar to earthquake insurance. A high proportion of the PBGC's obligations have come from companies with underfunded pension plans. When there's a financial earthquake, the PBGC is exposed."
Ann Hynek
FOXBusiness
The federal government agency that insures the pensions of nearly 44 million Americans has a multibillion-dollar deficit -- and if its problems continue to worsen, it could be stepping into the long line of groups asking for a bailout from taxpayers.
The Pension Benefit Guaranty Corporation has $11 billion of red ink on its books, and if it should need to take over any more pension plans in the near future, its financial situation would only become worse.
But, says Jeffrey Brown, a finance professor at the University of Illinois, there is a difference between the solvency of the PBGC and its cash flow, so its situation may look more dire than it actually is.
"What we know is that the PBGC's assets are inadequate to meet the long-term liabilities that it has absorbed. Thus, eventually, something has to give -- most likely, a taxpayer bailout," says Brown. "But this does not mean that the PBGC will have difficulty meeting its obligations in the short run."
Not all of the PBGC's liabilities need to be paid immediately, as pensions are distributed over a number of years, so it isn’t necessary to compare the liabilities with the actual amount of money it has at one time.
For the last two decades, the company has bounced around between surpluses and deficits. In 2000, for example, the PBGC had a surplus of $10 billion. In 2004, it had a deficit of $23 billion.
But if recent history is any indication, the number of PBGC participants will only increase. According to the Government Accountability Office, the PBGC had 500,000 participants in 2000. Last year, it had 1.3 million participants, and paid $4.3 billion in benefits to 631,000 retirees.
Adding to that, Frank Todisco, Senior Pension Fellow at the American Academy of Actuaries, says "we'll probably see a deterioration next year because of the economic situation right now."
Just to take one industry with a lot of pensions: General Motors (GM: 1.52, -0.37, -19.58%) and Chrysler received a $17.4 billion government loan package in December. That money is expected to sustain the companies only through March 31. If GM, Chrysler, and Ford (F: 1.7, -0.14, -7.61%) were to declare bankruptcy and roll their pensions over to the PBGC, it would mean 1.3 million more pensions for an agency that's already operating at a loss.
"We know that the Big Three's pension plans are underfunded by about $41 billion and that we would be responsible for about $13 billion of the underfunded benefits should they terminate," says Jeff Speicher, a spokesman for the PBGC.
The PBGC also has limits on the amount of benefit increases that it can insure, which "would mean a loss to the PBGC and also a loss to the workers and retirees," says Speicher.
"The PBGC is in a very volatile business," says Todisco. "It's similar to earthquake insurance. A high proportion of the PBGC's obligations have come from companies with underfunded pension plans. When there's a financial earthquake, the PBGC is exposed."
03-06-2009, 07:30 PM
#3
Gets Weekends Off
Joined APC: Sep 2006
Position: DC-10 S/O, forever.
Posts: 116
Pension Funding
As near as I can tell, the company buys an annuity for you based on your estimated pension. So, in theory, it should be totally divorced from the company's performance. What is not certain is what happens to future retirees, meaning anyone who retires after tomorrow.
03-07-2009, 04:13 PM
#4
On Reserve
Thread Starter
Joined APC: Dec 2008
Posts: 11
As near as I can tell, the company buys an annuity for you based on your estimated pension. So, in theory, it should be totally divorced from the company's performance. What is not certain is what happens to future retirees, meaning anyone who retires after tomorrow.
03-07-2009, 04:50 PM
#5
Gets Weekends Off
Joined APC: Jul 2007
Position: Gear Monkey
Posts: 3,199
As near as I can tell, the company buys an annuity for you based on your estimated pension. So, in theory, it should be totally divorced from the company's performance. What is not certain is what happens to future retirees, meaning anyone who retires after tomorrow.
I wonder how many "retirement eligible" over Age 60 pilots will start asking some hard questions/rethinking their delayed retirement, if this rumor is at all true.
Hmmmm....
03-07-2009, 04:53 PM
#6
On Reserve
Thread Starter
Joined APC: Dec 2008
Posts: 11
Here it is.
http://docs.google.com/gview?a=v&att...lication%2Fpdf
This is another opportunity to show how spineless this pilot group will be. On the other hand this is a great opportunity to take a proactive stand. NO CONCESSIONS! Give them a break for funding for awhile, but don't give up anything. Our benefits are accrued, don't forget that.
This is another opportunity to show how spineless this pilot group will be. On the other hand this is a great opportunity to take a proactive stand. NO CONCESSIONS! Give them a break for funding for awhile, but don't give up anything. Our benefits are accrued, don't forget that.
03-08-2009, 11:53 AM
#7
Gets Weekends Off
Joined APC: Sep 2006
Posts: 164
PBGC should ask for some of that "Pork". The FDIC gets cranked up to $500 billion. AIG gets a $100 billion here and $30 billion there. After a while it's just alphabet soap. It becomes meaningless and difficult to understand...trillions, billions whatever..... Eyes glaze over and we go back to eating our soylent green.
03-08-2009, 02:05 PM
#8
Line Holder
Joined APC: Sep 2006
Posts: 62
The pension fund won't be around by the time many of the junior folks retire, so lets get rid of it now and greatly increase the B-fund. By fighting tooth and nail for the pension fund, all we are doing is wasting negotiating capital that can be used elsewhere (and possibly helping secure pensions for some of the same people who want to see junior folks furloughed).
Trying to save the A-Fund is like trying to keep GM from filing Chap. 11. We are just wasting time and money and delaying the inevitable. It's naive to actually believe the pension plan will be around after one or two more contracts. I would like to be wrong, but if the pension is that underfunded, I just don't see it being around much longer.
Trying to save the A-Fund is like trying to keep GM from filing Chap. 11. We are just wasting time and money and delaying the inevitable. It's naive to actually believe the pension plan will be around after one or two more contracts. I would like to be wrong, but if the pension is that underfunded, I just don't see it being around much longer.
Last edited by RockyTopFlyer; 03-08-2009 at 03:04 PM.
03-08-2009, 03:27 PM
#9
Gets Weekends Off
Joined APC: Jun 2008
Posts: 357
I've been saying for some time now, lets figure out what the buyout price should be. Then buy out those already vested in it and be done with it. The real question is, what number to use. Obviously the more you have vested the higher you think the buyout should be. I'm sure the company will start somewhere around 25 cents on the dollar. Then the next question will be, what life expectancy to use. All the NDs think we should use a number around 90 and the company will want to use something around 70. Should be an interesting debate and vote.
However remember; we can't accept a buyout without a comparable increase in the B plan
However remember; we can't accept a buyout without a comparable increase in the B plan
03-08-2009, 03:51 PM
#10
Banned
Joined APC: Jan 2009
Posts: 133
How about we put to rest the notion that we voluntarily give up benefits that we currently have and worked hard to get. The sky may be falling for some, but that doesn't mean the rest of us have to participate in these give back schemes. No wonder so many of you lament that guys on the 'property' don't get it, IMO, they lurk and laff their @sses off.
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