*MINIMUM BALANCES* New Polling Needed
12-22-2019, 11:21 AM
#31
Gets Weekends Off
Joined APC: Jun 2009
Position: Captain
Posts: 830
You have a post that reflects my sentiments to the core.
I fly with Captains who show me their Fidelity accounts and tell me all about their toys. Yet they still are “burdened by the 60% FAE that they were promised.”
When I explain to them a 4-5% draw from their Fidelity cash, combined with their PBGC or pension payout is pretty damn near close (and that their Fidelity account is estatable, unlike their pension), they acquiesce and agree that they are, indeed, going to be okay. But they always know someone who knows someone, that we need to plus up and take care of because they are dead zoners...
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I fly with Captains who show me their Fidelity accounts and tell me all about their toys. Yet they still are “burdened by the 60% FAE that they were promised.”
When I explain to them a 4-5% draw from their Fidelity cash, combined with their PBGC or pension payout is pretty damn near close (and that their Fidelity account is estatable, unlike their pension), they acquiesce and agree that they are, indeed, going to be okay. But they always know someone who knows someone, that we need to plus up and take care of because they are dead zoners...
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The thing about the 60% is that we last had it under C2K. The pay rates were lower than we have now, we had a cap, a bow wave, no swap board etc that allows an average pilot today to make more than if we had the same work rules as C2K. Does the MD88 captain who is making 500k now because he uses the new rules, get 60% of 500k because he was “promised” a 60% DB under C2K, even though odds are the contract we have now would probably not have afforded him that ability to make 500k except but for the DB was terminated? (Run on sentence of the year)
I just want to know specifically what the goal is. Is it to get as close to 60% FAE as possible? If so, then it needs to include a LOT more data points than 10 years worth of earnings to have any sort of relationship to a fair or equitable distribution.
12-22-2019, 12:05 PM
#32
Gets Weekends Off
Joined APC: Mar 2015
Position: stake holder ir.delta.com
Posts: 10,571
I really don't like the idea of righting past wrongs with the PWA. I think this sets a dangerous precedent. If at some point in my career there is a down turn or concessionary contract or LOA, do I then look to future contracts to make up that loss with my targeted benefit? I'm all for improving retirement and doing so quickly to benefit those soon to retire but this plan is very divisive and runs the risk of lengthening the timeline because management can just wait us out.
We also have never defined the deadzoner and their needs. as others have said, what the rationale and what's the objective? The "plus up" is nothing more than a tapered hand out. Are the pilots retiring in the next year the ones who are in the most need and most disadvantaged? Are those retiring later on a graduated scale less needy? lost inb all of this is fairness and an account of the monies they should have by now given the bankruptcy settlements and DC contributions. I'm very skeptical that this is even on target for those who should(?) be targeted. Assuming targeting is even palatable to 50%+1.
We also have never defined the deadzoner and their needs. as others have said, what the rationale and what's the objective? The "plus up" is nothing more than a tapered hand out. Are the pilots retiring in the next year the ones who are in the most need and most disadvantaged? Are those retiring later on a graduated scale less needy? lost inb all of this is fairness and an account of the monies they should have by now given the bankruptcy settlements and DC contributions. I'm very skeptical that this is even on target for those who should(?) be targeted. Assuming targeting is even palatable to 50%+1.
Last edited by notEnuf; 12-22-2019 at 12:17 PM.
12-22-2019, 12:06 PM
#33
Gets Weekends Off
Joined APC: Oct 2017
Posts: 405
Lets say you have two guys hired at the same time. Both deadzoners.
Pilot A says I got screwed and I have to make up for it. It sucks but I’m going to work more and upgrade first opportunity. QOL takes a hit but more company dollars going in to the DC.
Pilot B says I got screwed. Woe is me. I’m working min credit every month. Look how little my retirement account is. Did I mention how much I got screwed?
They go to retire and pilot A has a good chunk of change in his account because he worked to max out that company DC while pilot B doesn’t because he didn’t.
Does pilot B get a big plus up so he gets to the minimum balance while pilot A gets a smaller amount or nothing because he worked harder?
Pilot A says I got screwed and I have to make up for it. It sucks but I’m going to work more and upgrade first opportunity. QOL takes a hit but more company dollars going in to the DC.
Pilot B says I got screwed. Woe is me. I’m working min credit every month. Look how little my retirement account is. Did I mention how much I got screwed?
They go to retire and pilot A has a good chunk of change in his account because he worked to max out that company DC while pilot B doesn’t because he didn’t.
Does pilot B get a big plus up so he gets to the minimum balance while pilot A gets a smaller amount or nothing because he worked harder?
12-22-2019, 12:34 PM
#34
Gets Weekends Off
Joined APC: Sep 2008
Position: Kickin’ Back
Posts: 6,971
As far as I can tell the plus up is derived from a percentage of earnings from age 55-65. So if someone makes more then they would get more and if they make less they would get less.
As far as the possibility of pilots going early, I would guess the above would actually deter early retirement based on the fact that if they retired early, that would effect the plus up by having less wages. Since it seems the Company has a manning issue (totally self induced because of not hiring enough) it might want some kind of assurance that would preclude early retirement. Some kind of penalty etc. Just my opinion.
Denny
As far as the possibility of pilots going early, I would guess the above would actually deter early retirement based on the fact that if they retired early, that would effect the plus up by having less wages. Since it seems the Company has a manning issue (totally self induced because of not hiring enough) it might want some kind of assurance that would preclude early retirement. Some kind of penalty etc. Just my opinion.
Denny
12-22-2019, 02:22 PM
#35
Gets Weekends Off
Joined APC: May 2012
Posts: 1,166
And in the next 5 years nearly 4,000 pilots will be retiring? How many will require a plus up? Why would the company agree to this any time soon when they could just drag out negotiations for a few years and not have to plus up 2,000 pilots and save half a billion dollars?
12-22-2019, 04:02 PM
#36
Gets Weekends Off
Joined APC: Dec 2009
Position: Capt
Posts: 2,049
I’m a reservist that just returned from abroad flying with 32 other Delta military aviators. All are mid-30’s/early 40’s with around 4-5 years on property.
Not one of us is in favor of a TA that includes anything inequitable between all pilots on the seniority list.
Increased DC: great. Fill up my 401k with company money: excellent. Invest my additional DC into the MBCP: eh, okay. It’s a different source of income later in life that’s still “estatable.” But give some people a “plus up,” and take more money for one group at the expense of all of us: absolutely not.
No one can tell me what my financial future holds and how the market will perform. No one can tell me if I’ll have social security benefits (and what age I’ll be able to utilize them), or what our future tax liabilities are (at some point our politicians will realize we have a deficit).
This is not to say that I don’t recognize that some people took it in the shorts, or that everyone won’t have a 60% FAE guaranteed annuity. But between increased DC benefits, Profit Sharing, PBGC/Frozen pension benefits, social security and insane market performance since ‘07, most captains I fly with are going into retirement doing very well.
Life happens. And I’m preparing for my salary decrease, or reduced benefits later in my career due to causes outside of my control. I’m certainly not going to ask others to cover for me later in my life at their own expense or that of the whole.
So yes, I’d like polling done. I’d tell the guys polling that I want scope protections, increased DC, increased pay, vacation and training increases, and QOL asks before I’d EVER consider plussing up someone else’s retirement at the groups expense.
And since we are not going to get even all of those important things, we are wasting negotiators and the company’s time even bringing this minimum balance up in any negotiation session.
Oh, and another thing. Polling numbers suck among my demographic because we don’t answer cell phone calls from random numbers. And these clowns don’t have a call back number, or allow us to make an appointment to do our poll (we’ve got kids, sports activities, recitals, crap trips to fly, and all of the other stuff that the Grandpa’s willing to answer their phones have long left in their rear view mirror). How about they email me and allow me to put some time on my calendar so they can get my feedback on this issue? They’d see that it’s a waste of time to bring a min balance to MEMRAT because it’ll be a huge failure and cause a massive delay in our contract...
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Not one of us is in favor of a TA that includes anything inequitable between all pilots on the seniority list.
Increased DC: great. Fill up my 401k with company money: excellent. Invest my additional DC into the MBCP: eh, okay. It’s a different source of income later in life that’s still “estatable.” But give some people a “plus up,” and take more money for one group at the expense of all of us: absolutely not.
No one can tell me what my financial future holds and how the market will perform. No one can tell me if I’ll have social security benefits (and what age I’ll be able to utilize them), or what our future tax liabilities are (at some point our politicians will realize we have a deficit).
This is not to say that I don’t recognize that some people took it in the shorts, or that everyone won’t have a 60% FAE guaranteed annuity. But between increased DC benefits, Profit Sharing, PBGC/Frozen pension benefits, social security and insane market performance since ‘07, most captains I fly with are going into retirement doing very well.
Life happens. And I’m preparing for my salary decrease, or reduced benefits later in my career due to causes outside of my control. I’m certainly not going to ask others to cover for me later in my life at their own expense or that of the whole.
So yes, I’d like polling done. I’d tell the guys polling that I want scope protections, increased DC, increased pay, vacation and training increases, and QOL asks before I’d EVER consider plussing up someone else’s retirement at the groups expense.
And since we are not going to get even all of those important things, we are wasting negotiators and the company’s time even bringing this minimum balance up in any negotiation session.
Oh, and another thing. Polling numbers suck among my demographic because we don’t answer cell phone calls from random numbers. And these clowns don’t have a call back number, or allow us to make an appointment to do our poll (we’ve got kids, sports activities, recitals, crap trips to fly, and all of the other stuff that the Grandpa’s willing to answer their phones have long left in their rear view mirror). How about they email me and allow me to put some time on my calendar so they can get my feedback on this issue? They’d see that it’s a waste of time to bring a min balance to MEMRAT because it’ll be a huge failure and cause a massive delay in our contract...
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12-22-2019, 04:05 PM
#37
Gets Weekends Off
Joined APC: May 2008
Position: VEOP Retired! 7ER A was last position
Posts: 978
Great post. And let’s call a spade a spade. We know that this is a dead zoner fix. Fine. But exactly what assumptions are being used to figure out who and how much needs to be made up?
It has been about 13 years since our 401k’s were filled with the note and claim money. There was also the MPPP that was paid out.
A pilot who is within say 5 years of retirement today would have had probably no less than 300k in the DC/401k after these payouts (including prior contributions). The market has averaged over 9% since that period. If you ONLY count company contributions of an average of 36000 a year, 1.9% dividend returns, that puts a pilot at age 60 with about 2.1 million not counting any of his own contributions. (Except what he had prior to BK) Take that out 5 more years to retirement and it is 4 million plus.
But let’s assume that the market slows and is closer to the traditional average from here on out. (5%) That same pilot is around 3.7 million dollars.. but at this point the average DC money is going to be more like $3600 a month (again, just company contributions) as you would hit the 270k cap. Of course this would also assume you did nothing with the DC excess, but let’s just keep it simple. That gets a pilot back up to 4 million.
4 million with that 5% growth is 200k a year, without reducing the principal. Take 250k a year out and you won’t out live your money. Worried about the markets? 2% in extremely safe money market type accounts would still allow you to withdraw 200k a year easily and pass some along to your heirs.
But wait.. what about the PBGC and the frozen benefit? Many are getting something from those sources as well.
So it boils down to.. what is the goal here (60%?) and exactly what assumptions are we using to justify it?
There are things we do know.
The value of the note and claim for each pilot that was forced into retirement accounts.
The value of the DC contributions for each pilot
The value of their PBGC
The value of their frozen DB
The stock market returns since the DC was implemented.
And now possibly, a guaranteed return with the MBCP that would take out some market risk.
I get it some aren’t gonna like the assumptions and that is fine... tell me what we should be using and what we should be using for the pilots going forward.
It has been about 13 years since our 401k’s were filled with the note and claim money. There was also the MPPP that was paid out.
A pilot who is within say 5 years of retirement today would have had probably no less than 300k in the DC/401k after these payouts (including prior contributions). The market has averaged over 9% since that period. If you ONLY count company contributions of an average of 36000 a year, 1.9% dividend returns, that puts a pilot at age 60 with about 2.1 million not counting any of his own contributions. (Except what he had prior to BK) Take that out 5 more years to retirement and it is 4 million plus.
But let’s assume that the market slows and is closer to the traditional average from here on out. (5%) That same pilot is around 3.7 million dollars.. but at this point the average DC money is going to be more like $3600 a month (again, just company contributions) as you would hit the 270k cap. Of course this would also assume you did nothing with the DC excess, but let’s just keep it simple. That gets a pilot back up to 4 million.
4 million with that 5% growth is 200k a year, without reducing the principal. Take 250k a year out and you won’t out live your money. Worried about the markets? 2% in extremely safe money market type accounts would still allow you to withdraw 200k a year easily and pass some along to your heirs.
But wait.. what about the PBGC and the frozen benefit? Many are getting something from those sources as well.
So it boils down to.. what is the goal here (60%?) and exactly what assumptions are we using to justify it?
There are things we do know.
The value of the note and claim for each pilot that was forced into retirement accounts.
The value of the DC contributions for each pilot
The value of their PBGC
The value of their frozen DB
The stock market returns since the DC was implemented.
And now possibly, a guaranteed return with the MBCP that would take out some market risk.
I get it some aren’t gonna like the assumptions and that is fine... tell me what we should be using and what we should be using for the pilots going forward.
12-22-2019, 04:06 PM
#38
Gets Weekends Off
Joined APC: Sep 2014
Posts: 5,018
Diluting his post to yours is the very antithesis of critical thinking. But thanks for the laugh!
12-22-2019, 04:43 PM
#39
Gets Weekends Off
Joined APC: Sep 2008
Position: Kickin’ Back
Posts: 6,971
The Note and Claim money wasn't forced into a retirement account, only 2 or 3 years were, and only up to the 415C limits. I'm a deadzoner and paid A Lot of taxes on the majority of that money as ordinary income. Oh and I think your math is wrong. My 401K is nowhere near 3 or 4 million, and Ive been here 31 years.
Denny
Cogf16 plz check your PM.s
12-22-2019, 05:00 PM
#40
Gets Weekends Off
Joined APC: Jun 2009
Position: Captain
Posts: 830
The Note and Claim money wasn't forced into a retirement account, only 2 or 3 years were, and only up to the 415C limits. I'm a deadzoner and paid A Lot of taxes on the majority of that money as ordinary income. Oh and I think your math is wrong. My 401K is nowhere near 3 or 4 million, and Ive been here 31 years.
The assumptions assumed that the note/claim/mppp was added to a previous 401k balance to get to the 300k starting number. From 2006, I also excluded individual contributions which would drive the total number higher.
The assumptions were made using actual market performance (S&P 500), a pretty good number (30-36k average) for annual DC contributions, but an “inexact” starting number, which could inflate or deflate the ending balance.
I am open to different models and projections. That is the reason for the post.. to figure out what the “shortfall” is, or at least about what it should be on consistent metrics.
That is what makes this so complicated. A pilot who just put the money in a savings account is going to be nowhere close to 60%. A guy who invested in an S&P index fund, may be very close to 60 or even 100%. A guy who invested in WebVan may be living off of social security.
A lot of uneven outcomes. So how do we fairly fix this and based on what?
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