End the Pension Now, replace it with…
10-29-2024, 10:47 AM
#12
Line Holder
Joined APC: Mar 2024
Posts: 56
Heard this idea the other day that's not being talked about...
Pay each pilot 150K for every year of service into 401K or another retirement account he/she controls immediately
That would require ~10.5B of the 20+B currently in the pension fund
From that moment on every pilot gets 18% Cash over Cap into B plan. Get rid of MBCPBPBCPBCP notion
- Every current pilot instantly on the same plan (retired pilots stay on pension)
- Never negotiate retirement ever again, which frees NC up to hammer pay scales and QOL every cycle like Delta
- Eliminates the old pilot vs new pilot strife surrounding retirement priorities
- Eliminates yes voters based on retirement section alone
Big winners are our estates and our unity. I can't think of anyone who loses, including the company...
Discuss pros and cons
Pay each pilot 150K for every year of service into 401K or another retirement account he/she controls immediately
That would require ~10.5B of the 20+B currently in the pension fund
From that moment on every pilot gets 18% Cash over Cap into B plan. Get rid of MBCPBPBCPBCP notion
- Every current pilot instantly on the same plan (retired pilots stay on pension)
- Never negotiate retirement ever again, which frees NC up to hammer pay scales and QOL every cycle like Delta
- Eliminates the old pilot vs new pilot strife surrounding retirement priorities
- Eliminates yes voters based on retirement section alone
Big winners are our estates and our unity. I can't think of anyone who loses, including the company...
Discuss pros and cons
1. Taking roughly half of the pension fund for a few thousand of pilots, what about the remaining 200k + participants in the fund? The pension would likely immediately be at distressed levels for them.
2. 150k a year for each year in the pension fails to consider the time value of money. The present value of one 130k pension payment on day 1 of retirement (age 65) for a 40 year old is a lot less than a 64 year old. Assuming a 6.5% return, one year of a 130k pension payment is worth $122k for the 64 year old, and ~$27k for the 40 year old. I.e. the 27k will grow into 130k in 25 years. Hopefully you see that 150k per year is wildly overvaluing it, which is consistent with point 1.
3. To each their own about MBCBP spillover. But considering the legacy pilot groups negotiated it as another tax advantaged option in addition to their 401k, it doesn't seem like a bad idea.
10-29-2024, 11:03 AM
#13
Line Holder
Thread Starter
Joined APC: Jan 2018
Posts: 64
1. Taking roughly half of the pension fund for a few thousand of pilots, what about the remaining 200k + participants in the fund? The pension would likely immediately be at distressed levels for them.
2. 150k a year for each year in the pension fails to consider the time value of money. The present value of one 130k pension payment on day 1 of retirement (age 65) for a 40 year old is a lot less than a 64 year old. Assuming a 6.5% return, one year of a 130k pension payment is worth $122k for the 64 year old, and ~$27k for the 40 year old. I.e. the 27k will grow into 130k in 25 years. Hopefully you see that 150k per year is wildly overvaluing it, which is consistent with point 1.
3. To each their own about MBCBP spillover. But considering the legacy pilot groups negotiated it as another tax advantaged option in addition to their 401k, it doesn't seem like a bad idea.
2. 150k a year for each year in the pension fails to consider the time value of money. The present value of one 130k pension payment on day 1 of retirement (age 65) for a 40 year old is a lot less than a 64 year old. Assuming a 6.5% return, one year of a 130k pension payment is worth $122k for the 64 year old, and ~$27k for the 40 year old. I.e. the 27k will grow into 130k in 25 years. Hopefully you see that 150k per year is wildly overvaluing it, which is consistent with point 1.
3. To each their own about MBCBP spillover. But considering the legacy pilot groups negotiated it as another tax advantaged option in addition to their 401k, it doesn't seem like a bad idea.
2. I got lost here. Who specifically would vote no for this plan? Which age "Demographic" of pilot would it be disadvantageous to?
Aside from the financial advantages of having 18% CoC for 25 years the real value for the younger pilot comes in the form of eliminating unity shortfalls that the pension creates and the ability to allocate all future negotiating capital away from retirement.
10-29-2024, 11:16 AM
#14
Line Holder
Joined APC: Mar 2024
Posts: 56
You would have to adjust the payout due to the present value of accrued benefits. You can't say every YOS is equal value of payout because of the time value of money. Back to my example, to accurately calculate your suggestion, the 64 year old would get around 122k, and the 40 year old would get 27k in their account, for 1 year of service.
Last edited by Moneybags; 10-29-2024 at 11:33 AM.
10-29-2024, 11:39 AM
#15
Gets Weekends Off
Joined APC: Aug 2023
Posts: 437
1. Let the company pay it out completely over a 3 or 5 year period.
2. I got lost here. Who specifically would vote no for this plan? Which age "Demographic" of pilot would it be disadvantageous to?
Aside from the financial advantages of having 18% CoC for 25 years the real value for the younger pilot comes in the form of eliminating unity shortfalls that the pension creates and the ability to allocate all future negotiating capital away from retirement.
2. I got lost here. Who specifically would vote no for this plan? Which age "Demographic" of pilot would it be disadvantageous to?
Aside from the financial advantages of having 18% CoC for 25 years the real value for the younger pilot comes in the form of eliminating unity shortfalls that the pension creates and the ability to allocate all future negotiating capital away from retirement.
Your statement that someone else can figure it out, or pay it out over a 3-5 year period shows you have no knowlege of retirement.
The defined benefit plan is not the source of any lack of unity.
Stop trying to negotiate in public, or are you trying to stir the pot? Is it just coincidence that this thread started just hours before the NC message was published?
10-29-2024, 12:34 PM
#16
Line Holder
Thread Starter
Joined APC: Jan 2018
Posts: 64
The NC just put our a message. They have passed retirement across the table. If you are so confident in your plan, talk to them.
Your statement that someone else can figure it out, or pay it out over a 3-5 year period shows you have no knowlege of retirement.
The defined benefit plan is not the source of any lack of unity.
Stop trying to negotiate in public, or are you trying to stir the pot? Is it just coincidence that this thread started just hours before the NC message was published?
Your statement that someone else can figure it out, or pay it out over a 3-5 year period shows you have no knowlege of retirement.
The defined benefit plan is not the source of any lack of unity.
Stop trying to negotiate in public, or are you trying to stir the pot? Is it just coincidence that this thread started just hours before the NC message was published?
10-29-2024, 12:37 PM
#17
Line Holder
Thread Starter
Joined APC: Jan 2018
Posts: 64
The pension is the single biggest source of contention we have between the old vs new pilots. It's a devastating hindrance to unity to when it comes to negotiating.
new guy quote: "I don't want to raise the pension right now I have 25 years to mess with that, I want pay scales and scope!!!"
old guy quote: "The young guys are screwing us it's our turn to get the pension raise before I retire they need to get in line"
new guy quote: "I don't want to raise the pension right now I have 25 years to mess with that, I want pay scales and scope!!!"
old guy quote: "The young guys are screwing us it's our turn to get the pension raise before I retire they need to get in line"
10-29-2024, 12:40 PM
#18
Gets Weekends Off
Joined APC: Nov 2017
Posts: 2,140
10-29-2024, 12:43 PM
#19
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Thread Starter
Joined APC: Jan 2018
Posts: 64
I guess there isn't one. I like cash now to invest personally over even more than the max in retirement accounts but I guess giving people that choice wouldn't hurt anything.
10-29-2024, 12:47 PM
#20
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Thread Starter
Joined APC: Jan 2018
Posts: 64
You would have to adjust the payout due to the present value of accrued benefits. You can't say every YOS is equal value of payout because of the time value of money. Back to my example, to accurately calculate your suggestion, the 64 year old would get around 122k, and the 40 year old would get 27k in their account, for 1 year of service.
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