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01-15-2019, 07:04 AM
#161
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Joined APC: Apr 2008
Position: Sleeping in the black swan’s nest.
Posts: 5,725
01-15-2019, 09:27 AM
#162
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Joined APC: Mar 2006
Position: guppy CA
Posts: 5,171
The only 'bulletproof' pension plan at this point is a 401k. Until some company figures out how to claw back fully vested contributions.
01-15-2019, 09:31 AM
#163
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Joined APC: May 2014
Position: Tom’s Whipping boy.
Posts: 1,182
Are you implying that United management raided the pension funds, (as in removing money from the plan) without the approval or agreement of the pilots, and that this happened in the 21st century?
01-15-2019, 09:52 AM
#164
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Joined APC: May 2009
Posts: 1,860
It could do you a lot of good. All depends on how your service is credited, and back dating is allowed by IRS.
I know of Continental pilots that retired after about 10 years in their DB plan with a lump sum of over a million (in addition to 401k), in 2004. And that was calculated on obviuosly lower CAL wages. Although the plan started in ‘92, it credited their service back to their hire date of ‘85 with NYA, PEX, or CAL. You have to understand how DB plan benefits are calculated and service credited.
Backdating a DB plan to provide “make up or catch up” is a kind of outside box thinking you have missed.
Someone mentioned the company “rading” a DB plan... The laws have long such changed. Employers can’t do that anymore.
This is a retirement plan that does not rely on big profit sharing checks or your prowess as a stock market investor.
I know of Continental pilots that retired after about 10 years in their DB plan with a lump sum of over a million (in addition to 401k), in 2004. And that was calculated on obviuosly lower CAL wages. Although the plan started in ‘92, it credited their service back to their hire date of ‘85 with NYA, PEX, or CAL. You have to understand how DB plan benefits are calculated and service credited.
Backdating a DB plan to provide “make up or catch up” is a kind of outside box thinking you have missed.
Someone mentioned the company “rading” a DB plan... The laws have long such changed. Employers can’t do that anymore.
This is a retirement plan that does not rely on big profit sharing checks or your prowess as a stock market investor.
I have a frozen DB plan from CAL and, yes, the former formula was very good. I'm fairly certain the backdating thing came up one time during Contract '97 talks and I seem to remember there was some kind of tax reason that prevented it....I could be wrong. Also, hitting a seven figure lump sum payout after only ten years doesn't sound possible...I had about ten years in when it was frozen and mine wasn't even close to that.
I also agree the rules have changed making it much harder for a company to distress terminate a plan, AMR tried it and got shot down.
Last edited by JoePatroni; 01-15-2019 at 10:02 AM.
01-15-2019, 09:54 AM
#165
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Joined APC: May 2009
Posts: 1,860
They don't even need to do that. Bristol-Myers Squibb announced last month that they're terminating their US pension plan. https://www.pionline.com/article/201...s-pension-plan
The only 'bulletproof' pension plan at this point is a 401k. Until some company figures out how to claw back fully vested contributions.
The only 'bulletproof' pension plan at this point is a 401k. Until some company figures out how to claw back fully vested contributions.
That plan is currently frozen and I don't think anyone is losing any money by it being terminated.
01-15-2019, 10:06 AM
#166
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Joined APC: Mar 2006
Position: guppy CA
Posts: 5,171
Step 1 - freeze new pension.
Step 2 - terminate pension and give them annuities.
I would expect those annuities to be far less than was 'forecast' given the current interest rate environment.
01-15-2019, 10:11 AM
#167
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Joined APC: May 2009
Posts: 1,860
I don't know if they're all the same or not but I don't think they can lessen the value of the end number on a frozen plan. A distressed one is a whole other ballgame. The interest rate is the wild card but until you retire no one knows what the actual number is, even our plan pre-freeze was predicated on the GATT rate. It wasn't uncommon for guys to pull the plug at the last minute, before the quarterly GATT rate move, to save money on their lump sum. This created a staffing nightmare at times because most of those guys were wide body captains.
I do know that the lump sum option can be suspended due to plan performance but it can also be reinstated down the road.
01-15-2019, 10:24 AM
#168
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Joined APC: Oct 2010
Posts: 2,639
The overfunded pilot persnion fund was quite legally raided to benefit UAL, management, and the creditors in several different ways during the bankruptcy. Freezing the plan would have been the obvious choice, but that would have prevented UAL from using the funds for other purposes, most notably making up for shortfalls in the other plans when it went to the PBGC. It was WIN-WIN-WIN for everybody involved except the pilots.
It doesn’t really matter if the pickpocket grabs your wallet from the left pocket or the right pocket if the wallet is still gone.
01-15-2019, 10:29 AM
#169
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Joined APC: May 2014
Position: Tom’s Whipping boy.
Posts: 1,182
I have a frozen DB plan from CAL and, yes, the former formula was very good. I'm fairly certain the backdating thing came up one time during Contract '97 talks and I seem to remember there was some kind of tax reason that prevented it....I could be wrong. Also, hitting a seven figure lump sum payout after only ten years doesn't sound possible...I had about ten years in when it was frozen and mine wasn't even close to that.
01-15-2019, 10:35 AM
#170
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Joined APC: May 2009
Posts: 1,860
It was an average of your five highest years of the last ten years times 2.2%, having twenty years absolutely put you into a seven figure lump sum. I think I misunderstood, I thought you were saying that after a person had ten years TOTAL in the plan they would hit seven figures
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