Pensions at risk

[Bob Owens]

Chuck,
The DOL oversees the multiemployer pension plans and the IAMNPF is in much better shape than the majority of plans. The AA DBP was in distress like most other DBPs in the airline industry specifically. There was no fuzzy math and the IBT and TWU both asked their members to urge the gov't for relief which was granted but not what was asked for. UA, DL, and other airlines that froze or terminated their DBPs got special treatment.
 
Bottom line, the IAMNPF is in damn good shape.

Its easy to keep a plan in good shape when the plan doesn't have to pay out much money. On average the IAMNPF only pays out $5000 per year per retiree and dependent. Add to that a 48% penalty if you retire at 55, 4.8% per year penalty for each year prior to 65 and a prohibition on working and its easy to see why the plan is in your opinion in damn good shape, because its a bad plan. If we leave everything where it is we can retire at 55 with only a 15% penalty and retire at 60 with no penalty, and supplement our income working. 
 
I believe that for each year you push back retiring it saves the pension plan 6.5%. So rolling us from 60 to 65 would cut the amount of money needed in our pension fund by over 32%, add on at least another 3 or 4 % for the increased penalty and we are looking at a 35% decrease in the amount of funding needed. What is the TWU portion of the AA pension currently funded at? 85%? If AA got to dump our pension into the IAMNPF there would be an overage of funding, not a shortage because with much lower obligations to meet much less funding would be needed. So lets say the TWU pension fund needed to be $1 billion to be considered fully funded and cover its obligations, if they were 85% funded then they would have $850,000,000 in the fund, if they dumped us into the IAMNPF they would only need $650,000,000, so they would not only eliminate $150,000,000 in liabilities they would have $200,000,000 left over to provide what they would then call "an industry leading contract that would also be a zero cost contract. A gain of $350,000,000 out of our pockets. 
 
Our frozen plan can not be reduced, we can retire without penalty at 60, and a 15% penalty at 55 (vs the IAMNPF 48%)  and AA would be forced to add more funds and provide the benefits we earned if it ran short. The IAMNPF can cut our benefits if it runs low on funds and in the unlikely event it ran out of funds we would get no more than $13000 per year. 
 
The IAMNPF sucks, maybe it better than nothing but its not better than what we have. 

 

[jimntx]

 
[SIZE=11.5pt]The PBGC said Monday that the increased deficit was due [/SIZE][SIZE=11.5pt]to worsening finances of some multi-employer pension plans, which are pension agreements between labor unions and a group of companies, usually in the same industry. The $62 billion deficit reported for the year ended Sept. 30 compared with $36 billion in the previous fiscal year.[/SIZE]
[SIZE=11.5pt]Without changes such as increased insurance premiums, the agency says it expects [/SIZE][SIZE=11.5pt]its multi-employer insurance program to run out of money in 10 to 15 years.[/SIZE]

This is misleading.  This does not mention specific multi-employer pension plans.  To say that this "proves" that an IAM or Teamster's pension plan has a deficit is a lie.  It's like saying "Toyotas have been deemed unsafe by the government.  Toyotas are cars.  Chevrolets are also cars.  The government finding proves that Chevrolets are unsafe."

 

[Vortilon]

This is misleading.  This does not mention specific multi-employer pension plans.  To say that this "proves" that an IAM or Teamster's pension plan has a deficit is a lie.  It's like saying "Toyotas have been deemed unsafe by the government.  Toyotas are cars.  Chevrolets are also cars.  The government finding proves that Chevrolets are unsafe."

 
No way in hell would I trust one of these dues collection agencies with my retirement money!  I will take my chances with the 401k match.

 

[CMH_GSE]

Its easy to keep a plan in good shape when the plan doesn't have to pay out much money. On average the IAMNPF only pays out $5000 per year per retiree and dependent. Add to that a 48% penalty if you retire at 55, 4.8% per year penalty for each year prior to 65 and a prohibition on working and its easy to see why the plan is in your opinion in damn good shape, because its a bad plan. If we leave everything where it is we can retire at 55 with only a 15% penalty and retire at 60 with no penalty, and supplement our income working. 
 
I believe that for each year you push back retiring it saves the pension plan 6.5%. So rolling us from 60 to 65 would cut the amount of money needed in our pension fund by over 32%, add on at least another 3 or 4 % for the increased penalty and we are looking at a 35% decrease in the amount of funding needed. What is the TWU portion of the AA pension currently funded at? 85%? If AA got to dump our pension into the IAMNPF there would be an overage of funding, not a shortage because with much lower obligations to meet much less funding would be needed. So lets say the TWU pension fund needed to be $1 billion to be considered fully funded and cover its obligations, if they were 85% funded then they would have $850,000,000 in the fund, if they dumped us into the IAMNPF they would only need $650,000,000, so they would not only eliminate $150,000,000 in liabilities they would have $200,000,000 left over to provide what they would then call "an industry leading contract that would also be a zero cost contract. A gain of $350,000,000 out of our pockets. 
 
Our frozen plan can not be reduced, we can retire without penalty at 60, and a 15% penalty at 55 (vs the IAMNPF 48%)  and AA would be forced to add more funds and provide the benefits we earned if it ran short. The IAMNPF can cut our benefits if it runs low on funds and in the unlikely event it ran out of funds we would get no more than $13000 per year. 
 
The IAMNPF sucks, maybe it better than nothing but its not better than what we have.

Totally agree, we all need to be vigilant that this never happens.

The FA TA apparently raised the company match to 9.9%.
I look for the same to happen to ours, and that is a good thing to go with the pension that is 100% at age 60.

 

[Overspeed]

Vortilon,
So you don't trust a union but you trust the Wall Street types? The ones that nearly crashed the world economy a few years back? That would have trashed a 401k.

 

[chellow]

TWU, IAM and Wall Street, birds of the same feather.

 

[Vortilon]

Vortilon,
So you don't trust a union but you trust the Wall Street types? The ones that nearly crashed the world economy a few years back? That would have trashed a 401k.

I know...right.   Remind me what the IAM pension is insured for by the PBGC vs what our current frozen pension fund is insured for by the PBGC.  I like the idea of having both my frozen, better insured - AA pension, and my 401K match - hopefully with a better match negotiated in our next contract.  I know what happens when the market tanks.  I lost a bunch as well.  However, the market has rebounded since, and I'm up again.  Gotta stay in for the long haul.
It's crazy, but I do trust the Wall Street types more than I do the industrial union types.

 

[MetalMover]

I know...right.   Remind me what the IAM pension is insured for by the PBGC vs what our current frozen pension fund is insured for by the PBGC.  I like the idea of having both my frozen, better insured - AA pension, and my 401K match - hopefully with a better match negotiated in our next contract.  I know what happens when the market tanks.  I lost a bunch as well.  However, the market has rebounded since, and I'm up again.  Gotta stay in for the long haul.
It's crazy, but I do trust the Wall Street types more than I do the industrial union types.

Good point. Wall Street is the entity we just love to hate. You are right, the stock market has always rebounded. We saw 401k's tank starting in 2008. It always bounces back. The younger you are, the better you will do as you will be able to endure the downs when they occur. We love those fund managers when we are making a killing, and hate them when we lose.