American Airlines and Labor Negotiations

[WeAAsles]

A multiemployer/union benefit plan is a plan that two or more employers contribute to under the terms of one or more collective bargaining agreements ("CBAs"). Multiemployer pension plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), as are most other employer retirement plans, but multiemployer plans are also subject to special rules added to ERISA in the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). MPPAA imposes an exit penalty, referred to as “withdrawal liability,” on employers who withdraw from an underfunded plan. The plan must allocate a portion of the unfunded vested benefits in the plan to a participating employer when it withdraws from the plan, and the withdrawing employer must pay this withdrawal liability.

Withdrawal liability can be triggered when an employer has a significant reduction in its participating union workforce (a “partial withdrawal”), a complete reduction in its participating union workforce (a “complete withdrawal”), or when there is a withdrawal of all employers from the plan (a “mass withdrawal”). When a withdrawal occurs, the plan will determine whether all participants’ vested benefits exceed the value of plan assets and, if so, the plan will determine the withdrawing employer’s share of the unfunded amount based on the formula in the plan and send the employer a bill for the withdrawal liability. MPPAA includes several allowable formulas the plan can use to make this determination. For more background on withdrawal liability generally, click here for our previous article “Union Pension Plan Participation Can Create Massive Unexpected Liabilities.”

https://www.frostbrowntodd.com/reso...ployer-pension-plan-withdrawal-liability.html

 

[WeAAsles]

A multiemployer/union benefit plan is a plan that two or more employers contribute to under the terms of one or more collective bargaining agreements ("CBAs"). Multiemployer pension plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), as are most other employer retirement plans, but multiemployer plans are also subject to special rules added to ERISA in the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). MPPAA imposes an exit penalty, referred to as “withdrawal liability,” on employers who withdraw from an underfunded plan. The plan must allocate a portion of the unfunded vested benefits in the plan to a participating employer when it withdraws from the plan, and the withdrawing employer must pay this withdrawal liability.

Withdrawal liability can be triggered when an employer has a significant reduction in its participating union workforce (a “partial withdrawal”), a complete reduction in its participating union workforce (a “complete withdrawal”), or when there is a withdrawal of all employers from the plan (a “mass withdrawal”). When a withdrawal occurs, the plan will determine whether all participants’ vested benefits exceed the value of plan assets and, if so, the plan will determine the withdrawing employer’s share of the unfunded amount based on the formula in the plan and send the employer a bill for the withdrawal liability. MPPAA includes several allowable formulas the plan can use to make this determination. For more background on withdrawal liability generally, click here for our previous article “Union Pension Plan Participation Can Create Massive Unexpected Liabilities.”

https://www.frostbrowntodd.com/reso...ployer-pension-plan-withdrawal-liability.html

So basically Tim it’s a Law that went into effect all the way back in 1980 and every year that passes if the underfunding of the Pension Liabilities increases so too does the cost of being able to get out for the Employers as the Penalty percentage will also increase.

 

[Tim Nelson]

Tim what you’re not seeming to understand is that the PPA was written by design to keep the liabilities for underfunded Multi Employer Pensions off the backs of the PBGC which itself is dramatically underfunded and may be looking for a Taxpayer bailout in the future.

Basically what I’m telling you is because of the PPA itself even if the Funds Trustees wanted to flush it onto the PBGC arbitrarily they don’t even have the ability to do so. And I’m sure that wouldn’t be their preferred course of action anyway.

You do remember perhaps that the PBGC Director during the AA Bankruptcy Josh Gotbaum fought like crazy not to have AA’s DBP obligations thrown on the backs of the Insurance Corporation.

Besides Tim despite how you sell it even with the coming cuts the IAMNPF is still 89% funded which does not constitute a catastrophe by any means.

But I can understand absolutely why you want to get out of it anyway and I do sympathize. Especially if the Company does option for the Default Plan Schedule.

It affects you as well. I have been telling you for years but you dont listen.
Your negotiations are my negotiations. This pension just handed a huge bill to your company for your group. Your group is my group.
So if the company does the preferred schedule then i guess i have to say thank you david.

 

[WeAAsles]

It affects you as well. I have been telling you for years but you dont listen.
Your negotiations are my negotiations. This pension just handed a huge bill to your company for your group. Your group is my group.
So if the company does the preferred schedule then i guess i have to say thank you david.

I agree with you Tim. My Company is also your Company and Vice versa. We both hold responsibilities that we’re obligated to fulfill.

You’re just as much on the hook for my Retirement as I am for yours. But you don’t read me crying about it or looking to see you get screwed like many others I work with seem to have no problem doing to you.

Honestly if the Company doesn’t ultimately agree to foot the bill to get out of the IAMNPF I hope they do (despite whatever it costs to me) put you guys on the Preferred Schedule. But that’s how “I” feel.

 

[Tim Nelson]

I agree with you Tim. My Company is also your Company and Vice versa. We both hold responsibilities that we’re obligated to fulfill.

You’re just as much on the hook for my Retirement as I am for yours. But you don’t read me crying about it or looking to see you get screwed like many others I work with seem to have no problem doing to you.

Honestly if the Company doesn’t ultimately agree to foot the bill to get out of the IAMNPF I hope they do (despite whatever it costs to me) put you guys on the Preferred Schedule. But that’s how “I” feel.

weez, the union should have settled prior to this new company cost.
The current company proposal is off the table. I just had it confirmed. Any new proposal imputs additional cost not contained in the latest offer.

 

[Tim Nelson]

this added cost to the pension is significant and is one of these future contract altering events i was concerned about dragging this out.

 

[Kev3188]

weez, the union should have settled prior to this new company cost.
The current company proposal is off the table. I just had it confirmed. Any new proposal imputs additional cost not contained in the latest offer.

$320M(ish) is a massive ask to add to any talks. The idea that no one on your NC could read the tea leaves and get out while they could should piss everyone off.

 

[WeAAsles]

weez, the union should have settled prior to this new company cost.
The current company proposal is off the table. I just had it confirmed. Any new proposal imputs additional cost not contained in the latest offer.

I suspect the Company would be taking their proposals off the table. But mainly because so far the odds are only showing about 20% are interested in accepting them anyway.

So will they soon be taking down the Jetnet links?

this added cost to the pension is significant and is one of these future contract altering events i was concerned about dragging this out.

Actually the cost is not as significant as you think if they wanted to keep the same economics they were already offering.

All they have to do is figure out where the variables are for what they ultimately want to offer you.

Let’s say instead of like the UAL guys have which is the IAMPF and a 3% 401K “Contribution” they keep you with the IAMPF and add a 3% “Match” instead? Or make the 401K Contribution 2% instead. Or some other combination of the two to keep the economics the same.

 

[WeAAsles]

this added cost to the pension is significant and is one of these future contract altering events i was concerned about dragging this out.

Remember Tim. The Company is more than likely ultimately not going to drop out of the IAMNPF because of that withdrawal liability fee and it being technically a penalty fee which both you and the Company don’t get anything out of anyway.

The reality is they were going to bump up their Retirement costs anyway by going from the 3% Contribution 2.5% Match we were getting now to the 5% Contribution 4% Match they were offering.

It’s actually not going to be that difficult for the Company to just reset the numbers for those of you continuing on with the IAMNPF.

Even if you do ultimately get less of a deal for some type of 401K formula I highly recommend and suggest you put a healthy chunk of your wages into the 401K anyway.

I’m sure even Suze Orman would offer that advice to you.

 

[Buck]

So i'm not sure if this was talked about or even noticed, but for all the lemmings and company cheerleaders (ie.. the know it all, seen it all, and claims it all, Mr T. Nelson)that want to force a vote or claim that everyone they have talked to will vote it in. Take a look at the M&R proposal that the company put out and look at Article 30 "Retirement", page 164, paragraph F and G. It says " The company reserves the right to amend the 401K plan at the Companys sole discretion. Also "The 401K Plan is NOT incorporated in this agreement". So even though the company doesn't want to come close to offering what is paid to some of the other employee groups 401K they want to amend this employee groups plan anytime they want. I can pretty much guess that they are not going to increase the percentages just to be nice. Not wanting it to be included into the agreement tells me that there is no way of enforcement. I only skimmed over the agreement but this stuck out plain as day. I would take my chances and let the negotiators work on your behalf because as you can see the company is not.

Thanks for the information.

I will avail myself of your advice, however, I have for the last 35 years hired the union to take my chances and let the negotiators work on my behalf because it is a "closed shop" and have been treated equal or better by the company. That does not mean I do not want a union, just a different one.

 

[WeAAsles]

Thanks for the information.

I will avail myself of your advice, however, I have for the last 35 years hired the union to take my chances and let the negotiators work on my behalf because it is a "closed shop" and have been treated equal or better by the company. That does not mean I do not want a union, just a different one.

Yes the Company treated you wonderfully when they filed Bankruptcy with over $4 Billion cash on hand and wanted to throw your Pension on the PBGC instead of taking care of that responsibility in the first place. SMH.

 

[Jester]

That is the fee and that fee is required by Law and is even on the PBGC Website.

That fee is to protect the benefits you have already accumulated.

To role reverse. You asking for the Company to be let off the hook for the fee would be comparable to me wanting to let the Company off the hook for the underfunding of my Defined Benefit Pension (Hell no) The Company will be making a $900 Million deposit on my DBP this year and that still doesn’t shore it up.

The problem is that the Company DID fund it with the $1.05(?)/hour on all those covered under the IAMNPF, but through mismanagement and over promising, the pension would now be short. That's a completely different scenario than what AA pension did not fund or grossly inadequately fund its company pension.

My problem with so many of these pensions are they SHOULD be fully-funded with whatever investment assets they presently have available to cover future actuarial claims REGARDLESS of any future contributions. No different than your 401K having no additional contributions, but compounding future returns should be able to project an annuity of monthly payment upon retirement. However, all of these pensions would collapse without additional suckers, errrr... contributors to pay-off current and soon-to-be future retirees. That's pretty much a Ponzi scheme.

 

[Tim Nelson]

Remember Tim. The Company is more than likely ultimately not going to drop out of the IAMNPF because of that withdrawal liability fee and it being technically a penalty fee which both you and the Company don’t get anything out of anyway.

The reality is they were going to bump up their Retirement costs anyway by going from the 3% Contribution 2.5% Match we were getting now to the 5% Contribution 4% Match they were offering.

It’s actually not going to be that difficult for the Company to just reset the numbers for those of you continuing on with the IAMNPF.

Even if you do ultimately get less of a deal for some type of 401K formula I highly recommend and suggest you put a healthy chunk of your wages into the 401K anyway.

I’m sure even Suze Orman would offer that advice to you.

Thats exactly what I said. The company is going to have to reflect that cost. You say it could mean less of a 401k of 1%. I dont think that will cover the icing on the cake.
The surplus of 10% + 6% is about $6 million more a year (mx and fleet) + any additional higher interest rate that may be imposed by congress.
We are stuck, because of F Obama to pay for 200,000 pensioneers with our pension and wages now. This includes you.
To fully cover the ongoing known cost, the company would have to change the 401k base to 1% total base for all lus or allow twu members to subsidize us again. Then the 401k base for all will only take a 2% hit. That would mean a 3% base and 4% matching for all.
Thats more than you have now.
Thanks weez! Im loving soft Alex!

 

[Tim Nelson]

The problem is that the Company DID fund it with the $1.05(?)/hour on all those covered under the IAMNPF, but through mismanagement and over promising, the pension would now be short. That's a completely different scenario than what AA pension did not fund or grossly inadequately fund its company pension.

My problem with so many of these pensions are they SHOULD be fully-funded with whatever investment assets they presently have available to cover future actuarial claims REGARDLESS of any future contributions. No different than your 401K having no additional contributions, but compounding future returns should be able to project an annuity of monthly payment upon retirement. However, all of these pensions would collapse without additional suckers, errrr... contributors to pay-off current and soon-to-be future retirees. That's pretty much a Ponzi scheme.

Pretty much?
And we get stuck with a future benefit of $34 hereafter if FT and $12 if pt.
And now no new employers will touch this, so more retirees and less contributers.
Pensions cost some airlines bankruptcy.
This is going to be a monster blow to United Airlines since they have 20% or 20,000 in this fund.

 

[WeAAsles]

The problem is that the Company DID fund it with the $1.05(?)/hour on all those covered under the IAMNPF, but through mismanagement and over promising, the pension would now be short. That's a completely different scenario than what AA pension did not fund or grossly inadequately fund its company pension.

My problem with so many of these pensions are they SHOULD be fully-funded with whatever investment assets they presently have available to cover future actuarial claims REGARDLESS of any future contributions. No different than your 401K having no additional contributions, but compounding future returns should be able to project an annuity of monthly payment upon retirement. However, all of these pensions would collapse without additional suckers, errrr... contributors to pay-off current and soon-to-be future retirees. That's pretty much a Ponzi scheme.

I’d have to agree with a lot of what you wrote. I do think that many of these Pensions overdramatized what they were really going to be able to pay out into the future when they were first proposed.

Absolutely the people who first drew them up wound up being the main beneficiaries. The guys who retired in the 70’s did spectacular.

I remember looking at my Pension accruals and what the expected payouts were supposed to look like when I retired and thought the numbers were awfully high looking at it through a realistic grounded in reality lens with no pie in the sky notions.

Even your IAMNPF while maybe not as grandiose when looking at the numbers as my Benefits Calculator was showing me, seemed rather high with the average life expectancy.