On 2/23/2003 10:09:57 AM RowUnderDCA wrote:
Couldn't ALPA agree to cash balance the money, keep it away from PBGC, in exchange for hundreds of millions of dollars of immediate payments? Why couldn't they agree to that, conceptually?
Yes, something like this is theoretically possible. This type of conversion has been accomplished numerous times for non-union employees. This would not be unlike a plan freeze and the establishment of a defined contribution plan.
However, by law you can only change FUTURE and not ACCRUED benefits. This is called the anti-cutback rule found in the ERISA statutes. Thus, U pilots approaching retirement would still be entitled to the bulk of their accrued benefits to include the lump sum option, and the "new" plan would still be liable for these payments. The savings wouldn't kick in for many years, and thus *may* not solve the immediate problem.
Also, conversions to cash balance plans tend to penalize older workers, and as a result these type of conversions have been subject to age discrimation lawsuits. I don't know if there is a basis to sue if the change was consensual.
The only way in which a person can actually lose ACCRUED benefits is through a distress or involuntary termination in which the PBGC takes over the pension plan.