Pensions- CEO's vs worker

[Wretched Wrench]

"Airlines pressure Congress over pension bill"


http://yahoo.reuters.com/news/articlehybri...News&rpc=44

If the airlines don't get some relief on funding time limits, two bad things will happen:

1. More of the bankrupt airlines will dump their plans, placing AA at a major competitive disadvantage.

2. The dumping of more plans means the PBGC will be even more underfunded, putting each of us at financial risk if and when AA dumps their pension.

I am surprised that we don't see more encouragement on Jetnet for us to write our reps in Congress. There is no mention of this situation under the "Major Initiatives" tab.

 

[Wretched Wrench]

Congress Nears a Pension Bill,
As Airlines Seem to Get Relief


Members of Congress neared a deal on a long-awaited pension bill as airline executives appeared to make headway in winning more time to fully fund their employee pension plans.

While details aren't final and much could still change, House and Senate negotiators have largely resolved some major sticking points, including giving struggling airlines some form of relief and making it easier for investment firms to provide advice to their 401(k) clients.

Negotiators have been working for months to complete sweeping changes aimed at ensuring that companies are able to meet their financial obligations to the 44 million employees with defined-benefit pension plans. U.S. companies have underfunded their pensions by an estimated $450 billion and some companies, including the airlines, have begun abandoning their pension plans as they hit rocky times.

Full Article: page A2 WSJ 7/19/05



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US lawmakers said to have deal on pension bill

U.S. House and Senate negotiators reached a tentative agreement on legislation to overhaul the employer-provided pension system the chairman of the negotiating group said on Wednesday.

Sen. Mike Enzi, speaking after a negotiating session, said the provisions would be put in writing and the group would meet again on Thursday to finalize the deal.


The Wyoming Republican said issues such as special aid for struggling airlines had been resolved, but declined to give details. He said he expected the completed bill to be voted on in the U.S. House of Representatives next week and then in the U.S. Senate shortly thereafter.

Full article: http://today.reuters.com/investing/finance...NS-UPDATE-2.XML

 

[Bob Owens]

Executives participate in the same pension plan as the rest of the agents, management, and support staff, so that is not really broken out. But, there's also a maximum amount that can be accrued in the standard plan under IRS and ERISA guidelines.


If you want to do the math, go for it, but for the two executives with the highest salary and years of service (Arpey and Garton), it doesn't appear that any executive currently at AMR will earn a pension in excess of $700K per year.

If all these executives are in the same plan then what does the company do when they hire some executive but give him 25 years of credit towards his pension?

Does the company all of a sudden have to put in 25 years worth of contributions plus intrest?

If not then it would leave the pension way underfunded, if they did then it could still be underfunded but still show a high contribution rate.

So when AA claims that they contributed $146 million but they hired 10 new executives and gave them each 25 years of credit towards their pension (based on their high six or seven figure salary) maybe most of that contribution was really to cover the execs pensions and not ours.


How is the liability for the unserved but credited years covered?

 

[Wretched Wrench]

I seem to remember Carty got three years' credit for every year he served. I suspect there was some clever bookkeeping legerdemain on that, too.

 

[Bob Owens]

No answers from our management/TWU types?

How is the liability for the unserved but credited years covered?

 

[FWAAA]

No answers from our management/TWU types?

How is the liability for the unserved but credited years covered?

You called on me to address this one in that other forum - you must have missed post #28 above where I admitted that I don't know.

 

[Wretched Wrench]

Our retirement is on the line.

This week may be crucial, and your input to your reps will count. Presently, AA uses an assumption around 5% per year on return on assets. A figure of 8 or 9% is more realistic. Rep William Thomas, chairman of Ways and Means Committee, opposes the higher figure.

Call or E mail your Congressman and Senators, as well as Speaker Hastert and House Majority Leater Boehner in support of a 10 year amortization schedule with an 8.25% discount rate for American and Continental.

 

[FWAAA]

Our retirement is on the line.

This week may be crucial, and your input to your reps will count. Presently, AA uses an assumption around 5% per year on return on assets. A figure of 8 or 9% is more realistic. Rep William Thomas, chairman of Ways and Means Committee, opposes the higher figure.

Call or E mail your Congressman and Senators, as well as Speaker Hastert and House Majority Leater Boehner in support of a 10 year amortization schedule with an 8.25% discount rate for American and Continental.

Don't know what discount rate is specified in the House bill, but it passed tonight - now on to the Senate next week.

The bill gives NW and DL 17 years (instead of the 20 they wanted) to make up the shortfalls. CO and AA get 10 years without having to freeze their plans - so AA should be happy. Based on the current shortfall of $2.3 billion, that would be a mere $230 million per year, which is well within AA's ability to pay.

 

[Hopeful]

Our retirement is on the line.

This week may be crucial, and your input to your reps will count. Presently, AA uses an assumption around 5% per year on return on assets. A figure of 8 or 9% is more realistic. Rep William Thomas, chairman of Ways and Means Committee, opposes the higher figure.

Call or E mail your Congressman and Senators, as well as Speaker Hastert and House Majority Leater Boehner in support of a 10 year amortization schedule with an 8.25% discount rate for American and Continental.

Does anyone remember about a year and half or so ago, they held hearing in Congresss about the airline pension crisis?
Bob Crandall was there along with the PBGC Comptroller.

When asked what he thought caused this mess, Crandall said the problem at been that airlines had historically used 10% ROI with respect to the pension plans. He said 4-5% would've been more realistic. I tend to agree with his assessment.

 

[nbmcg01]

Does anyone remember about a year and half or so ago, they held hearing in Congresss about the airline pension crisis?
Bob Crandall was there along with the PBGC Comptroller.

When asked what he thought caused this mess, Crandall said the problem at been that airlines had historically used 10% ROI with respect to the pension plans. He said 4-5% would've been more realistic. I tend to agree with his assessment.

perhaps mangt. shouldn't have signed off on pension agreements they either knew (or had no intention) of funding...

 

[Bob Owens]

You called on me to address this one in that other forum - you must have missed post #28 above where I admitted that I don't know.

The questions may be related but they are not the same.One asks an amount, the other asks how its addressed.

 

[Wretched Wrench]

Pension reform could rattle airlines

Continental and American airlines could face a competitive disadvantage against rivals Northwest and Delta under pension reforms passed by the House of Representatives late last week, according to Wall Street analysts.

The reform plan, which the House passed Fri day, gives Northwest and Delta, two airlines operating in bankruptcy protection, 17 years to pay their under- funded pension obligations. In comparison, Continental and American would have 10 years, unless they agree to renegotiate their defined-benefit pension plans with labor unions.

Full Article:

http://www.nj.com/business/ledger/index.ss....xml&coll=1

 

[AMFAMAN]

In comparison, Continental and American would have 10 years, unless they agree to renegotiate their defined-benefit pension plans with labor unions.

Went to my union meeting last week and they urged me to contact my Congressman to pass this bill, now I know why, an easy excuse for the pension concession. :down: