Pensions vs. 401(k) plans

Airlinelifer

Senior
Jan 10, 2008
333
142
The IAM negotiated a pension with NWA after the company froze its pension. The new pension is funded by NWA and administered by the IAM National Pension Fund (iamnpf.org) for its members. Delta's pension is now frozen, is Delta planning to start a new pension for its employees?

NWA offers a 401(k) plan to its employees (but does not match), the plan is administered by State Street Bank.
Does Delta's 401 K match?, and who administers the plan?

And remember: a 401 (k) plan is not a pension.
It's the only retirement plan most people have, but it carries significant risk for the employee (a declining stock market). A 401(k) plan is just a supplemental retirement savings plan. (Which is a good thing to have, if you also have a defined benefit plan - a real pension.)
 
The IAM negotiated a pension with NWA after the company froze its pension. The new pension is funded by NWA and administered by the IAM National Pension Fund (iamnpf.org) for its members. Delta's pension is now frozen, is Delta planning to start a new pension for its employees?

NWA offers a 401(k) plan to its employees (but does not match), the plan is administered by State Street Bank.
Does Delta's 401 K match?, and who administers the plan?

And remember: a 401 (k) plan is not a pension.
It's the only retirement plan most people have, but it carries significant risk for the employee (a declining stock market). A 401(k) plan is just a supplemental retirement savings plan. (Which is a good thing to have, if you also have a defined benefit plan - a real pension.)

From what I have discovered NW automatically puts up to 5% in your 401k where DAL only 2%. They do match up to, 4 or 5% of our contributions.

I just read an article this morning how underfunded our frozen pension plan is and the benefit is based on what you made as of April 7th 2007. About half of the frozen pension has been used for executive pensions.

The following is rather dry but gives you the over view and status of our frozen pension fund.

Retirement Plan Facts

The Pension Protection Act (PPA) grants special funding rules for commercial airlines
(http://www.pbgc.gov/media/pension-legislation/content/page15921.html click on Text of Pension Protection Act and go to page 120 STAT. 922, Section 402)

The PBGC guarantee is LIMITED if the plan is terminated before April 1, 2017.
(Government required notice from Delta June 15, 2007.)

If the Plan is terminated before April 1, 2017, “the first day of the first applicable plan year†is treated “as the termination date of the plan.†April 1, 2007 will be the termination date no matter what year the plan terminates.
(Pension Protection Act, page 120 STAT. 926, Special Rules for Termination)

If the Plan is terminated before April 1, 2017, “the amount of guaranteed benefits†is determined “on the basis of plan assets and liabilities as of the assumed termination date†which is April 1, 2007. Your guaranteed benefits are based on April 1, 2007.
(Pension Protection Act, page 120 STAT. 926, Special Rules for Termination)

The date of April 1, 2007 is significant. The PBGC maximum guarantee is fixed as of that termination date (www.PBGC.gov)

Your maximum guarantee amount is based on your age on the plan termination date—April 1, 2007. (www.PBGC.gov Maximum monthly guarantee)

There is a question as to the effect termination will have if you were not in pay status (receiving retirement benefits). If we were not under the PPA and the plan terminated, you would use your age on the date you begin receiving benefits from PBGC. However, since we are under the PPA, it appears that the termination date of April 1, 2007 will be used. If this changes, I will notify you.
(www.PBCG.gov)

As of July 1, 2006, Delta had not contributed enough to the plan to meet minimum funding standards. The deficit was $228, 300,678.
(Summary Annual Report, The Delta Retirement Plan, sent March 10, 2008)

By applying for the PPA, this deficiency was reduced to zero on March 31, 2007
(Summary Annual Report, The Delta Retirement Plan, sent March 10, 2008)

Less than a year after reporting the deficit of $228,300,678, Delta executives cost Delta $109 million in a specially created Management Program, which was only one component of their additional compensation. The program covered the eight months ending December 31, 2007.
(www.sec.gov )

The underfunded pension plan covers 91,319 retirees, active employees and beneficiaries. The generous Management Program--that was in addition to salary and benefits—covers 1,200 officers, director level employees and management personnel.
(www.sec.gov and Summary Annual Report, The Delta Retirement Plan, sent March 10, 2008)

In eight months, a small group of executives and managers got almost half of the amount that our retirement plan was underfunded by.

From July 1, 2006 to March 31, 2007, $378,015,609 was paid from the plan to retirees and beneficiaries.
(Summary Annual Report, The Delta Retirement Plan, sent March 10, 2008)

The promises to employees and retirees existed long before the majority of our executives came to Delta.

The executives knew these obligations existed before they came to Delta

The impact from an underfunded pension plan that was frozen is greater on a front-line employee or retirees than the millions our executives could have foregone to shore up the plan properly. After all they still have six figure incomes.
(www.sec.gov )

On August 16, 2005, Delta issued a memo entitled “Social Security Offset Factsâ€. “If the company were to cap the Social Security offset for its 62,000 non-pilot employees and not change any other calculations…it would cost the company more than $125 million a year.†That is slightly over the $109 million that 1,200 executives and managers cost Delta for the special Management Program for eight months ending December 31, 2007.
(Deltanet)

The annual payment into the underfunded pension plan that approximately 91,000 retirees and employees depend on is $100 million—$9 million less than 1,200 executives and managers cost Delta for eight months.
(www.sec.gov and Deltanet)

Delta executives ELECTED to freeze our Retirement Plan on 12-31-05.

Delta executives ELECTED to apply for the Pension Protection Act.

Delta can meet certain conditions, such as funding the plan properly, and revoke the election with the consent of the IRS.
(www.IRS.gov Bulletin: 2006-40)

Delta executives and some FAs like to point to the terminated plans of other carriers with the argument of ‘the union couldn’t save their plan.†They do not and intentionally do not, point out that their mismanagement is responsible for the underfunding of OUR plan and that were it not for their own greed, the plan could be funded properly at this very moment.
 
From what I have discovered NW automatically puts up to 5% in your 401k where DAL only 2%. They do match up to, 4 or 5% of our contributions.

Respectfully, this is incorrect as far as the IAM membership goes (ramp, stock clerks, CSA's, clerical, res, sim techs, and plant protection). The Sim techs had a (temporary???) match-and maybe negotiated a permanent one-but no one else does.

Thanks for the rest of the info; very interesting stuff!
 
Respectfully, this is incorrect as far as the IAM membership goes (ramp, stock clerks, CSA's, clerical, res, sim techs, and plant protection). The Sim techs had a (temporary???) match-and maybe negotiated a permanent one-but no one else does.

Thanks for the rest of the info; very interesting stuff!


Sorry, I was going by the AFA contract for FA's.