49 replies to this topic

[BoeingBoy]

jimntx, on 21 February 2012 - 11:34 AM, said:

There is a far cry between "you will not lose a dime" and "you will not lose accrued benefits."  Also, that is just semantics.

Well, first "you will not lose a dime" doesn't sound like words any company thinking of terminating pensions would use.  All it takes is a rudimentary understanding of what happens when a DB plan is terminated to know that you lose benefits not accrued on the termination date.  So anyone surprised that they won't get the same benefit as they would have in 4, 10, 20 or however many years hasn't been paying attention.  I would strongly doubt that AA management (or whoever put the information out about losing benefits) would use language that would give the impression that anyone not retired would get the same benefit that they'd have gotten when they did retire if the plan was still in effect.

How specific is the calculator?  Do you have to enter your work group or is there separate calculators for each work group?  Does it take into account how the PGGC calculates benefits for terminated plans or is it designed to be a ballpark figure?  Does it take into account PC categories or use the same calculations for all members of the group(s)?

Jim

[usa1]

The company said this month that it wants to trim $2 billion a year from its costs, including $1.25 billion in employee-related expenses.Then AMR wants to move ahead with last year's order for 460 narrow-body airplanes and earlier plans to acquire wide-body Boeing 787 and 777 aircraft. The airline also intends to invest in products and services like lie-flat seats and in-flight wi-fi that high-end customers who pay the most for tickets will find attractive.

http://uk.finance.ya...-195403030.html

At least you know where your lost pension percentage is going ....

[WorldTraveler]

Pension calculators like this are fairly accurate and do pull employee-specific information.  If they couldn't be specific to each employee, they would not be used, even given the disclaimer that is added at the bottom of every calculation that these numbers are not guaranteed until an actual start date is initiated.
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The bottom line is that terminating or freezing a pension will significantly diminish the amount of pension benefits an employee would have received because the vast majority of current employees are not at full years of service or age.  Former employees like E who may or may not have had full YOS and age when he left may not be hurt by the termination but by the changes in rules of what would have been available.
Further, it is likely that no active employee will receive pension benefits during BK so you automatically lose a couple years worth of funding and because of the time value of money, you can't make up with a lump sum what you would have obtained if the funding had continued on an ongoing basis, even at a reduced level.  
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And it is absolutely true that AMR's restructuring plan requires them to get rid of the pension underfunding in order to have the financial ability to take on the $25B in new aircraft orders (even if via leases) that are part of AA's turnaround plan.  
The fact that other airlines who have not terminated all of their plans and retain responsibility for the pension underfunding have also not ordered the large number of new aircraft that AA has ordered shows that there are choices about which debts you choose to pay and how, even in the midst of difficult decisions, financial priorities become apparent.

[BoeingBoy]

WorldTraveler, on 22 February 2012 - 04:17 AM, said:

Pension calculators like this are fairly accurate and do pull employee-specific information.

That doesn't sound right in this case if an employee has to put age or retirement date in - that should be employee-specific information that you claim is pulled so all that would be needed is an employee number or other identifying information.  When you say "like this" I assume you know no more than I do about the one(s) on jetnet.

Sure, there are pension calculators online that are only as accurate as the info put in - the old GIGO.

Jim

[WorldTraveler]

BoeingBoy, on 22 February 2012 - 04:52 AM, said:

That doesn't sound right in this case if an employee has to put age or retirement date in - that should be employee-specific information that you claim is pulled so all that would be needed is an employee number or other identifying information.  When you say "like this" I assume you know no more than I do about the one(s) on jetnet.

Sure, there are pension calculators online that are only as accurate as the info put in - the old GIGO.

Jim

someone who actually is using AA's pension calculator will have to comment but you probably have to put in at least the date you intend to start benefits or the age.

In order to make even a pension estimate, you need to know an employee's earnings history - and making a rough guess w/o that information means the only way you could do it is to assume that someone at X years of seniority exactly followed the pay scale progression for his current job classification etc.... if a company cannot be more accurate that that then they should not be offering a pension calculator - and I doubt that AA is that crude in its approach.

[BoeingBoy]

Does not the PBGC use the actual amount of money in the plan as part of it's process of determining benefits?  By George, I do believe they do.  With approximately $8.5 billion in total funding a 1% change in value of the fund holdings would make an $85 million difference.  Could that maybe, just maybe change an employee's benefit if the plan was terminated?

The "Whole Truth" is that an employee's benefits from the PBGC depend on more than payroll history and retirement date... GIGO

Jim

[limit]

Its employee specific.
There are two ways to calculate benefits.
1. you can put in any date as retirement date and any date as starting to withdraw date.
you are also asked for your spouse birth date, so that it can show you
her/his cut if you die first, and is very detailed in providing different scenarios .

2.The new option put up last month allows you to check the  PBGC box , in which case the calculator automatically uses 11/19/2011
as you "retirement" date.
You still have to enter a benefit start date so that it can give you a result depending on the benefit
start date per PBGC rules ( If you chose to start withdrawal at 55 it will be less than at 57, ..,60 and so on).
Your benefit after 60 does not change as there is no penalty per the rules after that date.

The reason for the birth day is simple , the way I see it.
The guys that wrote the code just decided to have you put in your date  ( needed to see if you are retiring pre 60 ),
, instead of the system pulling it automatically.
The system does pull your  average salary required by the formula to determine benefits and provides that average salary used on its results page.

[jimntx]

BoeingBoy, on 22 February 2012 - 01:50 AM, said:

Well, first "you will not lose a dime" doesn't sound like words any company thinking of terminating pensions would use.
Jim

No, but a certain company cheerleader did.  A quote from a post..."You, on the other hand, will receive every dime of accrued pension benefit."  Now, maybe you want to draw a difference between "you will not lose a dime" and "you will receive every dime", but that would be hairsplitting at its finest.