New book about AA’s trip through BK out soon.

[MetalMover]

Without a doubt new employees prefer the portability of a 401K, but I don't think you'll find too many employees who had their DB plan frozen who'd say no to negotiating away something else to see it restored. There's at least one group of legacy airline employees who still have a non-frozen pension today, and it's largely because they worked to save it during a restructuring outside of bankruptcy.

Nobody's forcing you to buy the book or read it. Those willing to consider other opinions than their own or question what they've been led to believe by the union or even by the company might want to do so.

For newer employee with many years of a working life ahead, the 401k will most likely be very substantial come retirement time. But for the older employees who were counting on the DB as they near retirement might not recoup the difference in the frozen DB from the 401k. There may not have been enough time to do so. But consider this.....Suppose the market events of 2008 occurred again where a DB did not exist. You were getting ready to retire and thought your 401k, your only retirement plan, was enough to live on......BAM! You just lost around 40% of its value.....
All of a sudden things change.....Do you retire anyway? Do you work a few more years to recover? Do you put your life on hold?
Having a DB also might have made up for some of the losses.

 

[swamt]

That's correct MM. Never put all your eggs in one basket. That's why I have and highly recommend the 5 legged stool instead of the 3 or 4 even. And my 5 legs do not include SS. 401K, Profit Sharing (both fully controlled and invested by ME) 2 separate individual IRA's (me and wifey) and a 5th of real estate portfolio, although mine is still very small as the focus on this one will multiply after I hit 55-65. Throw in there the SS and retirement looks very comfy and doable for many many years that hopefully my children will get some after my wife and I are past, not saving for that, but hopeful we can pass some along.

 

[jimntx]

The mistake I see most often--particularly among flight attendants--is the failure to recognize (or admit to knowing LOL) that no pension plan and no Social Security was ever intended to be your sole source of income in retirement. The pension plan (the frozen one) and Social Security represent less than 40% of my retirement income. Now I admit that I can say that a lot easier than others. My late wife and I had no children (amazing how much income that frees up from just day to day living and makes that income available for savings and/or investments). Also, other than my mortgage payment, I have no debt other than monthly bills. I drive a 9-year old BMW that has an inner beauty of its own (it's paid for). And I have a hard and fast rule for Jim. He can shop at Nordstrom's all he wants but when the bill comes, it must be paid in full. That really reduces the number of trips to Nordstrom's and makes a lot of those sweaters not nearly as attractive as I first thought.

 

[eolesen]

And again as much as I wish I still had my Pension continuing on it would be foolish to accept it if there are no laws to prevent the Company from not even bothering to contribute to it.

You need to be a little more educated on your retirement, sir.... ERISA (Federal law) does indeed protect your pensions, and specific to your statement above, the IRS has the statutory authority to impose tax penalties on companies for underfunding.

 

[WeAAsles]

You need to be a little more educated on your retirement, sir.... ERISA (Federal law) does indeed protect your pensions, and specific to your statement above, the IRS has the statutory authority to impose tax penalties on companies for underfunding.

Ok I would love for you to educate me on this then. During the BK off the top of my head I believe that PBGC Director Josh Gottbaum made a claim that AMR had an underfunding estimate of 8 Billion on all their Pensions. AMR stated their estimate at 5 Billion.

So where is my (Full payment) Pension protected?

Ok I’m guessing you will make the claim that I would get it all had it been thrown on the PBGC? Not sure how that would have worked out when the PBGC at the time was saying it was 30 Billion underfunded and would have to ask for a taxpayer bailout if changes to collection amounts weren’t modified?

So E would ERISA protect a DB Pension participant if his company went insolvent and wasn’t funding that retirement account?

Getting past all the fluff (BS) of rules and Laws that never really seem to hold up to snuff I prefer a more common sense go of things. Answer me this E. If everyone has a Pension that’s protected then why are so many people out there only getting pennies on the dollar for what they were promised? Lots of TWA guys out there only getting $200 a month you know.

Page 25 down Eric, Thank you.

https://www.pbgc.gov/documents/2016-Annual-Report.pdf

 

[WeAAsles]

But what do I know? I only graduated High School. I’m uneducated.

February 22, 2017

“As of Dec. 31, American Airlines had $10.02 billion in total defined benefit assets and $17.24 billion in benefit obligations for a funded status of 58.1%, down from 59.2% at the end of 2015. The 10-K did not break out U.S. vs. international plans, but U.S. plan assets totaled $10.12 billion as of Sept. 30, according to Pensions & Investments data.”

http://www.pionline.com/article/201...rts-279-million-pension-contribution-for-2017

 

[eolesen]

The people getting pennies on the dollar worked for companies that went out of business or declared bankruptcy. No, ERISA can't stop that from happening, but that's why the PBGC is there.

Underfunding estimates are a formula that both the company and PBGC can spin as needed. AA was claiming a higher assumed rate of return on their pension investments than what PBGC was using, and both were within their rights to forecast as they saw fit. I forget the specifics, but it was something like PBGC claimed 5% and AMR claimed 8%. Multiplied against future obligations, you can get a fairly wide swing on funding estimates i.e. $5B vs $8B that you mentioned.

Regardless, as long as the company is solvent, even if the pension fund hits zero, by law, the company still has to pay the remaining obligations out of their operating cash. There's no gaming that. They also can get hit with the IRS penalties I mentioned.

If the company declares bankruptcy and gets permission to unload their pension, the PBGC is the safety net. By law.

If the AA plans had been distressed terminated in 2013, the PBGC max was $45,400 per year for someone retiring at 62. For most people, I suspect that isn't too far off from their actual promised benefits.

It's not a perfect system, but to say there aren't protections is patently false.

The reason some TWA folks are only getting $200 a month is because they stopped earning credited service in 1992, which is when their plans were frozen before ultimately being distress terminated in 2001. When you look at a 35 year employee in 2015, you have to realize they only had had ~12 years of credited service in the TWA pension plan, minus any time they spent on furlough. Don't forget that TWA took pay cuts in 1986 and saw huge layoffs, and the lower (or zero) pay impacted the best X out of Y formula for those employees who were still around in 2001 (same thing happened at AA).