Pension Calculator or Jetnet

[jimntx]

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.

 

[jimntx]

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.

As I said earlier, the Pension Estimate Calculator on-line allows you to run two types of estimates. One in which you can specify a "last day worked" and a "pension start date." This is the estimate that has always been available to us for retirement planning purposes. And you can run different scenarios...what would the pension be if I retire now, but don't start drawing my pension until next year? What would my pension be if I continue to work until I'm 70? And so on, and so forth.

The addition to the Calculator is a PBGC estimate. If you check the box to indicate that you want to run this estimate, the first thing the calculator does is plug in a "last day worked" of 11/29/2011--the date the company filed for bankruptcy. And, in the pension start section, you are not allowed to enter a specific date, only a whole age number. The calculator then plugs in the first day of the month following the birthdate at which you achieve that whole age number. I will be 67 on the 27th of next month. If I put in 67 as my pension start date age, the calculator shows 4/1/2012 as the start date.

My point though was if I start my pension 4/1/2012 or 4/1/2025 (please god no), the amount is the same...$425.00/mo. As someone pointed out, this may even be reduced by the PBGC once they know the true amount of underfunding. As the company has already done an "oopsie" with some of their costing numbers for the f/a term sheet (only because an advisor to the union caught the miscalculation), I would not be surprised if they said, "Well, there was a rounding error of several billion dollars in our calculation of the pension liability. We are deeply sorry, but it can't be helped now."

 

[FWAAA]

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.

Assuming that AA terminates its pensions (a fairly safe assumption given its stated intentions), your pension accrual ceased on 11/29/11. Unless your accrued pension benefit on that date exceeded the PBGC maximum guarantee, you will receive your accrued pension on the date you retire. As for the gap period between 11/29/11 and the date the plans are actually terminated? Negotiate a defined contribution plan to replace the DB plan that accounts for that gap.

My point though was if I start my pension 4/1/2012 or 4/1/2025 (please god no), the amount is the same...$425.00/mo. As someone pointed out, this may even be reduced by the PBGC once they know the true amount of underfunding. As the company has already done an "oopsie" with some of their costing numbers for the f/a term sheet (only because an advisor to the union caught the miscalculation), I would not be surprised if they said, "Well, there was a rounding error of several billion dollars in our calculation of the pension liability. We are deeply sorry, but it can't be helped now."

The bolded portion is incorrect. Unless your accrued benefit exceeds the maximum guarantee, the magnitude of underfunding is irrelevant. For those whose accrued benefit exceeds the maximum guarantee, they might receive more than the max guarantee if the plan funding turns out to be higher than anticipated (an extremely unlikely scenario). For you, it wouldn't matter if the plan assets are $8.5 billion or just one dollar - you'll receive the $425 (or whatever the amount is) when you retire regardless of the asset value in the plan.

 

[jimntx]

The bolded portion is incorrect. Unless your accrued benefit exceeds the maximum guarantee, the magnitude of underfunding is irrelevant. For those whose accrued benefit exceeds the maximum guarantee, they might receive more than the max guarantee if the plan funding turns out to be higher than anticipated (an extremely unlikely scenario). For you, it wouldn't matter if the plan assets are $8.5 billion or just one dollar - you'll receive the $425 (or whatever the amount is) when you retire regardless of the asset value in the plan.

Not according to BoeingBoy who has been through it and you so vociferously defended on another thread.

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

 

[FWAAA]

Not according to BoeingBoy who has been through it and you so vociferously defended on another thread.

As a pilot, his monthly benefit might have been higher than the PBGC monthly maximum guarantee IF the US pilot pension plan had sufficient assets to support a benefit higher than the guarantee amount. For someone with a monthly benefit of $425/mo who is already 66 years old, there would be no adjustment up or down no matter what assets turn out to be in the AA FA plan.

 

[BoeingBoy]

Unless your accrued benefit exceeds the maximum guarantee, the magnitude of underfunding is irrelevant.

As I've said before, the PBGC calculates an employee's pension benefit per the plan formula with any penalties. If that amount is higher than the max guarantee then the PBGC looks at the amount of funds available and PC categories. Employees in the higher categories may get more than the guarantee if there's enough money in the plan to pay more than the guarantee. In short, the PBGC will pay out the money in the plan so the more money in the plan the better for some employees unless no one in a given group has a benefit higher than the guarantee. On the other hand, if there's less money in the plan than needed to pay everyone their calculated benefit the PBGC will pay the calculated benefit or max guarantee, whichever is less. So the amount of money in the plan can make a difference for some people. I don't know what anyone in any of the groups makes so I can't make a blanket statement one way or the other.

Maybe my mistake is trying not to go into an in-depth explanation of the PBGC process since it's not as simple as "you get the guarantee or the calculated benefit, whichever is lower". Going through all the possibilities could take 500-1000 words.

But as I said, until the PBGC gets it's hands on the assets of a plan it won't know how much money there is (it goes up/down every day with the market) so all one can expect at this time is a guesstimate of the PBGC benefit. That's what I was getting at with WT and his "accurate" pension calculator nonsense.
Jim

 

[jimntx]

The bolded portion is incorrect. Unless your accrued benefit exceeds the maximum guarantee, the magnitude of underfunding is irrelevant. For those whose accrued benefit exceeds the maximum guarantee, they might receive more than the max guarantee if the plan funding turns out to be higher than anticipated (an extremely unlikely scenario). For you, it wouldn't matter if the plan assets are $8.5 billion or just one dollar - you'll receive the $425 (or whatever the amount is) when you retire regardless of the asset value in the plan.

Well, I know this is going to come as a shock, but your adhering to the company line that the only thing that affects your pension payment with the PBGC is the termination date just might be incorrect. The "magnitude of underfunding" is NOT irrelevant. I just spoke with a friend who is a TW retiree. She started receiving $450/mo when PBGC first got the TW pensions. A year later it was cut to $380/mo due to the underfunded financial condition of the plan.

Also, for those who may have run pension estimates...the PBGC estimate calculator on Jetnet assumes that the company will get its way and put an 11/29/11 termination date on the pension funds, and it will have no further responsibility beyond that date for underfunding the pension plans--see also, the $6.5 million payment made in January, 2012 when a $100 million payment was due.

However, it seems that if AMR succeeds in dumping the plans on the PBGC, the PBGC will petition the court to make the termination date the same date as the court decides to allow the dumping to take place. If that is 6/1/2012, then the company will be liable for all pension funding up until that date if the PBGC can convince the court. Since the company has $4 billion in the bank, they may have a hard time convincing the court that they can't afford a $100 million (or greater) payment.

 

[eolesen]

Well, I know this is going to come as a shock, but your adhering to the company line that the only thing that affects your pension payment with the PBGC is the termination date just might be incorrect. The "magnitude of underfunding" is NOT irrelevant. I just spoke with a friend who is a TW retiree. She started receiving $450/mo when PBGC first got the TW pensions. A year later it was cut to $380/mo due to the underfunded financial condition of the plan..

How well the plan is funded has no bearing on what the minimum is.

A recalculation of benefits can happen if the PBGC guarantee was only $380, and they thought there were funds available to pay the higher amount.

If a plan if funded accordingly, PBGC *will* pay out higher than the minimum.

What were the exact circumstances?,,,

 

[jimntx]

Well, of course, you and FWAAA would know better than someone who is actually receiving a check from PBGC. Never mind.

 

[BoeingBoy]

Well, of course, you and FWAAA would know better than someone who is actually receiving a check from PBGC. Never mind.

Just receiving a check doesn't make anyone an expert. The details of your friends situation definitely come into play. Maybe the PBGC initially thought that your friends calculated benefit was $450, but after getting all the data found that the calculated benefit was lower and corrected it. Or it could be that they originally thought there were funds to pay the full $450 but after getting the funds found that there were only enough to pay the lower amount. Without the details, someone having their PBGC benefit cut means nothing.

Jim

 

[Wretched Wrench]

Unless your accrued benefit exceeds the maximum guarantee, the magnitude of underfunding is irrelevant.

How about the underfunding of the PBGC? It's funding is set by Congress, and they are way short, particularly when AMR and Eastman Kodak are entered into the picture.

If Gotbaum goes to Congress to ask that the corporations pay higher rates, what do you think will happen?

I would say that the underfunding of the PBGC is the most relevant issue older employees and retirees face.

 

[jersey777]

Well, the pension calculator has been deleted from jetnet. I am a bit suspicious because if you go onto the star telegram blog there is an article with pension estimates from the PBGC that show quite a bit of a reduction if they take over the pensions. The pension estimator on jetnet showed absolutely no reduction for my particular circumstances.....21 years flying over 85 hrs a month. The estimate was $1449 whether I retire at 60 or 65.....the maximum payout was below my amount at 60 and 65. Something is rotten in Texas!

 

[jimntx]

Well, the pension calculator has been deleted from jetnet. I am a bit suspicious because if you go onto the star telegram blog there is an article with pension estimates from the PBGC that show quite a bit of a reduction if they take over the pensions. The pension estimator on jetnet showed absolutely no reduction for my particular circumstances.....21 years flying over 85 hrs a month. The estimate was $1449 whether I retire at 60 or 65.....the maximum payout was below my amount at 60 and 65. Something is rotten in Texas!

If the PBGC takes over the pension plans, whether you retire at 60 or 65 has nothing to do with the amount of your pension because when your pension is calculated, PBGC will use 11/29/2011 (the date that AMR filed for bankruptcy and ostensibly quit putting money into the pension plans) as the last day you worked--regardless of when you actually retire or start drawing your pension. There may be a later date negotiated between PBGC and AMR, but I wouldn't count on it. If AMR allows the termination date to be after 1/15/2012, they have to come up with the rest of the $100 million payment that was due that day that they didn't make.

Also, remember even if you were flying 120 hours/mo for those 21 years, only the first 85 hours each month are credited to your pension. (That may be what you meant--that you had made maximum use of the plan--but I'm not sure.)

I imagine the pension calculator has been deleted from jetnet because it only allowed for two options--AMR keeps the plans as is or PBGC taking over. The calculator is not programmed to give you an estimate on a frozen plan. We have to first find out exactly what "frozen" entails.

 

[Bogey]

The Pension Calculator is there as of right now.

Frozen means, as of the date of the freeze, no additional benefit will accrue. All other aspects of the plan remain as they were prior to 11/29/11. No new entrants. Plain and simple.

 

[jersey777]

If the PBGC takes over the pension plans, whether you retire at 60 or 65 has nothing to do with the amount of your pension because when your pension is calculated, PBGC will use 11/29/2011 (the date that AMR filed for bankruptcy and ostensibly quit putting money into the pension plans) as the last day you worked--regardless of when you actually retire or start drawing your pension. There may be a later date negotiated between PBGC and AMR, but I wouldn't count on it. If AMR allows the termination date to be after 1/15/2012, they have to come up with the rest of the $100 million payment that was due that day that they didn't make.

Also, remember even if you were flying 120 hours/mo for those 21 years, only the first 85 hours each month are credited to your pension. (That may be what you meant--that you had made maximum use of the plan--but I'm not sure.)

I imagine the pension calculator has been deleted from jetnet because it only allowed for two options--AMR keeps the plans as is or PBGC taking over. The calculator is not programmed to give you an estimate on a frozen plan. We have to first find out exactly what "frozen" entails.
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I know that the date that the last day worked for pension purposes would be 11/29/2011 but my pension amount showed $1449 no matter if I retired at 60 or 65 because that is what I had accumulated from date of hire to 11/29/2011 and I had not hit the pbgc maximum payout at either age. With that said, it would have been beneficial to me to retire at 60 and collect $1449 a month rather then wait till 65 and collect the same thing. All this information conflicts with the information that the pbgc provided in their scenario.