Ragged Trousered Philanthropists

[La Li Lu Le Lo]

The IAmNPF is not doing too well, and without thousands of new IAm victims (dues payers) it will go broke.

That's the scam.  
 
Just a typical example of a socialist implosion.
 
They are running out of other peoples money so have to find a new source of income.
 
Kind of like the scam our government is trying to pull by blanket pardoning illegal aliens and offering them citizenship.

 

[bob@las-AA]

 
[SIZE=18pt]                                         Are you a Ragged Trousered Philanthropist? [/SIZE]
 
 
 
There are currently around 20,000 TWU members at American Airlines. In 2012 American Airlines froze their pensions. In order to get the workers to voluntarily accept the loss of the pension the company and those running the Union agreed to divert compensation to a Retirement savings plan otherwise known as a 401K Plan.  The catch was, unlike the plan negotiated by the APFA where up to the equivalent of 9% of their earnings are directly contributed into the 401K no matter what, ours is  a match, in order to get the matching funds that were negotiated we each had to contribute 5.5% of our gross pay each week. This was done knowing full well that we would already be under financial hardship and that some would not feel they were able live without an additional 5.5% of their pay, so the match was then forfeited and the company got to keep those funds .
 
 
 
Those matching funds are not a gift, it was paid for with other concessions, its part of your compensation.  You are paying for it with your labor , so if you do not get the maximum contribution of 5.5% you are voluntarily compounding the concessions and adding more funds to the Profits of American Airlines, profits that the management of AA do not share with it’s employees.
 
 
 
So that’s why I ask, are you a ragged trousered philanthropist, donating your money to the company that provides the lowest compensation, the least amount of paid time off, the worst medical plan , the fewest Holidays where we are penalized on the few holidays they do recognize by being forced to work at half pay?
 
 
 
Currently out of the 20,000 TWU members over 6500 are not getting the full 5.5% match because they are not putting 5.5% of their before tax pay into the plan.
 
 
 
These 6500 TWU Philanthropists are donating millions of dollars to AA.
 
 
 
I realize that due to the poor compensation at American Airlines that some may feel that they can’t part with more but out of the 6500 around 1250 contribute nothing. Around half those not getting the full match are putting in 3%, giving back 2.5%. So I don’t think for many this is a conscious intentional contribution to Parker and the management teams bonuses, more likely its because these people were signed up automatically and never gave it a second thought. If you can afford 3% then you can afford 5.5%.
 
 
 
 
Even if you had to borrow today to get the match the fact is that if you don’t get the match you are losing even in the here and now and even more in the future. Lets say you put nothing because you need every dollar you see in your paycheck now. So for each dollar under the 5.5% you automatically lose the $1 match, that extra Dollar now cost you two dollars before taxes, after taxes, if you net around 65 cents on each dollar you get paid you lose an additional 35 cents in the here and now. So you lose $1.35 in savings to pay for for each 65 cents extra to spend today, not including the compounding effects those funds would earn over  time. The difference is pretty substantial, remember the dollar you put in today only costs you around 65cents, for 65cents less take home pay you get $2 put into a savings account that you can invest, borrow and even withdraw from if needed. If you don’t put in that 68 cents ($1 before taxes) you just donated a dollar to the Profits of American Airlines and gave the government an extra 35 cents.
 
 
 
Lets say you are 25 years old, and putting in 5.5% comes out to $3300/year out of your gross earnings, it costs you around $2100/year, but you end up with $6600 in savings.  By the time you are 60, with a modest gain of 5% per year you would end up with [SIZE=14pt]$665,000[/SIZE] and your out of pocket costs over that period would be around $75,075.  Your taxable income is lowered while your net worth increases.
 
 
 
Lets say you are an older worker and only have 10 years left to work, you would end up with around $97,000 and your out of pocket would be around $21450. You see better gains even at the low investment return of 5% because right out of the gate you make 100% on what you contribute. It’s likely you can do better than 5% so your totals could be much higher.
 
 
 
 If on the other hand you chose to put in nothing of course you will have ZERO to borrow against if needed and to live off when you retire, and AA will have saved thousands of dollars.
 
 
 
So the question isn’t if you can afford to put in at least 5.5%, its how can you afford not to?
 
 
 
So, to each and every one who is not or does not know if they are putting in at least 5.5% in their 401K,  log into Jet net, click on “Pay and Benefits” , then under “Retirement & Investments”  click on “Supersaver 401(K)”, Log in, Click on “$uper $saver 401(K) Plan”  under “Account List”, then “Contribution Amount”, then in the “Regular contribution amount” box , under “Before-Tax” where it says “Regular Election” its shows at least 5.5% in the “Current” column.
 
 
 
 
Don’t be a Ragged Trousered Philanthropist donating your earnings to American Airlines, as stated earlier you are already giving AA your time and labor for the worst deal in the industry, its your money, make sure you take every penny that’s made available to you.
 

I'm going to poke a few holes in you example. 
In your example, a person age 25 contributing 5.5% of his or her pretax income would equate to a yearly income of $60,000.
I will give you a better and more realistic scenario.
The same person, age 25 is a new hire FSC. Making entry level wages. $9.50/hour, $19,760. yearly. For this example the max that a FSC would ever make in his or her career, putting all other extras aside (longevity, CC pay, overtime, ect.) $24.54/hour, $51,043.20yearly.
Even though top out is within ten years I spread out increases for 34 years to reach max pay expectation of  $24.54/hour.
At the end of 35 years this 401K would be worth $207,677 and cost $38,298 or about 18.44 cents out of pocket and gains of a modest %5 annual. 
Your example is misleading by not taking into account a person should increase his or her contribution every year by 1% and with a starting income if $60,000.
By putting more pretax income into your 401 up to $37,450, your income tax will be held to only 15%
Someone told me once "You can suffer now.....or suffer worse later".

 

[La Li Lu Le Lo]

I think we can all agree that 401k is basically worthless comparative to a traditional pension. 

 

[bob@las-AA]

I think we can all agree that 401k is basically worthless comparative to a traditional pension. 

Because a pension cost you NOTHING.
and a 401k  would have you making too big of a sacrifice to fund it.

 

[La Li Lu Le Lo]

Because a pension cost you NOTHING.
and a 401k  would have you making too big of a sacrifice to fund it.

I disagree. A pension cost you loyalty over several years to build up. I think someone that has spent 40 years at the same job would argue it cost them plenty.

 

[Zom JFK]

I would not complain about government pensions if the government acted responsibly with money, but we both know...... they don't.

The way I see it providing a secure retirement to somone who worked for and earned it over 25-30 years of service is one of the very few ways the government does spend its (our) money responsibly.

 

[La Li Lu Le Lo]

The way I see it providing a secure retirement to somone who worked for and earned it over 25-30 years of service is one of the very few ways the government does spend its (our) money responsibly.

It is a complicated problem.
 
There is some truth to what you say.
 
I just don't feel I should be FORCED to fund someone else's retirement while mine is underfunded. I rather put that money into MY retirement. After all I worked for it.
 
I am only asking that they fund their own retirement as I have to fund mine. Asking me to fund theirs AND mine is unfair to me.
 
Would it be fair for me to TAKE their money by FORCE and put it into MY pension?

 

[MetalMover]

I disagree. A pension cost you loyalty over several years to build up. I think someone that has spent 40 years at the same job would argue it cost them plenty.

The problem is, as every company moves away from defined pensions, they prove they do not care about employee loyalty. They also know that you are not going to quit to go work for another company simply because they may offer a pension.
Pensions are gone and no longer an enticement.

 

[Kev3188]

Because a pension cost you NOTHING.
and a 401k  would have you making too big of a sacrifice to fund it.

A pension actually costs works a lot.

A large 401k contribution (and match, of course) is a better way to go...

 

[Kev3188]

Because a pension cost you NOTHING.
and a 401k  would have you making too big of a sacrifice to fund it.

With respect, I think you have it backwards.
Pensions actually cost a lot-especially in our industry.
A large 401k contribution (and match, of course) is a better way to go...

 

[WorldTraveler]

thank you, Kev.

an actual DL employee and pro-IAM supporter that doesn't support 700's IAMNPF sales job.

A pension actually costs works a lot.

A large 401k contribution (and match, of course) is a better way to go...

there are lots of people who have walked away from their jobs early because of responsible 401k mgmt. and contributions. that is virtually impossible to do with a defined benefit pension because the mindset of a pension is that you get "exactly what we said we would give you, no more but in some cases less if we decide to change rules, file for BK, terminate the plan etc"

American workers DON'T want defined pension plans and companies aren't offering them as an option for the vast majority of workers.

trying to hold onto yesterday's solution will cost the employee

 

[Kev3188]

My preference for DC plans will not be news to most on this board. They simply empower rank and file workers more than a DB plan might.

I also happen to be a IAMNPF plan participant...

 

[WorldTraveler]

yes, I am aware that you have a patchwork of retirement plans because of your own NW/DL history.

and you are absolutely right that a 401k is a tool for EMPOWERMENT.

a DB pension is a tool for the company to CONTROL your future.


some of us figured that out a long time ago and have used the events thrown at us to improve our own financial security. In my current job, I can participate in a DB or a DC plan. It wasn't even close to a choice what decision I would make after being in the airline industry.

 

[bob@las-AA]

With respect, I think you have it backwards.
Pensions actually cost a lot-especially in our industry.
A large 401k contribution (and match, of course) is a better way to go...

To earn a pension, all you have to do is show up. But to build a large 401 dose take work, and for a long time you work hard and will bring home a small takehome check, all depending on how large you want to live when you retire. 
A pension cost the company a lot. Cost the employee nothing but time.

 

[TWU informer]

Alot of good opinions here on both sides of the issue.
 
One good benefit about the 401K that the DBP doesnt offer is after your life here on earth. With the DBP you can leave pension to spouse, but that is all. Once you and your spouse are deceased the payments cease. This wasn't the case when we had the lump sum payment option years ago. Back then, we could take the lump sum option and place the money in a different form of savings plan. And then leave the balance after death to our children, grand-children, ect. No longer possible after the lump sum option was taken or given away.
 
With the 401K you can leave your nest egg to the rest of your desired beneficiaries beyond just your spouse. That's a big plus!