Would you want the WJ pilot's contract?

[ogopogo]

Approx 60% so spending 5 years as a:

B777 CA at $230K T4, pension is $140K
B767 CA at $200K T4, pension is $120K
A320 CA at $160K T4, pension is $90K

Wow. I can see how DB plans become unsustainable with thousands of retired employees on the 'payroll'. I read somewhere that GM has many more retirees than employees.

I'd hate to be the CFO.

[TheStig]

Approx 60% so spending 5 years as a:

B777 CA at $230K T4, pension is $140K
B767 CA at $200K T4, pension is $120K
A320 CA at $160K T4, pension is $90K

Wow. I can see how DB plans become unsustainable with thousands of retired employees on the 'payroll'. I read somewhere that GM has many more retirees than employees.

I'd hate to be the CFO.

The CFO has no interest in changing executive DB pensions...

Air Canada's pilots fund a large portion of their pension through their career, the companies contribution is nothing more than deferred compensation. The pension funding issue we see before us is largely a result of low market interest rates (a 2% increase would wipe out the deficit), and the fact there is no incentive for Air Canada to properly fund the plan.

[neophyte]

What percentage of your pay do you have to contribute towards your pension at AC?

[Dockjock]

It's approximately 5%. However, when viewed in the context of the income that an AC pilot forgoes vis a vis his WJ counterpart, it is more like 25%.
ie.
WJ B737 CA T4's $200K, and has zero deferred compensation.
AC A320 CA T4's $160K, and has significant deferred compensation.
Therefore, in addition to the AC pilot contributing 5% of his income to his own deferred compensation scheme, he also forgoes approximately $40K annually in income he does not earn while he is working.

For primarily this reason, AC pilots find it misleading when the pension is viewed in a vacuum, without considering the substantial differences that exist between other pilots' contracts on a current income basis because ultimately that difference is "pocketed" by the corporation as savings.

[rudder]

It's approximately 5%. However, when viewed in the context of the income that an AC pilot forgoes vis a vis his WJ counterpart, it is more like 25%.
ie.
WJ B737 CA T4's $200K, and has zero deferred compensation.
AC A320 CA T4's $160K, and has significant deferred compensation.
Therefore, in addition to the AC pilot contributing 5% of his income to his own deferred compensation scheme, he also forgoes approximately $40K annually in income he does not earn while he is working.

For primarily this reason, AC pilots find it misleading when the pension is viewed in a vacuum, without considering the substantial differences that exist between other pilots' contracts on a current income basis because ultimately that difference is "pocketed" by the corporation as savings.

You are still trying an apples vs oranges comparison.

What tenure level? 5? 10? Higher? What about the fact that the WJ pilot gets no credit for years in the right seat?

How many pay hours worked per month? is this a 78 vs 85 comparison? Did the WJ pilot do any overtime?

What about ESOP participation? 5%? 10%? 20%?

What about the fact that AC pilots pay zero for GDIIP?

It would be great if somebody actually would do a fact based all encompassing comparison.

[ogopogo]

$120K/yr (say for a 67 skipper) starting the day you retire for the rest of your life, say 20yrs ~$2.4M...... Pretty sweet. The day I retire, they just take me off the payroll!

Waaaaaaa!

[yycflyguy]

You are not going to find any pilots that have the opportunity to put in 20 years in the left seat of a 767. The lucky ones get 10, most get around 5 years and some guys never make it to a widebody Captain position.

[ogopogo]

Approx 60% so spending 5 years as a:

B777 CA at $230K T4, pension is $140K
B767 CA at $200K T4, pension is $120K
A320 CA at $160K T4, pension is $90K

Wow. I can see how DB plans become unsustainable with thousands of retired employees on the 'payroll'. I read somewhere that GM has many more retirees than employees.

I'd hate to be the CFO.

The CFO has no interest in changing executive DB pensions...

Air Canada's pilots fund a large portion of their pension through their career, the companies contribution is nothing more than deferred compensation. The pension funding issue we see before us is largely a result of low market interest rates (a 2% increase would wipe out the deficit), and the fact there is no incentive for Air Canada to properly fund the plan.

Explain how it makes economic sense how my Mother-in-law, who is 90 years old, gets an AC pension and she never worked there in her life. Her husband did, but she still gets half. I can tell you she gets almost as much as a pension as the old guy did as a salary.

Multiply that by thousands of stories and you'll see how unions will deep six AC once and for all.

[morefun]

I guess you would like to see your mother-in-law starve......what a good capitalist you are!

[Dockjock]

ogopogo: impossible. If she is 90 and her husband would have been too, then he retired in 1982. The RPP pension limit in 1982 was $60,025, which was prior to the existence of the Supplemental plan.

With partial indexation from 1982 to 2006 (when it was lost), the benefit may have risen to near $90,000. But the survivor benefit is 50%, so on his death her benefit reduced by half to $45,000.

Either you're misinformed, lying, have an ulterior motive, or are just plain dumb. But there is virtually no way that your statement is anywhere near true.

NEXT

[ogopogo]

He retired in 1978 after 33 years. I see her T4, so I think I would know.
And my only point is that these DB pensions are unsustainable in today's environment with folks living so long.

[TheStig]

He retired in 1978 after 33 years. I see her T4, so I think I would know.
And my only point is that these DB pensions are unsustainable in today's environment with folks living so long.

Ogopogo try not to be jealous of others with DB plans. Seems like most people without DB plans have been led to believe they are unsustainable (envy can be a powerful propaganda tool). Everyone on this forum quickly jumps all over the poor starting salaries at AC and Jazz, usually the same posters think DB plans are too generous and unsustainable.

Maybe you can explain why are DB plans sustainable for executives (at accelerated YOS-rates in many cases) and not for their employees? I'd love to know what AC's executive pension obligation is? I personally found the GE executive pension obligation stated in the following article incredible!

From:

http://www.forbes.com/sites/stevedennin ... nest-eggs/

Retirement Heist: How Firms Plunder Workers' Nest Eggs

In December 2010, General Electric [GE] held its annual meeting in New York City for analysts and shareholders. CEO Jeff Immelt reported on GE’s financial health and said that GE’s pension plan was a problem. “The pension has been a drag for a decade,” he said. It would cause the company to lose 13 cents per share the coming year. In order to control costs, GE was—regretfully—going to close the pension plan for new employees. The implication was that workers’ pensions were dragging the company down.

What Immelt didn’t mention was that GE’s pension plans had actually contributed billions of dollars to the company’s bottom line over the last 15 years, earnings that the executives had taken credit for. Nor did he mention that GE hadn’t contributed anything to the workers’ pension plans since 1987 and still had enough to cover all the current and future retirees.

Nor did he mention that the executive pensions for GE executives were a burden. Unlike the plans for the 250,000 workers and retirees, the executive pensions had a $4.4 billion obligation that steadily drained cash from the company’s coffers, including $573 million over the past three years alone.

Why was GE closing its fully funded pension plan, while continuing its financially burdensome executive plan? This is the question to which Ellen Schultz’s incisive new book, Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers (Portfolio, 2011) offers a powerful answer.

A carefully planned heist

She explains that the current retirement crisis is “not a demographic accident. It was manufactured by an alliance of two groups: top executives and their facilitators in the retirement industry—benefits consultants, insurance companies and banks.”

Executives are viewed “as beleaguered captains valiantly trying to keep their overloaded ships from being sunk in a perfect storm. In reality, they’re the silent pirates who looted the ships and left them to sink, along with the retirees, as they sailed away safely in their lifeboats.”

In 2000, most pensions were fully funded

Two decades ago, pensions were well funded, due to laws and regulations passed in the 1970s and 1980s. By 2000, pension plans at many large companies had large surpluses that would have covered all current and future retirees’ pensions without them having to contribute anything.

Yet US firms found ways to siphon off billions of dollars in assets from the pension plans. Verizon used assets to finance downsizings. GE sold pension surpluses in restructuring deals, indirectly converting pension assets into cash. Many firms clandestinely cut benefits, using “actuarial sleight of hand to disguise the cuts.”

Cutting benefits boosted earnings

Cutting benefits boosted earnings. New accounting rules “turned retiree benefits plans into cookie jars of potential earnings enhancements and provided employers with the means to convert the trillion dollars in pensions and retiree benefits into immediate dollar-for-dollar benefit for the company.”

Since accounting rules rewarded employers for cutting benefits, retiree benefits plans soon morphed into profit centers. Retiree plans became handy earnings-management centers at the expense of the retirees. Yet as workers’ retirement benefits were cut, “supplemental executive pensions” ballooned along with escalating deferred compensation. “Today,” reports Schultz, “it’s common for a large company to owe its executives several billion dollars in pensions and deferred compensation.”

It’s these growing “executive legacy liabilities” that account for much of the “growing pension costs”. Executive liabilities are often large, growing, underfunded or unfunded, and hidden, buried within the figures for regular pensions.

“With no punitive damages under pension law, employers face little risk when they unilaterally slash benefits, even when promised in writing, since they can pay their lawyers with pension assets and drag out the cases until the retirees give up or die.”

Today, Schultz reports, “pension plans are collectively underfunded, hundreds are frozen, and retiree health benefits are an endangered species. And as executive pay and executive pensions spiral, these executive liabilities are slowly replacing pension obligations on many corporate balance sheets.”

They all do it
The firms involved in these activities are not a few small unscrupulous operators. They are the best-known companies in the USA, including: GE, Verison, Dupont, Northrop Grumman, Marathon Oil, Lucent, Wal-Mart, General Motors, Chrysler, Ford, AT&T, US Airways, Delta Air Lines, Cigna, Bank of America, Caterpillar, Deere & Co, UPS—the list goes on and on.

Schultz sums up the situation:

The masterminds of this heist should take a bow: They managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets. And they’re still at it. It might not be possible to resuscitate pension plans, but it isn’t too late to expose the machinations of the retirement industry, which has its tentacles into every type of retirement benefit: profit-sharing plans, 401(k)s, employee stock ownership plans (ESOPs), and plans for public employees, nonprofits, small businesses, and even churches. The retirement industry has exported its tactics, using them to achieve similar outcomes in retirement plans in Canada, Europe, Australia, and elsewhere, and has big plans for Social Security and its overseas equivalents as well. Unless it is reined in, the global retirement industry will continue to capture retirement wealth earned by many to enrich a relative few.

A systemic solution is needed
Does any of this sound familiar?

Readers of this blog may recall that pursuit of short-run profits pushes organizations into a default model of management that focuses on efficiencies at the cost of long run value to customers, undermines the capacity of the firm to innovate, kills commitment among workers whose full engagement is crucial to the firm’s future and results in sub-optimal financial returns for the firm itself.

Readers may also recall that pursuit of short-run profits led to foreign outsourcing that destroyed not only jobs in this country but ultimately the capacity to compete in whole sectors of the economy, which are now permanently lost, because the knowledge has gone. As a result, Amazon couldn’t make a Kindle in the USA, even if it wanted to.

So it should hardly come as a surprise that retirement is another area where the cancer of short-term profit seeking is carving its inevitable path towards disaster.

Firms have fallen into this mode of operating in part because firms operating with traditional management are not producing the returns they used to. Therefore managers become desperate and resort to tactics that hurt the firm in the medium term while meeting the immediate need of showing financial returns in the here and now.

Getting to the root cause: pursuit of short-term profits
As a result, focusing on fixing pensions by itself will not be enough. In addition to pension reform, we need to get the root cause of the problem: what is needed is a fundamental shift from shareholder capitalism to customer capitalism, i.e. from traditional management to radical management.

When the whole firm is devoted to systematically delighting its customers by providing a continuous stream of additional value and providing it sooner, through continuous innovation, as at Apple [AAPL], Amazon [AMZN] and Salesforce [CRM], it makes enough money that it doesn’t have to resort to looting the workers’ retirement to make ends meet.

______________

Steve Denning’s most recent book is: The Leader’s Guide to Radical Management (Jossey-Bass, 2010).

Follow Steve Denning on Twitter @stevedenning

[watermeth]

You are not going to find any pilots that have the opportunity to put in 20 years in the left seat of a 767. The lucky ones get 10, most get around 5 years and some guys never make it to a widebody Captain position.

here is an opportunity to ask : how long does it take, roughly, to get a 767/330/320 left seat at AC if hired in 2011/13 with the retirements at 65 to come in the next few years ? roughly, of course, we can't predict the future.

thanks

[yycflyguy]

You are not going to find any pilots that have the opportunity to put in 20 years in the left seat of a 767. The lucky ones get 10, most get around 5 years and some guys never make it to a widebody Captain position.

here is an opportunity to ask : how long does it take, roughly, to get a 767/330/320 left seat at AC if hired in 2011/13 with the retirements at 65 to come in the next few years ? roughly, of course, we can't predict the future.

thanks

It should be an easy question to answer. However, it is not. There are several factors, yet to be determined to accurately answer your question.

In the current "negotiations" the company and union have to decide how to accommodate those pilots who wish to remain past age 60. The law has changed so the exact number of how many will return and how many remain past 60 is not known. This creates stagnation throughout the system. If we go to an aircraft grouping or status pay system the numbers would change.

A very rough estimate based on years past would be to the very bottom of each list:
CA A320 roughly 8 or 9 years
CA B767 roughly 16 or 17 years
CA A330 roughly 17 or 18 years

There are always exceptions.

[watermeth]

thanks a lot !

[WJ700]

It's approximately 5%. However, when viewed in the context of the income that an AC pilot forgoes vis a vis his WJ counterpart, it is more like 25%.
ie.
WJ B737 CA T4's $200K, and has zero deferred compensation.
AC A320 CA T4's $160K, and has significant deferred compensation.
Therefore, in addition to the AC pilot contributing 5% of his income to his own deferred compensation scheme, he also forgoes approximately $40K annually in income he does not earn while he is working.

For primarily this reason, AC pilots find it misleading when the pension is viewed in a vacuum, without considering the substantial differences that exist between other pilots' contracts on a current income basis because ultimately that difference is "pocketed" by the corporation as savings.

You are still trying an apples vs oranges comparison.

What tenure level? 5? 10? Higher? What about the fact that the WJ pilot gets no credit for years in the right seat?

How many pay hours worked per month? is this a 78 vs 85 comparison? Did the WJ pilot do any overtime?

What about ESOP participation? 5%? 10%? 20%?

What about the fact that AC pilots pay zero for GDIIP?

It would be great if somebody actually would do a fact based all encompassing comparison.

'ZERO for GDIIP' -is a fantastic benefit.

WS Pilots buy directly from the insurer for 6 years. STD at 1 and LTD at 5. These rates have only gone northbound and will continue to do so as our claims history continues to rise. I'm already nervous to know what they will cost in another 5 years. A similar problem happened at Jazz and I'm not sure if they have ever done anything to alleviate the costs.