Senators resolve airline pension fight

[newellcr]

Howdy folks,

Interesting article about airline pensions.  I'm not entirely sure what this means though.  Anyhow, you might enjoy.

Chris

http://www.marketwatch.com/news/yho...496-FC9A96903A8A}&siteid=myyahoo&dist=myyahoo

 

[JPatrick]

Howdy folks,

Interesting article about airline pensions.  I'm not entirely sure what this means though.  Anyhow, you might enjoy.

Chris

http://www.marketwatch.com/news/yho...496-FC9A96903A8A}&siteid=myyahoo&dist=myyahoo

It means you and I may not be paying for a pilots  pension sooner, but maybe later.
I think it also means that there are some retired UAL pilots somewhere saying "hey congress,  where were yah when we needed you?"

 

[newellcr]

Jpatrick,

Yes, it does mean that, but I was referring to this part.

"both of which recently filed for Chapter 11 bankruptcy protection, by allowing them to make up their pension funding gap over 14 years, twice the amount of time that companies in other industries would receive."

I'm confused about the time value of money over this time span and if this deficit amount is calculated every year based on interest rates. etc. and so on... Understanding is probably more painful than just knowing that this is a break of some sort.

Cheers,

Chris

 

[ats5g]

Hey Chris,

IIRC from my actuary days, I believe that there are statatory times over which people can amortize certain costs and expenses of pension plans. The extension from 7 to 14 years seems to be allowing NW and Delta to take longer to recognize [read: pay for] pension costs [like newly accrued benefits] and make up their funding deficits.

- Alec

 

[Nords]

The extension from 7 to 14 years seems to be allowing NW and Delta to take longer to recognize [read: pay for] pension costs [like newly accrued benefits] and make up their funding deficits.

Presumably that's better than United's trick of dumping the pensions on the PBGC. NW & Delta will also keep paying their premiums into the PBGC, too, right?

 

[ats5g]

Presumably that's better than United's trick of dumping the pensions on the PBGC. NW & Delta will also keep paying their premiums into the PBGC, too, right?

Yes, assuming that they don't dump the pension plans on the PBGC. "Hopefully" they'll just freeze the current plans. As I read the new PBGC premium guidelines, corporations that are a greater risk to the PBGC will have pay higher premiums - as opposed to now when everyone pays the same premium [Imagine an insurance company charging everyone the same premium no matter what their chances of collecting are ].

- Alec

 

[newellcr]

Thanks Alec,

Nords, from the article again.

"In addition to setting new funding rules, the compromise package would require companies to pay higher premiums to the Pension Benefit Guaranty Corp., which serves as a federal backstop to corporate pension plans. The PBGC is funded by premiums and investments. "

Clear? All companies, or NW and Delta?...

Cheers,

Chris

 

[ats5g]

Chris,

Yes, it looks like congress is trying to raise PBGC premiums.

- Alec

 

[HFWR]

Good plan...