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ContnlEliteCMH
Topic Author
Posts: 1385
Joined: Wed Mar 02, 2005 8:19 am

CO Alpa Contract And Defined Contribution

Thu Mar 03, 2005 2:11 am

I've seen a few details of the proposed CO ALPA contract. To me, the biggest item in there is the change from a defined benefit plan (read: pension) to a defined contribution plan (read: 401K, IRA).

As I stated in another thread, this is *huge*. Easily the biggest item in there, as far as the future is concerned. This moves Continental from a business model whose costs are mired in the 1960's, and at least vaults them into modernity. Pensions are killing older companies -- automakers, steel makers, and airlines. They must be rid of these outmoded and backward way of providing for retirement. They have the least benefit while incurring the highest cost. Sounds a lot like Social Security, no? Essentially the same thing.

Does anybody have any details about this? Specifically, I want to know the following:

(1) How will the change be accomplished? I'm sure existing retirees can continue to draw their benefits. Will CO offer them a buyout?
(2) What about current pilots? Will they offer you a buyout option for credit already earned? Are you likely to take it?
(3) For pilots on this board employed by CO, do you also maintain defined contribution accounts in addition to your pensions?
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!
 
ewr757
Posts: 356
Joined: Mon Apr 03, 2000 8:47 am

RE: CO Alpa Contract And Defined Contribution

Thu Mar 03, 2005 2:13 am

1) Freezing the old plan. No

2) No. No

3) Like 401's? IRA's? Yes

[Edited 2005-03-02 18:16:08]

[Edited 2005-03-02 18:16:27]
 
FlyHoss
Posts: 534
Joined: Wed Feb 02, 2005 12:20 pm

RE: CO Alpa Contract And Defined Contribution

Thu Mar 03, 2005 9:33 am

It's a big change and one that many pilots just a year or two ago were strongly opposed to making. However, the example of US Airways and United has shown that, as much as possible, the money must not be allowed to rest in the company's hands. A bird in the hand is worth two in the bush, eh?
A little bit louder now, a lil bit louder now...
 
ContnlEliteCMH
Topic Author
Posts: 1385
Joined: Wed Mar 02, 2005 8:19 am

RE: CO Alpa Contract And Defined Contribution

Thu Mar 03, 2005 12:35 pm

Quoting FlyHoss (reply 2):
A bird in the hand is worth two in the bush, eh?


Boy, you've got that right! I'm 34, and my father is in his early 60's. It has taken him 10 years to admit a few things, but he's finally come around. Here's what he says:

Back when he started work, there was simply no mindset to save. There was no mindset to provide for the long future. Your parents hadn't done it; you weren't going to do it.

Even in the early 70's, when there was a sea change because the tax laws were rewritten to greatly favor defined contribution, his generation still did not really make the change -- at least not quickly. I had to point out to him that the vast majority of his working years were after the legislation and switch to defined contribution. Dad's a smart, well-educated chemist. This observation seemed to catch him by surprise.

It's different now. I am a saver through-and-through. I refuse to make car payments because I can't save as much. I'm on a 15 year mortgage in a modest home because to pay off the house is to save money.

In hindsight, had my dad not owned five houses and started the 30 year mortgage over each time, he'd easily have enough to retire. A little bit of change then would have a huge impact now. I think it's the same for Continental. They *must* get rid of the pension. They treat it like a piggy bank to be raided, as do most companies with pensions. I, on the other hand, treat that money as buried treasure, never to be touched until a predetermined time.

A bird in the hand is worth *many* in the bush.
Christianity. Islam. Hinduism. Anthropogenic Global Warming. All are matters of faith!

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