Quote:
Originally posted by Racerbvd
According to my buddy, the union negotiated the pension & health plans out. I'm going by what he said and the notification he received. Had he been able to use the money the union seized for his own retirement fund, a judge wouldn't have stopped it.
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If you're referring to UAL, that whole process is convoluted. It's different due to the employee "buyout" of the airline that left the employees with lots of liability but no real managerial voice. UAL mgmt flew the airline into the ground then declared bankruptcy by bringing in Tilton who has a history of moving companies into bankruptcy. Lots of the employee retirement and medical benefits were given back as an attempt to keep UAL out of bankruptcy; unfortunately, Tilton's people were both shrewder and less honorable than the employee reps - they took all of the give-backs with full knowledge that the bankruptcy would go forward anyway. The retirement plans were dumped to the PBGC (almost $10 Bill worth) and the managers rewarded themselves by taking, as I recall, 8 percent of all the stock of the reorganized UAL for the top 400 managers. This was much less than the 17 or so percent they initially petitioned the court for.
Side note: Pilots are required to retire by their 60th birthday. The PBGC says "normal" retirement is at age 65 and therefore the pilot retirement payments become discounted as being early even though mandatory. Catch-22
Business typically treat retirement accounts (except executive accounts) as just another asset - they are not kept in a separate trust fund and, therefore, could be used as collateral in borrowing. Fortunately, the carrier I last flew for insisted on independent management of the retirement accounts which really ticked off the airline management but is now saving our butts. Didn't stop the managers from raiding the disability accounts though. Also fortunately for us, we learned by closely tracking the history of the UAL bankruptcy and were able to avoid many of the mis-steps that cost the UAL people so much.
The whole process is nuts. When the stock market was climbing, airline management looked at "over funded" retirement accounts and collateralized them. Later, when the market declined they went whining that they couldn't fund them and dumped them to the PBGC. Bad financial management and not consistent with their fiduciary responsibilities.