what happened to northwest airlines pension

the end of the year). Page 15 of 61. Contract Employees) including benefits paid to retirees, Plan expenses, Plan Kight said that while about 1,300 ex-pilots' monthly pension checks were wiped out, a slightly larger number of the carrier's oldest pilot retirees saw no reduction. He said their expenses are less than $10,000 a year now, and they banked nearly $1.7 million when he retired two years ago, including savings from his Delta wages and the $1.2 million pension lump sum. "I plan to live conservatively and keep our costs down and wait for the dust to settle," he said. The "There's kind of an interesting dynamic there, where the pilots in many ways have the most to lose," says Schwieterman. ATLANTA Officials of unions that represent Northwest Airlines Corp. flight attendants, ramp workers and reservation agents told lawmakers Wednesday they are worried Delta Air Lines Inc.'s plan to combine the two carriers could lead to lost pension benefits for employees. Copyright 2016 Pension Appraisers Online, Inc. All Rights Reserved. But reviving old retirement plans would be a big new expense for the . He said nearly 22,000 Minnesota residents are Northwest pensioners, and they're counting on common sense to prevail. Delta pilots have met with counterparts at FedEx Corp., where union leaders are evaluating possible remedies to a shortfall in retirement benefits for the company's senior aviators. 's systems for evaluating such applications and following up to make sure the companies eventually made good. are $1,665,979,000. Its All About Final Glide, Pending Merger Will Bring More Pilot Jobs. This should only be necessary once for each IP address you access the site from. Covered employees are all contract employee groups in this particular defined "Because the pension board caps the amount you can receive at something in the mid-$40,000 range. "This is absurd," said Cochran, 59, who worked for Delta almost 27 years. Actuaries are required to look at the relatively short-term performance of the stock market, and market trends did not show the pension plans becoming healthy again in the near future. But Northwest Airlines, which filed for . 612-726-3774. "PBGC expects to pay $1.7. Airline pilots, still resentful over pensions yanked away in a wave of industry bankruptcies, see growing company profits as a chance to reclaim some of those lost benefits. A federal judge has denied dismissal of a lawsuit in which five former employees of Delta Air Lines allege Delta and its administrative committee improperly reduced their pension benefits from the Northwest Airlines Pension Plan for Contract Employees. Suite 3200 Instead, it reduced the plaintiffs pensions by an amount calculated to accommodate SSDI benefits. data in it was the amount of money in the fund at the start of the year, Northwest Airlines' bankruptcy filing has raised serious questions among workers and retirees about the pension benefits they've been promised. The Need for Speed in Trend-Following Strategies, Global Fixed Income: Volatility and Uncertainty Here to Stay, Morningstar Indexes' Annual ESG Risk/Return Analysis, 2023 Outlook: The Top Five Trends to Monitor in the Year Ahead, Show Me the Income: Discovering plan sponsor and participant preferences for cr, The Future of Infrastructure: Building a Better Tomorrow, For institutional investors, ETFs can make meeting liquidity needs easier, Gold: the most effective commodity investment, 2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios, Ten ways retirement plan professionals add value to plan sponsors. Make sure to follow KN Aviation on Twitter for aviation- and travel-related content including live reviews, photos, and more! If our laws were able to look long-term, and airlines had been more confident in their ability to survive through to better times, they might have been able to just skimp through those tough years. The investigation has implications for many businesses besides Northwest that have shaky pension plans. About Us company has met the minimum requirements ($69,417,036 per year) for the years If you are human user receiving this message, we can add your IP address to a set of IPs that can access FederalRegister.gov & eCFR.gov; complete the CAPTCHA (bot test) below and click "Request Access". She dismissed the plaintiffs ERISA claim for equitable relief. Twelve years later, Northwest also launched the first nonstop flight between China and the United States, strengthening its position as the leading carrier for China-bound travelers in North America. Airlines have the luxury of planning for pilots to retire at the FAAs mandatory retirement age of 65. Trans World Airlines (2001) 10. If airlines conclude that it is no longer efficient to run an aircraft, then it goes through the retirement process. With KLMs transatlantic and European routes now part of its network, Northwest Airlines was essentially covered on all fronts through its long-running transpacific network, its domestic network boosted by the acquisition of Republic Airlines, and now also across the Atlantic thanks to KLM. News stories provided by third parties are not edited by "Site Publication" staff. U.S. Sen. Now that income is gone, too, as a result of the pension plan termination. She did find that nothing in the committees interpretation appears to conflict with the substantive or procedural requirements of ERISA. Frozen pension plans can be re-activated if they are in compliance with. Northwest continued to operate under its own name and brand until the integration of the carriers was completed . 53 of 61. Plan Lookup (100,000+) Delta is the third major airline to dump all or part of its pension obligations as part of a recent Chapter 11 reorganization, after US Airways and United. The company said it planned to forgo . All named Plaintiffs receive pensions from Defendant Northwest Retirement Plan for Contract Employees (the "Plan"). I wrote a letter to Mr. Robert Kight, Vice President-Compensation, Benefits, and Donate ", He added, "This is particularly the case when pension plans are significantly underfunded.". At that time, in late 2004, Delta had just averted a bankruptcy filing, and waves of pilots were retiring. Delta angered some retirees by warning that it could take the PBGC "several years" to review the airline's estimates, and to send any questions to the airline in writing. Very interesting read you have given us about Northwest Airlines. Mark McClain, the head of Northwest's pilots association, said his focus is on saving jobs too. It lies in the arcane rules of pension termination --- and in a lucrative feature of Delta's pre-bankruptcy pilot contracts. none of which pertained to me. He didn't believe the carrier's pension plan could long continue to pay out lump sums. period and apparently different assumptions on the methodology for determining 61 Pages An offset is valid under ERISA if it is authorized by the plan. The committee performed a similar reduction for all five plaintiffs. BusinessesBuy Stuff, On January 28, 2011 I received a notice of the funding status of the Other plans defaulted to the care of the Pension Benefit Guarantee Corporation, or PBGC. U.S. Investigates Pension Fund at Northwest Air, https://www.nytimes.com/2006/03/15/business/us-investigates-pension-fund-at-northwest-air.html. "They will look at people like us who retired with a good salary, who have medical insurance, who earned all these things," says Harris. Delta is the third major airline to dump all or part of its pension obligations as part of a recent Chapter 11 reorganization, after US Airways and United. Pension Plan for Contract Employees is approximately forty percent of the Master One was a letter from Delta telling him that, as of Oct. 1, his benefit was zero. The plaintiffs have since retired and begun to receive their pensions. The remainder will be made up in reduced benefits. "It will certainly make my income tax a lot easier to figure," he joked. Airline Pensions All But Gone? Citing a provision of the plan that requires Delta to offset pensions by the amount of other income-replacement benefits, Delta has reduced each plaintiffs monthly pension by an amount calculated in his workers compensation settlement agreement. Total cost is only $ 299.00. An actuary can update a company each year on whether it has enough saved for pending pilot retirements, or not. As he suspected, several months later, the pension plan halted paying out lump sums. None of the figures jive for the present value of the Plan as of September 30, "Due to the complexity of the calculations, the Employee Service Center will not be staffed to answer questions regarding these calculations," Delta's letter stated. Will Buergey, the former union chairman who is appealing termination, believes most retirees' incomes will be much lower than Delta's estimates. Reported by Rebecca Moore Northwest's filing with the Securities and Exchange Commission says that participants' benefits accruals were frozen as of August 31. Airlines Pension Plan for Contract Employees. The requests had swamped the I.R.S. "But just saying 'We can't make changes that the group wants' isn't an acceptable answer." They won't take her," said Cochran. About 30 percent of passengers originated locally, the rest. "These pension checks are only the remaining portion of their benefit after they took the lump sum," said Rob Kight, Delta's vice president in charge of employee benefits and related matters. Being an aviation enthusiast I have often wondered why Delta and not American or United absorbed Northwest Airlines and all of its business dealings. A traditional pension plan pays retirees the same amount every month, no matter what the market is doing. Plans 5500 for PYE 9.30.09. Regarding the second factor in the 8th Circuits assessment, Ericksen said the committees interpretation of the plan renders the term periodic meaningless. A hearing has been scheduled for later this month in United States Bankruptcy Court for the Southern District of New York, in Manhattan. In fact, about 15,200 active United employees live in California. Former Reservation Sales Agent in Minneapolis, MN, Minnesota. The reason is more complex than the company's simple need to cut retiree costs. Discussions are in early stages, and any changes would require buy-in both by union members and the companies. This factor weighs in favor of plaintiffs, Ericksen wrote in her order. Trust. This is a governmental insurance policy for pension plans. Northwest retirees worried about their pensions. United pilots' pension fund was terminated in its 2002 bankruptcy and taken over by the PBGC. Two, it doesn't help for them to be dropped into the lap of the Pension Benefit Guaranty board. A federal judge has denied dismissal of a lawsuit in which five former employees of Delta Air Lines allege Delta and its administrative committee improperly reduced their pension benefits from the Northwest Airlines Pension Plan for Contract Employees. The government has subpoenaed voluminous and detailed information from Northwest going back to January 2002, when both the airline and its pension fund faced severe financial pressures after the terrorist attacks of 2001 and the bursting of the technology bubble in the stock market. Cutting that timeline from 30 years to just 15 means our rule of thumb doesnt hold anymore. Northwest Airlines was founded in 1926 as Northwest Airways and initially served as an airline focused on mail service before expanding into passenger service in 1927. In its filing for Chapter 11 bankruptcy protection, Northwest Airlines highlighted a pension deficit that's now reached $3.8 billion. United's problems became front-page news last month when it failed to make a $72.4 million payment that was owed to three of its employee pension plans. I figure one reason for DAL absorbing NWA was the presence of NWA in Asia, and in AMS. Despite this assertion, a payment made to settle a legal claim is not the same relief as the payment Delta would have owed had the plaintiffs ultimately succeeded in their workers compensation actions. The committee defined payable as something that may, can or must be paid, and argued that because Delta paid the settlement, the underlying workers compensation benefit was something that can be paid. With annual pay above $600,000 per year (in today's numbers), a 60 percent FAE pension. Airline officials say they want to avoid handing off their pension obligation on the federal government.