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FedEx Freight | The pension problem

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Moninja

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I should begin this post by first stating that I am FedEx Freight driver with 4 1/2 years service. Just to clarify so the pro-union folks don't confuse with me with management. The goal of this post is to help us understand how our pensions situation sets up and how it compares with what the union has done with theirs.

Fact: December 2012-Teamsters run Union pension fund had liabilities of $34.9 Billion
December 2012-Teamsters run Union pension fund had assets of $17.8 Billion
Fact: There are currently 65,000 working union members funding retirements of 212,000
That means every worker is paying for 3.25 retirees to collect their pensions.
The union wants to represent you and your money to dig themselves out of a $17Billion deficit.

My understanding is that the union offers:
$3000/month upon retirement at 65 years old for 30 years of working for the union. There is no growth nor adjustment for inflation.
$2500/month upon retirement at 65 years old for 25 years of working for the union. There is no growth nor adjustment for inflation.
$2000/month upon retirement at 65 years old for 20 of years of working for the union. There is no growth nor adjustment for inflation.
Fact: In June 2014, Teamsters Pension fund director calls to cut current and future retirees benefits by 30%. Thanks for your years of service grampa. If Walmart isn't hiring greeters you might check with McDonald's to supplement that lost income.

Even assuming that doesn’t happen, and the pensions keep getting paid out by future union members (such as yourself who will also need someone else to follow you so they can fund your retirement), there is no adjustment for inflation which has averaged a little over 3% since 2000. Adjusted for 3% annual inflation, using 2014 dollars, their pension payouts look more like this :

$1235.96/month upon retirement at 65 years old for 30 years of working for the union.
$1194.01/month upon retirement at 65 years old for 25 years of working for the union.
$1107.35/month upon retirement at 65 years old for 20 years of working for the union.

Subtract 30% from these numbers and that is what a union pension plan could do for you… assuming they don’t declare bankruptcy before then. If they can make enough promises to get FedEx drivers to pool in with their insolvency, you would really be doing them a big favor.

NOW I WOULD LIKE TO COMPARE THEIR PENSION PROMISES WITH FedEx's PENSION PLAN. Based on an annual salary of $50,000 with no raises ever.
Annual Salary$50,000
Fed ex pension investment (3%). This percentage
increases with your age plus years of service.		$1500
Fed ex 401K match (3.5%)$1750
Union dues ($23.68 x 2.5 x 12months)$710
Your personal 6% 401K investment.
Seriously, if you’re not putting this much in there,
you really should reconsider. The sooner the
better. It not only reduces the taxes you pay today,
it also gives you the benefit of compound interest
and takes advantage of the highest company match.		$3000
If you're in the 28% marginal tax bracket, you are
paying $2160 per year toward your retirement.
Total annual FedEx investment$3250
Total gained from not paying union dues$710
Total personal 401K investment$3000
Annual retirement investment.$6960
The stock market has averaged annualized growth of 7% for the past 65 years. There are also dividends that should be considered but I will be conservative and use 6% and exclude dividends and the dividends being reinvested into your retirement account. Anyway, I have been very conservative in terms of income, how much is invested, etc. To reiterate, this is a conservative estimate based on constant income with no raises and less than annualized average market return. These numbers increase significantly with increased earnings and investment.

Why give away your money fund other people’s retirements… Look at social security as a classic example. Your retirement,and the security of your family, will be given over to a group who is $17Billion upside down.
$6960 x 30 years @ 6% annual compounded growth.$572,989.20
$6960 x 25 years @ 6% annual compounded growth.$398,852.81
$6960 x 20 years @ 6% annual compounded growth.$268,727.97
Should you die before you have collected all of your retirement, the remainder will pass on to your heirs. This is one advantage of the cash-basis/defined benefit pension. It is yours whether you leave FedEx today or in 30 years. Any unused portion of your pension or retirement reverts to your next-of-kin. This is not the case with a union pension.
The average life expectancy for an American male is 76 years. For truck drivers, the average is less. However, using an annuity table, it seems pretty obvious that the FedEx pension and retirement plan is better than what the teamsters promise. And considering that they can’t fund the promises they have made to their present membership and retirees, they will promise you what they can’t give to you as well. For me, however, the fact that my wife will receive any unused pension/401K whether I die tomorrow or sometime after tomorrow makes me feel like it is a more responsible decision.
$572,989.20 after 30 years of serviceA $3000/month annuity that will last until you are 115 years old
$398,852.81 after 25 years of serviceA $2500/month annuity that will last until you are 91 years old.
$268,727.97 after 20 years of serviceA $2000/month annuity that will last until you are 83 years old
Or you can accept the promises of a group who isn’t able to keep the promises they have already made to other people. Educate yourself and don’t fall for promises of people who don’t keep their promises.
 
Haven't you read any other thread on this board? The pension would be a stand alone that would be Fed Ex itself, like UPS freight contract. You took numbers from the outdated "master freight" contract, but you know that. The way I see it, if you are happy with the way things have been, just keep grabbing your ankles and do nothing. I'm going to at least to try to make them squirm. If you are not happy with the way things are, sack up and do something about it. :nutkick: Now is the time, a lot of brothers in the balance that could use some help!
 
Right...as soon as the drivers are out of the debt and 401k loans they took on during downsizing and layoffs of the company and a tanked economy just to stay afloat and not lose everything they own this will mean something.
 
I don't know what information I have that is outdated or not. I'm just going on the information that was provided to me from someone who was trying to convince me that the union was a good idea. The legacy pension is a bad idea period. It's not good for either the employee or the company. The cash-basis/defined-benefit pension is the most practical solution. As far as my information being outdated, please update me so that I can have the information.
 
And they are going to get that help. I like how he said the market averaged 7% a year. I guess he forgot a lot of people got or nearly got wiped out by the meltdown of 08. Lost compounded earnings potential there for a decade. I like how he also assumed I would ONLY rely on a pension, when really I will still add to my 401k, it won't be matched anymore by fedex BUT all the money I save from not paying 80 a week in benefits and hundreds, if not a couple of thousand a year in medical bills could easily surpass the company match amount and put me in a much better state of retirement. And I don't know of anybody in my family that got cut off from a spouse's pension when they died. AND you cited social security. Yes I will add that to my collection and I will be ok. In the meantime, I will have peace of mind knowing my job is protected, I'll make it to retirement instead of being fired on a whim, and when I do retire I will be ok.
 
AND you forgot to mention that the pension funds are made up of bonds, stocks, mutual funds,etc....you know, the same stuff you claim is superior with the fedex way.. Maybe you can call our old supervisor that left out of frustration a few months ago. Worked here for 17 years. Fedex pension fund is 118 a month. What bill am I going to pay with that?
 
1) All the money you ostensibly lost in 08 has also been gained back with exponential growth on top of it. Unless you sold at market bottom.
2) I'm also not sure where you think this other money will come from. No health care costs? Somebody has to pay for these things. Obamacare anyone? I'm a veteran and I get free health care there and I never ever go. It's entirely free and entirely terrible.
3) Defined-benefit pension funds are not automatically passed on to your survivors whereas cash basis pension plans are. If I married an 18 year old and died would she get my $X payout for the next 70 years? Probably not but I'm not sure.
 
Not all teamster companies are in the central state pension "the teamster pension"
Ups freight for example is in the ups pension. Ups bought out of the central state fund for several. Billion in cash several years back.
 
Fed ex could end up doing the same thing, there would be a lot less people collecting from it for a wile so they would have time to get it funded.
 
Gideon129 said:
Not all teamster companies are in the central state pension "the teamster pension"
Ups freight for example is in the ups pension. Ups bought out of the central state fund for several. Billion in cash several years back.[/QUOTE

$6.1 Billion according to Bloomberg. Will FedEx have to buy their way out of that as well? From what I've read, that was more like extortion than a buyout. If the teamsters are going to organize us then I can only assume they're going to want to get some of that money into their pension fund. Maybe we just join the UPS pension fund. Or, even better yet, go work for UPS and live the life of our dreams and find happiness over there where the grass is greener. Except our local UPS Freight terminal's union steward is buddy-buddy with management. Where's my recourse in that situation? But anyway, are we talking about a defined benefit pension package or a cash basis pension package? Does anyone know or even care?
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We would not be under central states, but thanks for starting a new thread on something we've covered in other threads for 2 months. UPSF isn't in central states. So why would we agree to be in it.

Thanks anyway be safe out there driver.
 
Wow. I'm sorry for inconveniencing you with this whole new thread and everything. I shouldn't have put you, or any of my fellow drivers, through that. But even considering that we won't be in the Central States pension fund, that still doesn't answer the question of what the pension situation would look like. As we get closer to this whole thing becoming a reality or not, and votes being scheduled, it's an important point. Not being part of one pension fund does not mean that a similarly structured pension fund would not experience the same difficulties. I guess I will explain the difference.
Cash-basis pension: You accumulate a certain amount of money and when you retire, that amount of money is yours.
Defined-benefit pension. You work a certain amount of time and when you retire you receive a set amount of money on a regular basis until you retire. Or the fund becomes insolvent or 50%+1 truckers who are financially illiterate vote to cut your pension or your pay or your benefits and we're all in this together.
Again. I would like to apologize to everyone for having put them through this extraneous thread. You did nothing to deserve this and I used to think I was a better person. Now I am not so sure. Perhaps if I was union we could work through this together???
 
Moninja would like to thank you for try to educate some folks. Your had work is appreciated.
 
Last edited by a moderator:
Moninja said:
Gideon129 said:
Not all teamster companies are in the central state pension "the teamster pension"
Ups freight for example is in the ups pension. Ups bought out of the central state fund for several. Billion in cash several years back.[/QUOTE

$6.1 Billion according to Bloomberg. Will FedEx have to buy their way out of that as well? From what I've read, that was more like extortion than a buyout. If the teamsters are going to organize us then I can only assume they're going to want to get some of that money into their pension fund. Maybe we just join the UPS pension fund. Or, even better yet, go work for UPS and live the life of our dreams and find happiness over there where the grass is greener. Except our local UPS Freight terminal's union steward is buddy-buddy with management. Where's my recourse in that situation? But anyway, are we talking about a defined benefit pension package or a cash basis pension package? Does anyone know or even care?
Click to expand...
Why would you have to buy out of something you were never a part of? UPS paid to get their package division out of the fund. Fedex wouldn't have to pay a dime. Nice try but NONE of what you posted would apply to an organized Fedex
Click to expand...
 
Moninja said:
Wow. I'm sorry for inconveniencing you with this whole new thread and everything. I shouldn't have put you, or any of my fellow drivers, through that. But even considering that we won't be in the Central States pension fund, that still doesn't answer the question of what the pension situation would look like. As we get closer to this whole thing becoming a reality or not, and votes being scheduled, it's an important point. Not being part of one pension fund does not mean that a similarly structured pension fund would not experience the same difficulties. I guess I will explain the difference.
Cash-basis pension: You accumulate a certain amount of money and when you retire, that amount of money is yours.
Defined-benefit pension. You work a certain amount of time and when you retire you receive a set amount of money on a regular basis until you retire. Or the fund becomes insolvent or 50%+1 truckers who are financially illiterate vote to cut your pension or your pay or your benefits and we're all in this together.
Again. I would like to apologize to everyone for having put them through this extraneous thread. You did nothing to deserve this and I used to think I was a better person. Now I am not so sure. Perhaps if I was union we could work through this together???
Click to expand...

Perhaps you should read this

http://www.truckingboards.com/forum...duce-forum-clutter-post-existing-threads.html
 
Richard Cranium said:
Help an old fool out here, Moninja.
Now exactly how did that $3000 dollar a month pension shrink to $1000 or so a month?[/QUOTE

It's called inflation. The numbers stay the same but the earning power of your dollar decreases. Inflation has a compounded effect as it decreases your dollar in the same way that interest increases your actual dollars. Over time it can be devastating.

in 1984 the average home cost $79,000, hamburger was 99 cents/lb, average new car cost $7200. $3000/month in 1984 could go a lot further is my point. Inflation will kill you.

Anyway, my point is that without any consideration for future inflation, which I estimated very conservatively considering the QE the Fed has been putting on us, will destroy the value of a defined benefit pension. There has to be some consideration for the fact that everything will cost more when we retire than they do today.
Click to expand...
 
yrc-atm said:
Moninja said:
Why would you have to buy out of something you were never a part of? UPS paid to get their package division out of the fund. Fedex wouldn't have to pay a dime. Nice try but NONE of what you posted would apply to an organized Fedex
Click to expand...

1: What might or might happen in the future is uncertain. 2: Anything someone promises is not fulfilled until the promises comes true. 3: If it's run the same way as other pensions and social security, why wouldn't that pension plan end up insolvent just like those plans?
Click to expand...
 
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