Illustrative Charts Showing Effect of Agreement
All of these charts and calculations illustrate, on a comparative basis, a Flight Attendant's Defined Benefit pension value at age 60 to the Agreement benefit value at age 60. The Replacement Plan value includes the Pension Benefit Guaranty Corporation (PBGC) June 30, 2005 terminated benefit and the Defined Contribution Plan effective January 1, 2006.
Calculations to measure our retirement security are based on actual payroll data and the most recent available United Flight Attendant population demographics. Our actuaries used conservative, rather than aggressive, financial assumptions for future projections. Future assumptions include:
- a 7.5 % investment rate
- actual Contract seniority and pay rate and increases through 2010
- a payroll increase of 3% per year based on seniority and pay rate increases
Note: these charts are for illustration purposes only; they represent projections based upon certain actuarial assumptions described in the text associated with the charts. These charts do not depict actual investment outcomes. As with any investment, 401(k) investment performance is based on market factors that carry an element of investment risk. Actual performance of your 401(k) investments may vary (better or worse) from these projections.
Contents
Percentage of Replacement By Age or Service
Original Company Proposal Projections with a 3% Direct Contribution
Shows projected percentages of benefit replacement for current age or years of service, for a Flight Attendant retiring at age 60. The benefit at age 60 is compared to what the Flight Attendant would have received under the Defined Benefit Pension Plan.
IMPORTANT: The two charts below represent the original proposal;
they do not represent the Agreement.
| Age |
Replacement Value |
| 25 - 30 |
44% |
| 30 - 35 |
38% |
| 35 -40 |
38% |
| 40 - 45 |
40% |
| 45 - 50 |
46% |
| 50 - 55 |
86% |
| 55 - 60 |
98% |
| 60 - 65 |
100% |
| 65 plus |
100% |
|
|
| Years of Service |
Replacement Value |
| 0 - 5 |
39% |
| 5 - 10 |
38% |
| 10 - 15 |
44% |
| 15 - 20 |
61% |
| 20 - 25 |
69% |
| 25 - 30 |
90% |
| 30 - 35 |
99% |
| 35 - 40 |
101% |
| 40 plus |
100% |
|
Defined Contribution Plan Tentative Agreement
Shows projected percentages of benefit replacement for current age or years of service with full utilization of the Agreement, and retirement at age 60. Full utilization contemplates a 3% contribution of Flight Attendant Earnings to her or his account to gain the full value of the Company Match.
| Age |
Replacement Value |
| 25 - 30 |
127% |
| 30 - 35 |
103% |
| 35 -40 |
88% |
| 40 - 45 |
77% |
| 45 - 50 |
72% |
| 50 - 55 |
100% |
| 55 - 60 |
102% |
| 60 - 65 |
100% |
| 65 plus |
100% |
|
|
| Years of Service |
Replacement
Value |
| 0 - 5 |
109% |
| 5 - 10 |
91% |
| 10 - 15 |
82% |
| 15 - 20 |
84% |
| 20 - 25 |
86% |
| 25 - 30 |
100% |
| 30 - 35 |
104% |
| 35 - 40 |
102% |
| 40 plus |
100% |
|
Comparison of Company Proposal and Agreement
The Company's original proposal of replacing our Defined Benefit Pension Plan with a 3% Defined Contribution Plan meant that two-thirds of us would have lost over half of our pension benefit. This Agreement cuts those losses and doubles the amount of Company contribution originally proposed by United management.
The following two charts show the movement of our entire Flight Attendant population closer to 100% replacement of the Defined Benefit Pension Plan when comparing United's original proposal with this Agreement.
Company’s Replacement Plan Proposal of 3% Defined Contribution
IMPORTANT: This chart represents the original proposal;
it does not represent the Agreement.
NOTE: The numbers in each percentage replacement column above represent actual numbers of Flight Attendants at each assumed age of retirement: age 56, age 60, age 62 and age 65.
Full Utilization of Agreement with Phased-In 3% Direct Company Contribution, 3% Member Contribution & 3% Company Match
NOTE: The numbers in each percentage replacement column above represent actual numbers of Flight Attendants at each respective age of retirement: age 56, age 60, age 62 and age 65.
Benefit Components in Replacement Plan
The Company’s original proposal provided for a 3% Company Contribution to follow the termination of our Defined Benefit Pension Plan. Under their proposal, anyone ineligible to retire on the termination date of June 30, 2005 likely would have lost over half of the pension benefit otherwise provided by the Defined Benefit Pension Plan continuing until their retirement age. These charts provide five illustrative examples of replacement benefits at age 60 retirement, for specific ages and years of service currently accrued today.
Company Original Proposal (Age and Years of Service Examples)
This chart breaks down each component of the Company’s originally proposed Replacement Plan, including:
- The PBGC guaranteed benefit under the June 30, 2005 termination date.
- The Company 3% Direct Contribution to a Flight Attendant’s Plan account.
IMPORTANT: This chart represents the original proposal;
it does not represent the Agreement.
Note: The percentages listed under each example column of age and years of service above, represents the percentage of benefit replacement under either Company "direct" contribution or "PBGC Benefit." The percentage numbers added together provide a total percentage of replacement of the Defined Benefit.
Agreement (Age and Years of Service Examples)
This chart breaks down each component of the fully utilized Agreement, including:
- The PBGC guaranteed benefit under the June 30, 2005 termination date.
- The Company 3% Direct Contribution to a Flight Attendant’s Plan account.
- The Flight Attendant’s 3% Contribution of Earnings.
- The Company 3% Matching Contribution.
NOTE: The percentages listed under each age and years of service column above represent the different components of the total Replacement Plan. The percentage numbers added together provide a total percentage of replacement of the Defined Benefit.
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AFA Rejected United’s Proposal to Work Longer for Same Pension Benefit
United used a methodology that assumed Flight Attendants would not be harmed if they simply worked longer to accrue the same pension benefit. For instance, they attempted to present calculations to the Court that compared the dollar value of a Flight Attendant's Defined Benefit pension at age 56 retirement, to a replacement Defined Contribution Plan at age 65 retirement. (AFA won Court decision to exclude this filing from Court records.) That comparison yielded nearly 100% replacement of benefits for all Flight Attendants.
While it is true that pension benefit losses will be minimized the longer we work, all of the charts and calculations presented in this Agreement Summary Packet compare a Flight Attendant's Defined Benefit pension value at age 60 to the Agreement Replacement Plan Benefit value at age 60. In every case, the illustrations reflect a comparison of age, to same age.
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