For example, although Leighton only claimed to be entitled to temporary partial disability, the stipulation calculated his settlement based on his potential entitlement to permanent total disability. She noted that had the calculation reflected his claim, it would have calculated the payments based on his potential entitlement to temporary partial disability. It is usually a requirement of the Plan that the amount awarded to the Alternate Payee be expressed in terms of a monthly benefit payable for either the lifetime of the Participant or the Alternate Payee. Ericksen noted that ERISA Section 502(a)(3) permits actions against fiduciaries who breach their fiduciary duties, and although the plaintiffs may not ultimately obtain duplicate recoveries under both Section 502(a)(1)(B) and (a)(3), they can plead alternate theories of liability under both provisions. But that goal hinges on passage of federal legislation that would allow Northwest to stretch out billions of dollars in required pension fund payments. 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. Therefore, this factor weighs in favor of plaintiffs, Ericksen wrote. information was included, amount of money in the fund at the beginning of the data in it was the amount of money in the fund at the start of the year, Even so, an alarming number of large plans have collapsed in the last few years, leaving the government to cover huge debts to retirees. Northwest Airlines Pension Plan for Contract Employees (the Plan) from Delta Among the airlines that have come and gone over the years, Northwest Airlines ranks as not only one of the largest and most influential but also as one that went on to create something larger. The active pilots negotiated a new pension plan for themselves," said Lewis, 58, who lives in Duluth. The merger propelled it to become the worlds largest airline in practically every metric until the American Airlines-US Airways merger half a decade later. Even though the Northwest Airlines brand has completely disappeared from aircraft and airports around the world, it would be wrong to put Northwest in the same category as failed airlines that suffered catastrophic bankruptcies or declines into irrelevancy. The I.R.S. In this report all of the necessary Plans 5500 for PYE 9.30.09. If a recession reduces the funds in the pension plan enough, its possible for the ongoing payouts to deplete the accounts too quickly. Unlike most employees, retiring Delta pilots until 2005 could cash out half their pension benefits in lump sums that sometimes topped $1 million. Mark McClain, the head of Northwest's pilots association, said his focus is on saving jobs too. Airlines have the luxury of planning for pilots to retire at the FAAs mandatory retirement age of 65. Invest as much as you can for your own future. The committee performed a similar reduction for all five plaintiffs. A company would get in trouble with the government if it funded a pension plan too well, but if the plan is under-funded, it causes trouble for retirees. Attorneys Say Guaranteed Income Safe Harbor Clearer Than Previous Guidance, 702 King Farm Boulevard, Suite 400, Rockville, MD 20850 / +1 212-944-4455 /. the 5500 for PYE 9.30.09, all 61 pages. But reviving old retirement plans would be a big new expense for the . The committee also had a fiduciary obligation to follow these plan requirements. Northwest Airlines Freezes Pension Plans September 9, 2005 (PLANSPONSOR.com) - Northwest Airlines has frozen two pension plans that cover salaried employees, Business Insurance reports. Unfortunately, our countrys laws make every traditional pension plan this vulnerable. It suggests that the Labor Department is looking for a way to break an entrenched pattern, in which distressed companies quietly deplete their pension funds over a number of years, then declare bankruptcy and transfer huge obligations to the federal government. All rights reserved. Page 49 of 61. Why did NWA always have two hubs in close proximity to each other MSP, DTW and did not dehub one of the two? Aviation Finance as an Instrument of Power, How Much Money Do You Need to Retire? Contribution from Delta Airlines was $77,621,712. "I felt like I had to do it for my family, even though I wanted to stay and fly.". Most airlines now have defined contribution retirement plans like a 401(k). A traditional pension plan pays retirees the same amount every month, no matter what the market is doing. Pricing Flying may receive financial compensation for products purchased through this site. maintaining the fund, fees and commissions. Thats not to say that the story of Northwest Airlines is one of immense success, either. I figure one reason for DAL absorbing NWA was the presence of NWA in Asia, and in AMS. In other words, they are not receiving a monthly workers compensation entitlement in addition to their monthly pension. The PBGC has a database of unclaimed. Leading up to Northwests bankruptcy filing were numerous challenges that severely hampered the airlines profitability. "The management didn't take any hits on their pensions. "I just knew this was going to be a dead-end battle, which is why I retired.". Administration expenses were $17,035,079. Technically, everything they did was legal. 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. Will Buergey, the former union chairman who is appealing termination, believes most retirees' incomes will be much lower than Delta's estimates. Delta says about 1,300 retired pilots had their monthly pension checks zeroed out by the pilot pension plan termination. At that time, in late 2004, Delta had just averted a bankruptcy filing, and waves of pilots were retiring. Issues were further compounded by the tragic 9/11 terrorist attacks, which caused customer demand for air travel to plummet. year, amount of money at the end of the year, plan expenses, plan earnings, plan Therefore, she said this factor weighs in favor of the defendants. The committee argued that because the lump sums represent a monthly payment for the rest of each plaintiffs life, they are equivalent to retirement income. 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. Save my name, email, and website in this browser for the next time I comment. 61 Pages The Senate has passed a measure that would give Northwest and the other major airlines 20 years to catch up on their pension contributions -- nearly three times as long as most companies would get under a major revision of the pension law that has been passed by both houses of Congress. The Labor Department, responsible for enforcing the fiduciary duty requirements, has lately emphasized voluntary compliance, operating a successful amnesty program to help errant pension officials bring their plans back into line. But he downplayed any new emphasis. Learn about Northwest Airlines Pension Plan, including a description from the employer, and comments and ratings provided anonymously by current and former Northwest Airlines employees. "And three, there is some legislation and ways to do that by simply amortizing payments over a longer period of time.". Have United drivers lost their pensions? What he found inside was worse. here might like to read what I found. What was NWA cargo business like e.g., profitable, steady, etc.? "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. Page 15 of 61. In its motion for a protective order against the Labor Department's subpoena, Northwest is arguing that the demand is "extremely broad" and that full cooperation could "threaten or undermine" its ability to reorganize in bankruptcy. Hope this helps. No Reproduction Without Prior Authorizations. "We kind of expected that the benefit would go to zero, but it's a shock when that letter shows up," said Lewis. This battle is in response to a new . This defined pension fund (the Plan) is commingled with the investments of three in 2003, allowing it to reschedule that year's pension contributions over five years. Glassdoor is your resource for information about the Pension Plan benefits at Northwest Airlines. That's in addition to seeking access to frozen pension funds now that the world's largest carrier is churning out profits. But Northwest Airlines, which filed for . PBGC "Termination of the pension plan is among the most difficult decisions Delta has had to make in connection with our restructuring process, and we truly regret the impact this has had on you," Delta said in a letter late last month to almost 6,000 retired pilots. It is posted here for informational purposes only. Rebecca Moore. Breach of fiduciary duty and wrongful denial of benefits are distinct causes of action so a plaintiff may pursue both under ERISA, she said.The plaintiffs allege that the committee denied their claims because it consulted with the Workers Compensation Department, a party alleged to have an interest adverse to participants. About Us The remainder will be made up in reduced benefits. Airline pensions have all but ceased to exist. Instead of assuming the long-term average performance of the stock market, actuaries are allowed to make shorter-term predictions about the future performance of the stock market. 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. Ericksen found that the stipulations made a monthly calculation to account for SSDI payment offsets and to maximize the plaintiffs pre-retirement SSDI income. In the meantime, he and his wife are considering going back to work or selling their house. Delta is a good airline like all the other legacy carriers in the U.S. so why did Delta absorb NWA? A union spokeswoman declined to comment on the memos. Federal law currently requires the company to pay off most of that shortfall within the next three years. American is seeking its own meeting. Employees caught up in recent pension fund collapses have said they were not adequately warned of the impending failure and have questioned how it could have happened if the people in charge had kept their interests foremost. They're trying to survive," he said. "If those are amortized over a number of years, they're not a significant drain on the operating budget for the carrier. none of which pertained to me. You can find everything printed here in Deltanet Employee Connection (found on Instead, airlines and other retirement planners hire special statisticians called actuaries to essentially do custom versions of the trinity study for each specific situation. Through the course of its over eight decades as Northwest Airlines, it made plenty of misplaced bets, was involved in numerous fatal incidents, and filed for bankruptcy once. Weirton Steel (2004) [See Jobs With the Best Retirement Benefits .] He said he long thought the pension plan termination was inevitable.