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Administration September 9, 2006
Retiring Pilots Crowd the Exit, Delta's Pension Plan Strained
September 21, 2005 (PLANSPONSOR.com) - A Delta Air
Lines pilot union official has warned that pilots who retire
in the future may not have access to a lump-sum payout
because the plan may be too drained to fund it.
Reported by Fred Schneyer
John Malone, chairman of the pilot union’s executive committee, included that warning in a letter to pilots this week, saying that retirements dated after October 1 were likely to encounter the lump-sum payout problem, the Associated Press reported. The reason: a continuing exodus of Delta pilots that has drained away resources from the plan.
According to the union official, 202 pilots retired September 1, two weeks before Delta’s recent bankruptcy filing, and more than 2,300 who have put in their papers since January 2003. The normal pilot retirement age at Delta is 60. Senior pilots with enough years in can retire early at age 50.
Malone said management has informed the union that the lump sums due the pilots who retired September 1 will create a cash shortfall for the plan, forcing the beleaguered air carrier to make up for it with a special contribution to the plan.
If Delta doesn’t pump in the extra funds – its recent statements suggest it won’t – the plan would be prohibited from doling out future lump sum payments until the shortfall is erased.
The nation’s private-sector pension insurer has already warned airline officials that their bankruptcy filing did not take away their responsibilities to fund their pension plans (See PBGC to Airlines: Pension Contributions Still Required ).