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|Subject: Re: Another reason to save for retirement||Date: 10/27/2013 3:02 PM|
|Author: BruceCM||Number: 73656 of 76621|
But that doesn't guarantee they'll receive benefits promised. IIRC, several years ago some airline went bankrupt, PBGC covered the pensions but the pilots and stewards were taking about a 30-40% cut in payout.
Yes, I didn't mention the insured maximum as it seems excessive to the OP's original comment which deals with modest pension benefits.
But the pension cuts to many (most?) of the retiring airline pilots was far more than 30-40%, at least for the career pilots.
As an anecdote, I was teaching a CFP class at Seattle University in about 2005, and had an older looking student who seemed a bit bitter in his discussions about this or that FP topic. Over lunch one day, I was chatting with him (an otherwise nice guy), and he explained that he had retired from US Airways as a senior pilot at age 55 (the max flying age as I recall at the time) after 28 years with US Airways, and had started his pension of about $110,000 at age 56. 6 months later, he received a notice that the PBGC had taken over the pension, that his pension was being cut from $110,000 to about $25,000 (the max benefit at that time for his retirement age), and the amount he had been receiving that was over this amount would have to be paid back!
I can certainly understand his bitterness.
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