Originally Posted by le soixante neuf
Both sets of pilots do, my socialist friend. We've been down the "defined benefits" vs. the "defined contributions" road many times. There is no short answer, each has pros and cons.
Some easy math may surprise you, lets take a 40 yr old WJ Captain, who has, for now, has 20yrs of flying left. We'll say that after his 40th birthday party hangover subsides, he realizes that although he has a nice house, kids, truck, etc. and all of his bills are paid he only has 50k set aside toward his retirement.We start with this conservative number and add to it, about $46,000 per year. This is the amount he could save, 23k of his own, and 23k more from the company, all into the ESP plan. It's important to take this amount of company stock and diversify it appropriately as soon as practicable.(navcanada word). At a modest return rate of 8%, after 20 years, our hero will have $ 2,422,653 to resume drinking with.
I'm sure this plan will draw it's detractors and it has it's pitfalls, but it has some huge advantages over the defined benefit plan as well.
It's totally portable...one can take his/her savings thus far and at any time, abscond to Thailand with it.
One has control over ones own financial destiny.
The monetary potential is much higher than old school plans.
It is less costly for the hand that feeds you, thus enabling said hand to feed you more.
I'll put forth for your consideration that had you chosen a defined contribution plan when it was offered, your company may well be able to afford the higher salary that you desire, thus enabling your group to contribute handsomely to such a plan.