Originally Posted by
jriv
US airlines used to have “defined benefit” pension plans where the company promised to put money away for you and you’d get a certain amount of money each month until both you and your spouse died. That was taken away in bankruptcy court after 9/11.
Currently the major airlines are putting 15-16 cents for every dollar you make into a retirement fund that is owned by you. There are rules that apply to how you can use that money, but essentially you can’t touch it until age 65 unless you want to take a big penalty and pay a bunch of taxes on the disbursement.
So if my gross pay for a month is $10,000, the company deposits another $1,000 in my retirement fund (created by section 401(k) of the tax code, so commonly called a 401(k) account).
The deposits are pre-tax, the money is managed by either you or a professional investment company, and the money is taxed as you withdraw it in retirement.
Thanks. Some quick calculations show that the amount in a uk pilot pension isn’t that different to you guys (assuming major uk and major us). But your salaries are frustratingly, significantly higher and I always wonder how that became the case. And how your companies still make big profits with such pay for the workforce.