n previous Skywords, we’ve
written articles about comput-
ing the value of your pension
when you are ready to retire.
But what we haven’t really dis-
cussed are the measures you
must take to qualify for those
benefits.
In this article, we will address
the various time factors that
influence the value of and eligi-
bility for retiree benefits, as well
as what those benefits are.
When you are hired by
American Airlines, many clocks
begin. The following informa-
tion is meant to familiarize you
with all of the time measures
that influence your benefits.
Age – All retirement benefits
available to us are based upon
minimum age requirements. In
every case, you must attain a cer-
tain age to qualify for a benefit.
Classification Seniority (Pay) –
This is the seniority upon which
pay is based. It accrues from the
date you ‘went on the line’ as a
Flight Attendant. It is adjusted dur-
ing leaves, even though
Occupational Seniority is not.
Company Seniority
(Benefits/Vacation) – This senior-
ity begins with your date of hire
at American and is adjusted dur-
ing any time you spent off of pay-
roll. This seniority determines
your vacation accrual and some
retiree benefits, excluding pension.
Occupational Seniority
(Bidding) – This seniority is
based upon length of service as a
Flight Attendant with American
Airlines. This is bidding seniority
and is adjusted annually on June
1. It is also known as ‘Union
Seniority.”
Vesting – This is time you have
accrued towards a pension benefit.
Vesting begins on your date of
hire at AMR and for Flight
Attendants requires 386 hours
flown within a calendar year. You
must fly 386 hours in a calendar
year to receive a year of vesting
credit. You do not receive credit
for partial years of vested service.
Five years of vesting are required
to own your pension benefit and
it is all or nothing. If you leave
American before you turn 65 and
don’t have five years of vested
service, you have not earned a
I
pension benefit. Your vesting time
determines your eligibility to
receive a pension.
Years of Credited Service (YCS)
– After you complete one year of
eligibility service, you earn one
year of credited service for each
year you participate in the plan
and fly 734 hours of service (this
averages out to about 62 hours a
month). If you are credited with
less than 734 hours of service,
you earn a fractional year. As a
guideline, if American pays you,
the time counts (Vacation and
paid sick time are included; dis-
ability payments are not). You can
check your hours in the computer
by pulling up HISK (current year)
and HISK/L (last year) in your per-
sonal mode. It is important that
you keep these records.
(NOTE: For those of us who were
hired during the ‘60s and ‘70s,
entry into the pension program
involved three primary factors:
1) following the completion of
one year of service;
2) turning age 25; and,
3) limited to two opportunities
a year, July 1 and January 1.
APFA negotiations have made
everyone whole for the years
earned prior to turning age 25; the
July and January entry dates have
remained. The number of YCS
you have earned determines the
age at which you are eligible to
begin your pension benefits.
Normal retirement age is 65. Early
retirement is available to us if we
meet the following criteria:
1) age 55 and a minimum of 15
YCS (retiring at this age
results in a reduced pension
benefit); or,
2) effective with the new
Contract, 60 years of age and
a minimum of 10 years of
credited service. (This early
retirement is with no
reduction in your pension).
In order to qualify for your pen-
sion you must meet the follow-
ing criteria.
The qualifying times listed
above are for retiring with a
pension (being a pensioner)
along with health and travel
benefits (known as being a
retiree). What about the people
who won’t have the required
YCS in order to retire early? Are
there any benefits for them?
The answer is yes. In order to
qualify for retirement benefits
other than your pension you
need a combination of age and
various seniority types.
Appendix T – This is no longer
available as of November 12,
2001. This was the youngest age
at which you could qualify for
any form of severance. It provid-
ed a lump sum of $10,000 for an
active Flight Attendant with a
minimum of five years of
Occupational Seniority whose
age plus seniority equaled a
minimum of 40. There were
eight round-trip D-2 passes
annually with this severance. No
The Time Factor
by Jill Frank,
APFA Retirement Specialist
Retirement
health insur-
ance was
available with
Appendix T,
and recipients forfeited all seniori-
ty rights or claims for recall.
However, if they qualified for
retirement benefits under Article
36, they could have taken both
Appendix T and retire under
Article 36.
Article 30 – This article addresses
early retirement benefits for Flight
Attendants retiring between 45
and 55 years of age. In order to
take Article 30 (located on page
134 of your Contract) you must be
between 45 and 55 with a mini-
mum of 20 years of Company
Seniority. There is a lump sum of
$25,000, pass benefits equaling 10
round-trip D2 passes for the Flight
Attendant, spouse and dependent
children, declining life insurance
and medical coverage in the
amount of $20,000 lifetime for
each of the Flight Attendant,
spouse and dependent children.
(When you take Article 30, you
lock in your health and travel ben-
efits and they will not alter once
you collect your pension – you are
restricted from any type of
upgrade of benefits.)
50 – 55 Rule – This benefit is
located on page 15 of your
Employee Benefits Guide. If you
terminate employment after you
reach age 50 (but before 55) and
if you have at least 10 years of
Company Seniority, you become
eligible for Retiree Medical and
Retiree Travel once you begin
your pension. When? Remember
that you need at least 15 years of
credited service to begin your
pension at 55 and a minimum of
10 YCS to begin at 60. Using this
rule, you can resign between 50
and 55 and then begin your pen-
sion when you are eligible (with
the applicable reductions for early
benefits), based upon your YCS.
At that time you will also have
retiree medical (if you have pre-
funded continuously from the
time eligible until you begin to
collect the benefits $300,000 life-
time until you reach 65) and full
retiree travel benefits.
Note on 50 – 55 rule: If you are
leaving before 55 and qualify for
Article 30 you might wish to
forgo Article 30, since it restricts
the health and travel benefits. If
you took Appendix T or you
choose to resign, you will still be
eligible to collect your full retire-
ment benefits when you collect
your pension assuming you have
prefunded. Unless you have alter-
nate medical coverage, the $300,000
quickly makes up for a lump sum
of $25,000.
55 Retiree – You can collect your
pension if you have enough YCS,
but what if you want to retire and
haven’t accrued the required
amount? If you have 10 years of
Company Seniority, and if you
have prefunded from when first eli-
gible until you retire, and you are
55 (or you are collecting Social
Security Disability), you can retire
with full retiree medical. You will
collect your pension when you
qualify. Anyone who retired prior
to January 1, 2002, was not
required to prefund and will
qualify for retiree medical.
55 Travel Retire – If you have 10
years of Company Seniority (five
years if hired prior to 1/1/96) you
can leave at age 55 with retiree
travel.
There is a lot of information here,
and it is easy to get confused. If
you are considering leaving
American, consider your age and
length of service to get an idea
about what you might have earned.
We are in the process of establish-
ing a Retirement Department at
APFA and are happy to answer
your questions and assist you in
determining which benefits work
best for you. Please feel free to
contact me, Jill Frank, with your
questions at APFA Headquarters,
Ext. 8397. Each of you must con-
sider specific personal facts in mak-
ing decisions regarding which path
will be best for you.
There is a lot of information here,
and it is easy to get confused. If
you are considering leaving
American, consider your age and
length of service to get an idea of
what you might have earned.
ne of the questions that has
arisen, especially lately, is the
safety and protection of our pen-
sion funds. We’ve all heard horror
stories of misspent monies and
missing pensions. So this is a
good time to find out what protec-
tions are in place for our future
retirement dollars.
WHAT IS OUR PENSION
PLAN?–The Retirement Benefit
Plan of American Airlines, Inc. for
Flight Attendants is a 75-page doc-
ument that specifies the terms and
conditions of our pension plan. It
spells out definitions, eligibility
requirements, formulas for benefit
calculations, methods of payment,
and the administration and man-
agement of the Plan’s assets.
CAN THE COMPANY
TERMINATE THE PLAN?–In
the Plan page 67, Article XIII 1 a it
is clearly stated that “the company
will not amend, suspend, or termi-
nate the Plan for the duration of
the Collective Bargaining
Agreements between the compa-
ny and the Association.”
Additional protections against
unilateral Company action to
amend or terminate the Plan are
spelled out in Article 36 of the
new American Airlines-APFA
Collective Bargaining Agreement.
So, for those who are worried
that American will simply termi-
nate the Plan to save money, that
is not an option.
WHAT IF AMERICAN
(REORGANIZES) OR GOES
OUT OF BUSINESS?–Every
employee at American (manage-
ment included) has a vested inter-
est to ensure this doesn’t hap-
pen. No one is going to choose
this as a solution to the current
financial challenges. Instead,
every effort will be made to
make American Airlines a prof-
itable company again.
BUT WHAT IF THIS DOES
HAPPEN? WHAT HAPPENS
TO OUR PENSION MONEY
THEN?–The demise of a compa-
ny does not necessarily terminate
the pension plan. If a Plan is
fully funded (and it was for the
year ending 12/31/2000), it would
remain in place for anyone who
is owed a pension.
HOW IS THE PLAN
FUNDED?–The obligation to
fund our Plan is based upon an
annual review of the assets.
Supported by the successful stock
market growth of the last 10 years,
the Plan has actually been fully
funded at more than 100
percent.
WILL THE PLAN NEED TO BE
FUNDED AT THE END OF
THIS YEAR?–In light of the stock
market performance for the year
2001–plus the fact that our new
Contract made our pensions more
valuable–American may have to
contribute additional funds to the
Plan for the year 2001.
WHEN MUST THE FUNDS BE
CONTRIBUTED?–The account-
ing is done based upon year-end
calculations, and the due date for
any required company contribu-
tions is September 15 of the fol-
lowing year. So it is the responsi-
bility of American to make the
necessary contributions annually
by September 15.
WHAT IF AMERICAN GOES
BANKRUPT OR FILES TO
REORGANIZE?–Bankruptcy
doesn’t necessarily terminate the
Plan. If it is fully funded, it would
remain in place.
IS OUR MONEY PROTECTED?
Yes, The Employee Retirement
Income Security Act of 1974
(ERISA) created The Pension
Benefit Guarantee Corporation
(PBGC, available online at
www.pbgc.gov) to guarantee pay-
ment of basic pension benefits
earned by workers.
HOW DOES IT WORK?–If the
employer terminates a Plan in
which it does not have enough
money to pay all benefits owed,
and the employer can prove to
the PBGC that the business is
financially unable to support the
Plan, there would be a distress
termination. If that were to occur,
the PBGC would take over the
Plan and step in to serve as Plan
trustee, supplementing the Plan’s
assets with PBGC funds in order
to make sure that current retirees
and future retirees receive their
pension benefits to the extent
required by law.
WHAT BENEFITS DOES THE
PBGC GUARANTEE?–PBGC
guarantees monthly pension ben-
efits beginning at normal retire-
ment age, certain early retirement
benefits, and spousal benefits
under joint and survivor coverage.
These are subject to federal limi-
tations on the maximum amount
and types of benefits that the
PBGC can guarantee. PBGC does
not guarantee health care, vaca-
tion pay, or severance pay.
WHAT IS THE MAXIMUM
AMOUNT THAT THE PBGC
CAN GUARANTEE?–The maxi-
mum benefit guarantee is set
each year under the provisions of
ERISA. For pension plans termi-
O
Is Our Pension Safe?
by Jill Frank,
APFA Retirement Specialist
nated in 2001, for example, the
maximum guaranteed amount is
$3,392.05 monthly, for a worker
who retires at age 65, with some-
what lower amounts for those who
retire at earlier ages.
ARE THERE OTHER LIMITS
ON THE PBGC’S GUARAN-
TEES?–Yes. For example, if the
Plan was amended to increase bene-
fits within the five years before it
terminated, the PBGC’s guarantee of
the improvements may be gradually
phased in over a five-year period.
IF AN EMPLOYEE IS STILL
WORKING, BUT FULLY VEST-
ED, WILL SHE/HE STILL BE
ELIGIBLE FOR A PENSION?
–The eligibility is the same whether
retired or still employed.
This information is offered to help
educate all of us about the protec-
tions that exist for our money if our
Plan was to terminate. Remember
though, that is not something that
can be arbitrarily done and, if the
Plan were fully funded, it wouldn’t
happen even if American Airlines
were to reorganize in bankruptcy.
While it is understandable that due
to recent events people are con-
cerned about our Plan, at this point
there is no threat to the benefits
provided under the Plan.
This article has been reprinted
at the request of many members
who are concerned about the
security of our pensions.
RETIREMENT OUTLINE
*RETIREE MEDICAL BASED ON MEETING PRE-FUNDING REQUIREMENTS
AGE
SERVICE REQUIREMENTS
BENEFIT
REFERENCE
LOCATION
BRIEF DESCRIPTION
EFFECT ON RETIREMENT
45 – 55
20 YEARS COMPANY
SENIORITY
ARTICLE 30
CONTRACT
A. $25,000
B. LIMITED LIFE INSURANCE
C. $20,000 MEDICAL COVERAGE
D. TEN ANNUAL D2 PASSES
A. ELIGIBILITY TO BEGIN
PENSION TIED TO YEARS OF
CREDITED SERVICE.
B. NO OTHER BENEFITS
50 – 55 RULE
15 YEARS COMPANY
SENIORITY
AGE 50 – 55
RULE
JETNET
ELIGIBILE TO RECEIVE RETIREE
MEDICAL* & TRAVEL AT AGE 55
ELIGIBILITY TO BEGIN PENSION
TIED TO YEARS OF CREDITED
SERVICE
55 RETIREE
10 YEARS COMPANY
SENIORITY
MEDICAL
COVERAGE &
TRAVEL
JETNET
ELIGIBLE TO RECEIVE RETIREE
MEDICAL* & TRAVEL
ELIGIBILITY TO BEGIN PENSION
TIED TO YEARS OF CREDITED
SERVICE
55 RETIREE &
PENSIONER
15 YEARS CREDITED
SERVICE
RETIREMENT
ARTICLE 36
CONTRACT;
SUMMARY PLAN
DESCRIPTION ON
JETNET
A. GUARANTEED ANNUITY
B. RETIREE MEDICAL*
C. RETIREE TRAVEL
D. RETIREE LIFE INSURANCE
A. 3% REDUCTION IN PENSION
PER YEAR UNDER 60
B. FORMULA:
1.667 X FAE X YCS
60 RETIREE &
PENSIONER
10 YEARS CREDITED
SERVICE
RETIREMENT
ARTICLE 36
CONTRACT;
SUMMARY PLAN
DESCRIPTION ON
JETNET
A. GUARANTEED ANNUITY
B. RETIREE MEDICAL
C. RETIREE TRAVEL
D. RETIREE LIFE INSURANCE
FORMULA:
1.667 X FAE X YCS
July 20, 2004
1
FROM STEWARDESS TO RETIREE
(FROM GIRDLES TO PANTYHOSE)
REVISED JULY 2004
By Jill Frank
Retirement Specialist
WHO WE WERE-THE BEGINNING
In the mid 1970’s the Flight Attendants at four major carriers: Pan Am, TWA,
Continental and American Airlines, decided to leave the umbrella of big unions and to
represent themselves with small, independent unions. Thus was born our Association of
Professional Flight Attendants; certified 27 years ago in 1977.
The previous decade had seen gigantic changes in the job: Hired as “Stewardesses” until
we acquired Trans Caribbean Airlines and its “Stewards” in 197O; we were now Flight
Attendants. We “girls only” had been required to wear white gloves, false eyelashes and
girdles. Now we had men in our ranks and panty hose had been invented! You had been
required to be a female between 20 and 25 to get the job, and you knew you would be
forced to ‘retire’ (with NO benefits) when you got married, became pregnant or reached
the ripe old age of 32.
At the time, we were responsible for funding our retirement plan and therefore had been
obliged to decide whether to join or not. It was hardly an issue since you were offered
the opportunity to ‘join’ the AA Retirement Plan ONCE, at age 25, but you needed to
participate for 10 years in order to be vested. Since you were going to get fired at 32 –
you do the math - it becomes obvious that few (if any) had bothered to join.
In 1978 we elected our first APFA National Officers and soon thereafter we entered into
contract negotiations. In the years since APFA was certified we have had six rounds of
bargaining plus the 2003 concessionary agreement. From the ‘pay for your own’ to a
‘fully funded defined benefit plan’ the improvements are significant. A quick review of
the contracts:
WHAT WE’VE DONE-A BRIEF CHRONOLOGY OF RETIREMENT
1979 - The first contract negotiated by APFA.
??For the first time retirement had its own place, Article 36 became the retirement
article.
??American would now fund the plan – no more need to pay ourselves.
??For all those retiring after September 1980 their pension would be calculated at
1 2/3% of the pay for hours up to 67 per month.
2
??F/A’s no longer had to ‘join’ the plan, everyone was automatically enrolled after
the completion of one year of service and those who had never joined were now
members
??The reduction taken when retiring before 62 was favorably changed from an
actuarial table to the present 3% per year.
1981 AND 1983 – A TOUGH TIME IN THE AIRLINE INDUSTRY
Just when we were beginning to consider our job as a potential long term career, along
came the 1980’s, with deregulation and a cry from management for B scale! We spent
the next two contracts trying not to lose the few things we had, but in 1981 we did make
two improvements in retirement. Included in a side letter of agreement known as
Appendix P we were able to negotiate:
??The return of any money that F/A’s had contributed to the plan in earlier years
??Retroactive entry (back to turning 25 and having one year of service) into the plan
for those people who had not joined voluntarily when we were responsible for
funding it ourselves.
For those changes we agreed not to discuss retirement in the next (1983) round of
bargaining!
1987 – REAL BARGAINING RESUMES
By now we had a large number of F/A’s who had been hired under B scale. It was time
to fix that and most of our efforts went towards that goal.
There were two changes to retirement in this contract:
??We increased the number of hours eligible to be considered in calculating our
Final Average Earnings from our base pay of 67 hours to a maximum of 75 hours,
however, the additional 8 hours would only be considered at base pay rates!
??We improved the vesting rules from needing 10 years to being eligible for any
pension to being 50% vested after 5.
1993 – AN INCREDIBLE YEAR FOR APFA BROUGHT SOME SIGNIFICANT IMPROVEMENTS IN
OUR RETIREMENT PLAN
??You would be 100% vested after 5 years, retroactive to 1/1/1989
??All years of credited service were to be restored to those who had not been
eligible to join the plan until they were 25.
??We improved the number of hours that would be considered for your FAE to 77
Domestic and 82 International, and the hours over 67 would be considered at the
incentive rates they were earning!
??Purser pay would included in our FAE
3
1999 NEGOTIATONS – RATIFIED SEPTEMBER 12, 2001
By 1997 APFA recognized that large numbers of the men and women who had begun
this job in the 1960’s and 1970’s would become eligible to retire during the term of our
next agreement. These were the people who had blazed the trail and worked to overturn
the discriminating rules that had prevented this from being a career. It was important to
make their retirement possible with improvements and the opportunity to do so was now!
APFA began research into the retirement plans that other F/A groups and other
employees at American enjoyed. The goal was to bring our Plan up to standard to make
sure we had the best retirement in the industry. We negotiated significant improvements:
??The hours considered for our FAE went to 1020 a year (average of 85 per month)
for both operations to be considered at the pay earned for those hours. This meant
you didn’t have to struggle to hit a certain number every month as before but
could do it in the course of 12 months.
??For the first time the above provisions would be retroactive so that everyone,
including people out on long term sick, who retired after ratification would
benefit from this increase (prior to this contract you always had to fly after
ratification to be covered)
??We also had the policy of months with no pay being dropped from you FAE
written into the agreement.
??Pay prospectively for galley, language, longevity and narrow body lead were
added to Purser for inclusion in one’s FAE. Retroactive monies and lump pay
sums were also to be included.
??Full retirement was available at 60 with 10 YCS.
??The charge for the pre retirement survivor annuity (QPSA) was eliminated.
??A new form of ‘pop-up annuity’ was added to the choices f payments.
??We became eligible for supplemental health insurance
??Active F/A’s who retired within 60 days of ratification could take advantage of
Appendix T and have a $10,000 exit payment.
??Pay for vacation time could be contributed into your 401K
??Sick hours not used prior to retiring would be paid into 401K at $3.75 per hour.
2003 – CONCESSONARY AGREEMENT
Although this was not positive bargaining, we did manage to retain our pension formula
and benefits but the lowered pay will have a negative impact on ones final average
compensation.
2004 – WHO WE ARE AND WHERE WE’RE HEADED
We have been hurt by the events of September 11, 2001 and the downturn in the airline
business. US Air and United have been operating under Chapter 11 bankruptcy and
Delta is still teetering on the edge. American has improved the bottom line but has not
yet emerged as a profitable entity – only the future will tell whether that is possible or
not.
4
The PBGC talks of shortfalls and Social Security is needing attention as least; an
overhaul at most. Our younger, fellow workers talk of giving up a pension plan for more
income now. There are fears of cash balance programs or other corporate shenanigans
which have a negative impact on workers.
APFA has a complicated task to determine what is in the collective best interest of the
many interests of the Flight Attendant corps, then to achieve the best we can in the
current airline environment. Creative solutions must be found to insure we maintain our
existing benefits and find a way to go forward with protection for our hard earned
retirement savings.
Retirement information has become far easier to obtain. Americans website JETNET has
a wealth of personal information. The Flight Service Web Site publishes the number and
names of all Flight Attendants who retire and updates the site on a monthly basis. The
APFA web site has retirement articles and resources. The 401K site has a retirement
planner. Each of us needs to be aware and informed of our existing benefits in order to
evaluate what tomorrows need be.
7/19/2004
1
HOW ARE MY PENSION BENEFITS DETERMINED?
REVISED JULY 2004
In order to maximize your pension benefit you must plan properly. In order to accomplish this
we must first understand how the benefit is determined. In June 2002 I spent two days in TUL
and DFW with the AA people who gather this information and ‘crunch’ the numbers. I went in
thinking all I had to do was translate my HISK (shows monthly hours) into salary and I would
know my Final Average Compensation (FAC). Wrong!
The following is my best shot at describing the way the pension plan and pension system work.
The Contract: The language in the contract (Article 36 I. 1.) reads as follows: “Final Average
Compensation shall be determined by taking the average of the highest paid 48 consecutive
calendar months out of the 120 consecutive calendar months of plan participation preceding the
date of retirement, disability, death or termination of employment disregarding any month in
which the Flight Attendant did not perform duties (or receive credit) for which the Flight
Attendant would be entitled to receive pay.”
How is this applied? Let’s break it down step by step.
STEP 1 – YOUR PAY AND HOURS ARE ACCUMULATED MONTHLY.
Since we receive our base pay for the month in progress (based upon an assumption that we will
work at least 67 hours) but our overtime is paid the following month, the pay numbers gathered
are actually based upon your hours from the current and the previous month. The hours you
worked and the associated pay, both base and incentive, are summed up each month and
recorded in the pension system.
EXAMPLE: You work 90 hours in December. In January you are paid the base pay (70 hours)
for January and the incentive (20 hours) for December. When the pension people calculate your
pensionable earnings, they start out with all of that salary paid to you in January.
The category of pensionable earnings will show the money you were paid for the entire month.
(The following example is based upon our rates of pay effective 5/1/2004 for an international
flight attendant in the 15 + year category).
PAY TYPE HOURS
DOLLARS
BASE 70 $3241.00
INCENTIVE 20 $1065.00
GALLEY 10 $ 8.80
PURSER 80 $ 240.00
TOTAL PENSIONABLE 90 $4554.80
2
STEP 2 – YOUR ELIGIBLE PAY AND HOURS ARE CALCULATED YEARLY:
A. Get an average value for the hours. The base pay for the whole year is added up then
divided by the number of hours that were in that category. The incentive pay (all of it) is
then added and divided by the number of overtime hours flown. What that does is give
you an average value for each base pay hour and an average value for each overtime
hour. That is particularly helpful because many people go through pay step and contract
raises (or fly a mix of domestic and international) at various times during the year. This
method makes sure that it isn’t just the hours earned at the beginning of the year that
count. Now each hour of base pay and each overtime hour are given an ‘average’ value.
B. Credit all eligible pay. The next step is the actual calculation of the eligible pay. The
contract (Article 36 I. 2.) states that, “for purposes of determining pensionable pay, the
following shall be included: longevity pay, narrowbody lead pay, language pay, galley
pay , purser pay, lump sums, retroactive pay and base and incentive pay up to 1,020 paid
flight hours per year regardless of which operation in which the flight attendant serves
during each applicable calendar year, provided that paid flight hours of service paid to
the Flight Attendant at incentive rates in excess of 216 will be credited for this purpose,
and only this purpose, at base rates.”
That means the average value of an overtime hour will be counted for up to 216 hours of
overtime and the average base pay value will be used for up to 804 hours. Then add in the other
forms of pensionable pay (longevity pay, narrowbody lead pay, language pay, galley pay, purser
pay, lump sums and retroactive pay) and you have the total for the calendar year.
STEP 3 – HOW YOU CAN DETERMINE “THE HIGHEST PAID 48 CONSECUTIVE
CALENDAR MONTHS OUT OF THE LAST 120 CALENDAR MONTHS.”
Your total eligible pay for each year will be divided by the number of months you worked to
calculate the value of pay for each month that year. Remember in Article 36 I. 1. where it said
“disregarding any month in which the F/A did not perform duties (or receive credit) for which
the F/A would be entitled to receive pay?” This is the ‘zero’ month concept that you may have
heard reference to.
It means that once the above calculations are done, the year’s activity is looked at (this is the
actual months with activity, not the pay; {the HISK actually comes in handy here}). So, if there
are months with zero activity, they are taken out of the equation.
Now 120 of these ‘non-zero’ months are placed end-to-end and the 48 consecutive that yield the
highest FAC are identified. Those 48 are added up, then divided by 4 and you have now
determined your Final Average Compensation!
3
STEP 4 – CALCULATING YOUR PENSION BENEFIT
1.667% times FINAL AVERAGE COMPENSATION (FAC) times YEARS OF
CREDITED SERVICE (YCS)
1.667% is the contractual value in the pension formula. YCS is based on flying 734 hours in a
calendar year. The FAC has now been added up. If you do the math you determine your annual
pension value.
Your pension benefits are maximized by being paid for as close as possible to 85 hours every
month because the 1,020 maximum paid hours in a year is equivalent to twelve 85-hour months.
If you want to take significant time off, and your goal is to have that least impact on your
pension benefits, it would make sense to drop an entire month (or months) so that they have zero
activity and then will be disregarded when it comes times to determining your 48 highest
consecutive months. (Of course, you may have other reasons for not wanting to do this.)
For those who fly pretty consistently high time, there will be no problem in reaching the 1,020
annual paid hours figure. If you go below 85 paid hours one month, the annual cap allows you
the benefit of flying a bit more the other months to get to the 1,020 annual paid hours cap. For
those who like to fly partial schedules, your pension benefits will be maximized by flying hi-time
some months then zero others, even if you don’t reach the 1,020 annual paid hours figure.
What about the other forms of pay? There is no cap on them, so beginning September 12, 2001
they are included. Prior to that date include only purser and the lump sums and retroactive
monies paid in 2001 and applied to prior years.
Many of us want to be able to verify American’s calculations. The best way to do this is by
keeping good records. Begin now. Print a hard copy of all your pay check stubs and keep them
for at least 10 years. It isn’t a big deal to have a file folder from every year with your HISK, HI-
2’s, and paycheck stubs in it. If there is ever a question, these records could be extremely
helpful. If you fly many zero months, you will need to keep these records longer than 10 years
so that you have records for the final “120 consecutive months” from which the highest
consecutive 48 will be selected.
You can access American’s calculation of your Final Average Compensation on JETNET as
follows:
JETNET
BENEFITS AND PAY
RETIREMENT PLANNING – MY RETIREMENT
REQUEST/VIEW ESTIMATES (complete the fields in Request an estimate then click on
highlighted section under Sate Estimate Created)
PLAN CALCULATION FORMULAS
7/19/2004
