Jazz Pension Question

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Bede
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Jazz Pension Question

Post by Bede »

Question re Jazz pension: assuming a pilot started Jazz at age 30, when he retired at age 60 how much would he get per month? How about retiring at 65?
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swervin
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Re: Jazz Pension Question

Post by swervin »

At current pay rates for Captains after 30 years of service, you would make about $68,000 a year if you go at 60. With 35 years it's about $84,000 a year. That using the current Pension cap as well. Had one of the union guys calculate it for me.

Swervin
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The Raven
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Re: Jazz Pension Question

Post by The Raven »

swervin wrote:At current pay rates for Captains after 30 years of service, you would make about $68,000 a year if you go at 60. With 35 years it's about $84,000 a year. That using the current Pension cap as well. Had one of the union guys calculate it for me.

Swervin
According to my financial advisor you would need to save almost 2 million dollars to provide yourself with an income like that in retirement if you didn't have a pension. Not a lot of people have the discipline to save that kind of money over their career.
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Bede
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Re: Jazz Pension Question

Post by Bede »

Is that in 2011 dollars or is it indexed to inflation?
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Bede
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Re: Jazz Pension Question

Post by Bede »

OK, that's about identical to what you'd get at WJA if you did 10% ESP or 20% ESP and took half out every year.
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The Raven
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Re: Jazz Pension Question

Post by The Raven »

Bede wrote:OK, that's about identical to what you'd get at WJA if you did 10% ESP or 20% ESP and took half out every year.
I don't know too much about how it's done at Westjet. I imagine that if you are financially savy and a disciplined investor you can do better than a defined benefit pension plan. I, on the other hand, am not terribly bright when it comes to investing so am happy to have my money in a defined benefit plan and let the professionals look after it. After 36 years at AC my pension will be $120,000 per year.
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Joe Blow Schmo
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Re: Jazz Pension Question

Post by Joe Blow Schmo »

The Raven wrote:
swervin wrote:At current pay rates for Captains after 30 years of service, you would make about $68,000 a year if you go at 60. With 35 years it's about $84,000 a year. That using the current Pension cap as well. Had one of the union guys calculate it for me.

Swervin
According to my financial advisor you would need to save almost 2 million dollars to provide yourself with an income like that in retirement if you didn't have a pension. Not a lot of people have the discipline to save that kind of money over their career.

I'd find yourself a new financial advisor.

If I were 65 right now with $2 million, invested at a modest 5% rate of return, I could pay myself $80,000/year and increase it for inflation at 3%/year and live a VERY long life. I would be 81 years old before my account balance dropped below $2 million. If I were to find the fountain of youth and achieve immortality, I could pay myself $62,000/year, increased for inflation at 3% year and live forever.

Adjusting for inflation at 3%/year and investing at 5% rate of return I could pay myself:

$150,000/year and run out of money at age 81 (The average life expectancy in Canada in 2009 was 81.2 years)
$120,000/year and run out of money at age 86

So with $2 million in the bank at age 65 I can retire on a salary almost double what a Jazz pension pays, AND I can increase that salary by 3% / year to make up for inflation. Doing that, I will be able to live to the average age of death in Canada (which is what the Jazz pension formulas will be based on).

Jazz' pension is not inflation adjusted. So if I just paid myself $80,000/year, I would only need $1 million to be able to afford to live to age 85, or $1.2 million to be able to afford to live to 93.

If you start with nothing, and invest $500/month from age 30 to age 65 at an average of 8%/year, you'll have $1.1 million at age 65. If you invest through an RRSP, you'd get ~$150-200/month of that back from tax savings, so it would only cost you $300-350/month. If you double your investment to $1000/month, you'll have $2.2 million at age 65.

If you start by investing $500/month for the first 10 years (while you're an FO) then increase it to $1000/month for the last 25 years (when you're a Capt), you'll end up with $1.55 million.

DB pension plans aren't all they're cracked up to be.
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CanadianEh
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Re: Jazz Pension Question

Post by CanadianEh »

Joe Blow Schmo wrote:DB pension plans aren't all they're cracked up to be.
Are you sure you don't mean DC? DB pensions are pretty sweet...
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Franky Jr
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Re: Jazz Pension Question

Post by Franky Jr »

DB's have their advantage, if you were about to retire in the spring of 2008 with your personal DC and then your 2M went to 1M you would be a little grumpy. Under the the DB the company takes that risk for you. ( which creates its own set of risks ) so really each to his own.
I don't think anybody needs a new investment adviser because most adviser's use a 4% w/d rule of thumb which does value a Jazz pension at very close to 2M. (provided you work more than 30 years)
And yes the Jazz pension is indexed to inflation. It may have not used to be, but it is now.
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Maxpwr
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Re: Jazz Pension Question

Post by Maxpwr »

The Jazz DB bennefits are NOT indexed for inflation...only the formula used to calculate the maximum benefit is indexed. Thus we do not have a "Cadilac" pension but rather a pretty good "Honda" pension so to speak.
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WetJet
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Re: Jazz Pension Question

Post by WetJet »

Joe Blow Schmo wrote: I'd find yourself a new financial advisor.
That's some good info Joe, can you post a link to the calcualtor you are using?
Thanks.
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Joe Blow Schmo
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Re: Jazz Pension Question

Post by Joe Blow Schmo »

WetJet wrote:
Joe Blow Schmo wrote: I'd find yourself a new financial advisor.
That's some good info Joe, can you post a link to the calcualtor you are using?
Thanks.
I used this:

http://www.blogcdn.com/www.tuaw.com/med ... 080609.jpg
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D-Iced
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Re: Jazz Pension Question

Post by D-Iced »

HA! :lol: Thats funny. Thanks for that :wink:

... and your math looks sound to me.
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Stinky
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Re: Jazz Pension Question

Post by Stinky »

If I were 65 right now with $2 million, invested at a modest 5% rate of return, I could pay myself $80,000/year and increase it for inflation at 3%/year and live a VERY long life
If you were retired right now you wouldn't be getting a 5% rate of return.
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khar
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Re: Jazz Pension Question

Post by khar »

Hey everyone,

Quick question: Is there some type of agreement to roll the Jazz pension over to Air Canada should you make the hop?

Thanks.
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Warden
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Re: Jazz Pension Question

Post by Warden »

khar wrote:
Sat Jul 27, 2019 8:51 am
Hey everyone,

Quick question: Is there some type of agreement to roll the Jazz pension over to Air Canada should you make the hop?

Thanks.
Not yet, as it's not really a DC pension here. Apparently they are working on it, but mine is just sitting in an RRSP at my bank.
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