The IAM believes that all employees deserve traditional defined benefit pension plans. But if the Continental-United merger is completed, the IAM has serious concerns about the ability of the Continental Airlines Retirement Plan (CARP) to survive with flight attendants continuing to accrue benefits.

While in bankruptcy, United cut a deal with the Pension Benefit Guaranty Corporation (PBGC), the government agency that insures defined benefit pension plans, to terminate all of United’s pension plans. As part of the arrangement, United was prohibited from establishing any new pension plans for a ten-year period, ending in 2015. 
It is not clear if the PBGC would allow United to continue CARP post-merger.

Outside of bankruptcy, a company sponsoring a pension plan cannot simply terminate and walk away from the plan. All vested benefits must still be paid. However, the plan could be frozen, meaning participants will no longer earn additional benefits, but vested benefits would be paid upon retirement in accordance with the plan's provisions.

CARP currently allows flight attendants the option to take their pension benefits in a lump sum. If CARP is frozen, the lump sum option will remain for vested benefits.

Some have asked if they should retire before a merger is completed so they can preserve their lump-sum option. The Machinists Union cannot advise members when or if they should retire. We can only present you with your options as they stand today, and offer the facts about what will happen in the future as we get them. Acting on rumors or speculation can have long-lasting consequences, so everyone should ensure that any decision they make is an informed one.
If CARP is frozen, your IAM contract requires Continental to automatically begin contributing to the IAM National Pension Plan (NPP) on your behalf going forward.  However, control of CARP and the responsibility to pay your previously vested CARP benefits will remain with the company. 

NPP rules allow any flight attendant who is vested in CARP to be immediately vested in the NPP after earning a benefit. Newer employees who have been in CARP for less than 5 years will get credit for their time in CARP that goes toward the normal 5-years vesting in the NPP. For example, a flight attendant who has been at Continental for 3 years only needs 2 additional years in the NPP to receive a vested benefit.

Because no single employer controls the IAM’s NPP (it is governed by an equal number of employer and employee representatives), the Machinists Union successfully negotiated the NPP to replace the failed United plans for IAM members – an agreement that was “blessed” by PBGC. United’s flight attendants, however, are not IAM members and were left without any pension. In fact, the only employees at United still earning a government insured, defined benefit pension plan are IAM members.

But since both United and the PBGC have approved the NPP for United’s current IAM members, the NPP can be put in place if the IAM remains your post-merger collective bargaining representative, even if CARP is frozen after the merger.

You can print a PENSION flyer below.