Methinks yours makes you blind:

Work & Life: Executives insulated from NWA pension fears
H.J. Cummins, Star Tribune
August 11, 2005 WORKANDLIFE0811
Page: 1 2




One person who doesn't have to worry about the future of his Northwest Airlines pension is former CEO Richard Anderson.

When Anderson left the company last year, he took his pension with him in the form of a check for $3,028,700.

Such lump-sum payments are not available to Northwest mechanics, pilots or other union workers at the airline, who receive one pension from the company.

Anderson's check covered three separate pensions that he received from Northwest: the regular pension plan, his excess pension plan and his supplemental executive retirement plan, or SERP as they're known in the business world.

This is not to pick on Anderson. Top executives at Northwest still have these three pensions, including new CEO Doug Steenland.

This is not even to pick on Northwest. Executive pensions this size are standard across U.S. corporations.

But Northwest's retirement plans, and how they fit into its cost-savings efforts, is a central fairness issue to the Aircraft Mechanics Fraternal Association, which is heading toward an Aug. 19 strike deadline. Northwest wants to slash worker compensation by $1.1 billion a year and replace traditional pension plans -- which pay a set amount each month -- with a plan that includes a 401(k) match.

Northwest's pension plans for all union and nonunion workers are underfunded by about $3.8 billion. It has warned that it may have to file for bankruptcy protection unless it gets help from both Congress and its unions.

401(k)s replace some pensions

The situation is fluid. At the end of this month, for example, the pensions of salaried workers will be frozen and replaced with 401(k)s. That's what management wants its unions to accept, too, and some have indicated a willingness to negotiate that possibility.

Union workers at Northwest have a pension based on years of service. For AMFA members -- mechanics, custodians and cleaners -- that amounts to $85 a month for every year they work, Local 33 President Ted Ludwig said. A mechanic who retires at 65, after 40 years at Northwest, will collect about $40,000 a year.

Northwest's salaried -- nonunion -- employees have been covered by a regular pension plan that pays them 60 percent of their top 60 consecutive months of work, though the maximum salary for the purposes of calculating a pension is set by the federal government. Last year it was $205,000, or less than half of Steenland's 2004 salary.

Northwest's excess pension plan exists to cover salaries above that $205,000 federal limit. Steenland and three other executives are covered by the excess plan, the company explained in its 2005 proxy statement.

The supplemental plan, or SERP, adds multipliers to boost the pensions for four top executives, the proxy says.

For example, it credits Steenland with 15 years of service for every five he works. It also pays him pension credits at twice the rate applied to regular salaried workers.

The proxy estimates that Steenland's combined pensions, if he retires at 65, will be $947,417 a year.

Northwest declined to say Wednesday whether the additional pension plans for Steenland and other executives will be subject to the freeze that will be imposed on the plans of salaried workers.