UNDERSTANDING SURVIVOR’S BENEFITS

Although the information contained in this article is believed to be accurate, no warranties are made or implied as to the extent of its accuracy.

INTRODUCTION: 

Are you single, widowed, or divorced and remarried since you retired?  Fortunately or unfortunately depending on your viewpoint, you don’t have a survivor’s benefit and probably little or no interest in what follows.  The rest of you, please pay attention because you do have a common and vested interest in the Delta Pilots Disability and Survivorship Plan & Trust.

HISTORY:

The Delta Pilot Disability and Survivorship Plan (D&S Plan) was established in 1972 to provide disability benefits to disabled pilots and survivorship benefits to the survivors of deceased Delta pilots.  This happened at the same time that the Delta pilots were switching from a two plan A&B retirement plan to the recently terminated FAE Plan.

OVERVIEW OF WHO’S COVERED:

Today, there are approximately 6000 retired Delta pilots.  Included within the 6000 are about 1200 Wallybirds, 700 retired former PAN AM, and a few hundred former Northeast pilots. The rest are retired RD’s. 

In addition to the 6000 now retired, there are also between 500-600 surviving widows of Delta pilots WHO HAVE ALREADY FLOWN WEST.  The vast majority of the 6000 retired pilots have eligible spouses who, if they survive their pilot spouses, will receive benefits from the D&S Trust.

Again, the exceptions are those retirees who are single, divorced, or have remarried.   

DOING THE MATH:

ONLY ABOUT 10% OF THOSE SPOUSES ELIGIBLE FOR SURVIVORS BENEFITS ARE CURRENTLY DRAWING BENEFITS.  That means there is a huge future liability for the D&S Trust.  We estimate that the future liability of the remaining 90 % far exceeds the only other category of benefits, namely those disabled pilots who retired with their disabilities who number about 990.

WAS THE BENEFIT MODIFIED DURING BANKRUPTCY?

NO, it wasn’t. The D&S Plan remains unique in that a benefit is payable to eligible survivors of deceased Delta pilots regardless of the election made relating to payment options under the pilot pension plan (Delta Pilot Retirement Plan).  Survivor’s benefits under the D&S Plan are paid from the Delta Pilot Disability and Survivorship Trust (D&S Trust) and are in addition to any joint life annuity benefits that may be payable from the pilot pension plan.

HOW MUCH CAN A SURVIVING SPOUSE RECEIVE? 

Although there are various formulas relating to the age of the pilot at the time of death and the number of eligible family members, in general an eligible surviving spouse is entitled to a benefit that equals 30% of the pilot’s Final Average Earnings (FAE) if the pilot had at least 25 years of Delta service prior to retiring. For pilots who had less than 25 years of Delta service, there is a ratable deduction. Eligible survivors of disabled pilots receive the greater of (1) the benefit stated in the above or (2) 50% of the LTD benefit immediately prior to the pilot’s death.   

There is a variable portion on one-half of the benefit that increases over time. Indexing of the variable benefit begins as of the pilot’s date of retirement rather than the date of the pilot’s death. 

UP TO DATE ESTIMATES:

It is recommended that you contact Delta (1-800-MY-DELTA) to obtain a current estimate of your survivor’s benefit under the D&S Plan.

HOW SECURE ARE D&S PLAN BENEFITS?

Many retired pilots are asking, “Will the survivor’s benefit payable from the D&S Plan be there when my wife needs it?” That’s a good question and a difficult one to answer. At this point in time, there does not appear to be an immediate threat to pilot retiree benefits under D&S Plan as Delta has not proposed any changes in benefits and the D&S Trust has significant assets. The long run outcome will be determined by a number of factors.  If the following questions could be answered, a better assessment could be made.

1.   What are the present year assets/liabilities of the D&S Trust?

2.   Will the additional $60 million annual expenditure for pilot sick leave and vacation pay threaten the future solvency of the D&S Trust?
 

3.   Will Delta be around to pay the D&S Plan benefits if the D&S Trust assets are depleted?

4.   Do present ERISA laws protect the benefits of retirees against modification?

5.   Will there be future changes to ERISA laws?

6.   Will ALPA negotiate away Delta existing retiree’s benefits under the D&S Plan?

7.   What will be the investment performance of the assets in the D&S Trust?

8.   Will Delta have to seek bankruptcy protection in the future?

9.   Will the future managers of Delta remain committed to the stated intention of maintaining the Plan in force indefinitely?

10. Will unfunded liability be added to the Trust by a merger?