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Hawker Union Members To Vote On Pension Plan Changes

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UPDATE: Thursday, August 23, 2012

Machinists union members at Hawker Beechcraft will vote this week on proposed changes to their pension plan. It’s all a part of Hawker’s bankruptcy.

The vote comes after the company filed Chapter 11 bankruptcy in May. The employees have told KAKE News and the Union that they have been concerned about their pensions since the filing. Machinists will vote on whether to preserve the existing defined benefit pension plan. New hires at Hawker would not be included.

Hawker released the following letter Thursday:

"After productive negotiations with the Pension Benefit Guaranty Corporation (PBGC), our lenders and union leaders, we have reached an agreement in principle on an approach to address our pension plans within the context of our restructuring efforts. Under the terms of this agreed approach, we estimate that 100 percent of union plan participants and more than 99 percent of non-union pension plan participants will receive the full amount of pension benefits that have already vested."

"According to the terms of our agreed approach, accrued retirement benefits for participants in our hourly/union plan will remain the responsibility of Hawker Beechcraft. The agreement with the union is subject to approval by its membership."

"Hawker Beechcraft will seek permission from the bankruptcy court to 'terminate' the base and salaried plans. 'Plan termination' is the legal term used to describe the process by which the PBGC assumes administration of a pension plan if the employer is in financial distress and the plan does not have enough money to pay all pension benefits owed to participants. The PBGC is a government agency that pays monthly retirement benefits when an employer is no longer able to do so. Hawker Beechcraft, like many other companies, has paid the PBGC premiums over the years to insure our pension plans and protect the retirement security of our employees and retirees."

"Following termination, the PBGC will pay benefits to vested participants in the base and salaried plans in much the same way we do. The precise benefit you ultimately receive will be subject to the specifics of your situation and relevant PBGC rules. However, as an example, an individual retiring at age 65 who does not elect survivor benefits could receive up to $56,000 per year. The agreement with the PBGC is subject to documentation acceptable to the parties and approval by the Bankruptcy Court."

"The company currently utilizes a defined contribution plan, known as Retirement Income Savings Plan, for employees hired after Jan. 1, 2007. Going forward, Hawker Beechcraft will provide all employees with contributions to a defined contribution plan in lieu of future contributions to the pension plans. Over the coming months, every employee will receive information about this plan and details about their individual benefits."

"We are in advanced negotiations with Superior Aviation Beijing Co., Ltd., regarding the terms of the potential acquisition announced in July, and Superior supports the agreement in principle with the PBGC and Hawker Beechcraft’s proposed new defined contribution plan. We are confident that any final agreement with Superior will result in these agreements being fully honored and preserved."

UPDATE: Wednesday, August 22, 2012

Machinists union members at Hawker Beechcraft will vote this week on proposed changes to their pension plan. It’s all a part of Hawker’s bankruptcy.

The proposal machinists will vote on would prevent termination of the existing defined pension plan. But there would definitely be changes.

"It's not perfect, but it's better than what we thought we were going to get."

Hawker employees like Carmelita Brooks seem to know their expectations can’t be too high when the company they’re working for is struggling to emerge from bankruptcy. Ever since the May filing, one concern among employees is what might happen to their pension.

The machinists union and the company have been quietly negotiating this proposal, which will freeze the current pension at the end of the year. The pension would then change to a 401K contribution plan.

"It's different than the current plan we have out there, which is a defined benefit plan,” says Machinists Union President Frank Molina, Jr. “Now what we're going to is a defined contribution."

Though different, Molina says.

"It is a decent retirement program, and the rest of the retirement programs, the 401K's will still be in place," says Molina.

"The termination of a defined benefit plan is a serious blow to active as well as retired employees," says Machinists Union Spokesman Frank Larkin.

And because that would be avoided, the union sees this as a positive development.

Union leadership is recommending approval. Members will decide in a Friday morning vote at Hartman Arena.

Hawker employee Nancy Bugner says, "It's sad the company had to end this way but I guess it is what it is."

"I think, for the most part, it's going to be a good deal,” Brooks says. “They're not taking anything away from us, so that's a good thing."

Molina says if voted down, it could change everything. There’s speculation the door could be opened for an acquiring company to make other contract changes.

Wednesday, August 22, 2012

Union members at Hawker Beechcraft are expected to vote this week on a new pension proposal.

In a press release Wednesday, The International Association of Machinists and Aerospace Workers announced that the vote is scheduled for Friday.

The vote comes after the company filed Chapter 11 bankruptcy in May. The employees have told KAKE News and the Union that they have been concerned about their pensions since the filing. Machinists will vote on whether to preserve the existing defined benefit pension plan. New hires at Hawker would not be included.

If the measure is approved, a bankruptcy judge still must rule in favor of the pension plan changes.


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