American Airlines plans to freeze pension plans for its 10,000 pilots, which stops any funds from accruing for the employees towards their retirement, according to the Dallas Morning News.
Before deciding to freeze the pensions, American Airlines considered terminating them altogether. Employees would have seen cuts in their pensions upon retiring if the plans were terminated.
“The freeze will preserve our pilots’ accrued A Plan benefits and will require continued plan funding,” the Allied Pilots Association, the union for American Airlines pilots, told the Dallas Morning News. “The APA leadership has consistently expressed support for a plan freeze versus plan termination, with APA Government Affairs Committee representatives actively lobbying in favor of amending the ‘anti-cutback’ rules.”
American only agreed to a freeze rather than a termination after the U.S. Treasury and the IRS eliminated a clause that allowed employees to take their pensions in a lump sum.
“As we’ve said since March, we are committed to working collaboratively with the Allied Pilots Association, Pension Benefit Guaranty Corporation and Unsecured Creditors’ Committee to develop a solution that maintains the freeze of our pilot defined benefit plan,” Bruce Hicks, a spokesman for American Airlines, told the Dallas Morning News.