Continental Pilots Retirement Plan
CPRP
The Continental Pilots Retirement Plan (CPRP, A-Plan., formerly CARP.), like pension plans offered by many major companies, is a Defined Benefit Plan, whereby the plan defines the benefits you receive when you retire. At retirement, the A-Plan allows you to elect to receive an annuity (there are several payment options to consider) or to receive a lump sum distribution.
The pilot benefit formula under the CPRP is complex and is determined by many factors, including your Final Average Compensation (FAC), which is the highest consecutive 60 months out of your last 120 consecutive months, years of Credited Service, your age when you collect and the assumptions set by the Internal Revenue Service (IRS).
As you may know, the plan was frozen as of May 31, 2005. Therefore, your accrued benefit will be based on factors such as your Credited Service and FAC as of the freeze date. Changes in the lump sum factor and early retirement reductions will still apply after the freeze date.
Based on the new Pension Protection Act (PPA), the CPRP changed how it calculates lump sum payments in January 2009. In addition, the life expectancy tables have been updated to reflect longer life expectancies. Prior to this law change, lump sums were calculated using the 30-Year Treasury Rates.
Please note: The CPRP does not provide any survivor benefit for your spouse or contingent beneficiaries other than the lump sum or fixed benefit annuity that you elect at retirement. For this reason, it is important for you to review both your life insurance and estate planning needs as you approach your retirement decision.
Defined Contribution Plan (“B-Plan”)
The Continental Pilots Defined Contribution Plan (.B-Plan.) is a money purchase, defined contribution pension plan. This new plan, effective July 1, 2005, allows pilots to continue receiving retirement benefits after the freeze of the A-Plan.
The new B-Plan is a self-directed account with investment options similar to those available under the 401(k) Plan. In addition to the current mutual funds that are available, there is also a new brokerage account option under the B-Plan and 401(k) Plan. This option allows participants to invest up to 100% of their total account balance in other mutual funds and individual stocks. Charles Schwab is the administrator for the B-Plan and 401(k) Plan.
Continental will make monthly contributions to each pilot’s account in an amount equal to 12.75% of the pilot’s compensation each month. Company contributions to the B-Plan are tax-deferred and eligible for rollover when you retire.
Pilots 401(k) Plan
Your 401(k) is also a defined contribution plan and pilots have an opportunity to contribute their own money to it. Continental no longer provides matching contributions after the A-Plan freeze date of May 31, 2005. However, the new Pilots 401(k) Plan does provide for annual variable contributions from the company ranging from 0%-6% of a pilot’s compensation. The percentage is determined by the company’s pre-tax income.
The amount pilots can contribute to the 401(k) Plan is limited by the IRS. In 2009, you are eligible to contribute up to $16,500, plus an additional $5,500 if you are age 50 or older. These limits are adjusted annually by the IRS, based on inflation
Please contact us for more information.
