1. What is the difference between a Defined Benefit and a Defined Contribution retirement Plan?

A Defined Benefit (DB) Retirement Plan "defines" the retirement benefit that an employee will receive at retirement. The benefit is (usually) determined by a formula utilizing the components of age, pay and years of service. Under this type of Plan, it is the employer ' s responsibility to insure that the required amount of money necessary to fund the retiree ' s pension benefit is sufficient. Until disbursement to the retiree (or a qualified survivor), all monies belong to the Plan. Defined benefit pensions last for the retiree ' s (or their survivor ' s) lifetime. A retiree can never outlive this type of pension benefit. Defined Benefit Plans are insured (subject to maximums) by the Pension Benefit Guaranty Corporation (PBGC), a federal agency.

A Defined Contribution Retirement Plan such as a 401(k) - "Defines" the amount of money the employer contributes to the Plan. Once the contribution is made, the employer ' s responsibility to the Plan ends. The contributions are deposited into an individual employee account and invested at the employee ' s direction, subject to a limited number of investment options set up by the employer. The amount of the retirement benefit is uncertain and is determined solely by the individual ' s success in investing these contributions. A retiree can run out of money. Defined Contribution Plans are not insured.

Basic differences between the two types of Plans:

	Defined Benefit Plan	Defined Contribution Plan
Employer Obligation:	Funding of Pre-determined Pension Benefit at Employee’s Retirement	Funding of Pre-determined Contribution Only
Plan Assets:	Held in the DB Plan	Held in an individual employee account
Responsibility for Investments:	Employer	Employee
At Retirement:	Employee* receives lifetime pension (*and qualified survivor)	Retirement benefit uncertain (retiree may outlive this money)
Insured:	Yes. Pension Benefit Guaranty Corporation (PBGC)	No

2. What type of pension Plan do the Flight Attendants have?

Flight Attendants have a Defined Benefit Plan that is entirely funded by the employer.

3. Do all Flight Attendants have a 401(k)?

No. Only the Flight Attendants in the following categories have a 401(k) account:

1. Flight Attendants who were employed on 1/1/92 received a (one time) Company contribution of $250 deposited in her/his 401(k) account;
2. Flight Attendants who transferred a 401(k) account from previous employment; and
3. Flight Attendants who have enrolled in the 401(k) with voluntary contributions.

The 401(k) Saving Plan is an additional savings vehicle Flight Attendants may utilize to save for retirement on a tax deferred basis. United makes no annual contributions to the 401(k) Saving Plan.

4. How is the Defined Benefit pension calculated?

Our pension calculation was modified effective with the 2003-2009 Flight Attendant Agreement. Section 34.A.6 of our Contract determines the calculation of our pension benefit by comparing the benefit accrued up to June 30, 2003 under a career earnings formula and the new formula called the final average earnings formula which calculates our benefit based on the highest 5 consecutive years of service in our final 10 years of service.

6. How is my monthly pension benefit determined?

The earnings arrived by the above calculations are divided by 12; Multiplied by the Early Retirement Factor (see question #5), if applicable; and Subtracted by REA* charges, if applicable. The annuity option factors are then calculated.

* Retirement Equity Act (REA) - provides for spousal protection in the amount of 50% of the employee ' s retirement benefit in the event of the employee ' s death prior to retirement. This is an automatic default selection for married employees between the ages of 35 and 49 but an elective option for domestic partners. Married employees who elect to waive this "REA" charge must obtain the written approval from their spouse. There is no charge for this coverage prior to age 35 and after age 49. This is essentially a pension insurance that protects your accrued benefit prior to retirement eligibility and deferred to be paid out of your monthly pension payments.

7. Does United purchase an annuity for me to provide my retirement benefit?

There is no actual annuity purchased by United. The retirement benefit is annuitized, meaning it provides for a stream of lifetime payments to the retiree and a qualified survivor, if any. This is paid directly out of the assets of the Flight Attendant Defined Benefit Pension Plan.

Note: While the concept of providing a lifetime income is the same, do not confuse the United pension annuity options with annuities that may be purchased through insurance companies.

8. What is the difference between service and participation?

Service means periods while receiving pay, including payment for sickness, disability or vacation taken prior to retirement. It also means periods during Company approved leaves. (Section 34.A.3.)

Participation means service on and after the completion of one year of service while pay is or was received from the Company whether in active service or as in sick pay. (Section 34.A.4.)

9. What are pensionable earnings?

Pensionable Earnings
Flight Pay (includes purser, night, galley change, understaffing, holding pay etc.), Sick Pay; Vacation Pay; Training Pay and the lump sum payments are pensionable earnings.

Earnings Not Pensionable
Duty Free commissions; prizes and awards; per diem and ORC expenses; vacation accrual pay after retirement; travel/cleaning/moving allowances; Short Term Disability (STD)* and Long Term Disability (LTD) benefits.

* Short Term Disability (STD) state mandated benefits

10. If I retire early can I defer receiving my pension benefits until a later date?

Yes. But the deferral must not be later than April 1 of the year following the year in which you reach age 70 1/2.

11. I Plan to retire after my birthday at age 62. Will there be a reduction in my pension?

No. There will be no reduction upon retirement at or after age 60. (Section 34.A.7.)

12. May I take my Defined Benefit pension in a lump sum?

No. There is no lump sum provision in the Flight Attendant Defined Benefit Plan. However, a Flight Attendant may receive a lump sum only if their entire vested benefit is $3,500 or less.

13. How is my vacation calculated during the year I retire?

A retiring Flight Attendant receives vacation credit only for the calendar months worked in the year of separation. The following is an example based upon the 2005-2010 Agreement:

A Flight Attendant with 32 years of service chooses to retire October 1, 2005.

	40 days (accrued vacation days for 30 years of service)
÷	12 (months of the year)
=	3.33 (days accrued days per month)
x	9 months (January – September months worked in 2005)
=	30 days of 2006 vacation
x	2.6 hours per day
=	78.00 hours of 2006 vacation pay
x	$37.08 domestic hourly rate (determined by the majority of trips flown the 5 months prior to retirement)
=	$2,892.24 (total pay for 2006 vacation accrued in 2005)

The Flight Attendant will be paid this amount, less taxes, in a separate check.

Note: Monies for unused vacation days paid to a Flight Attendant after retirement are not pensionable or covered by the PBGC guarantee.

14. If the PBGC takes over the Flight Attendant Defined Benefit Plan, how will my benefit be calculated?

The PBGC will calculate your benefit subject to the rules and using the factors of the Flight Attendant Defined Benefit Plan. If a Plan terminates prior to the date at which you become eligible for a pension subject only the early retirement factors (age 55 with 10 years of service OR age 50 with 10 years of service for the pension earned prior to July 1, 2003 and age 55 with 10 years of service for the pension earned after June 30, 2003), the PBGC will calculate your benefit as if you have terminated your employment on the Plan termination date and your benefit will be subject to the vested terminated reduction factors applicable in Section 34.A.8. of our Contract. (See question #22 and #23 for more details)

You will receive your entire United pension benefit or the PBGC guaranteed maximum, whichever is less. If you would have been eligible to start taking your pension benefit at age 50 (the benefit frozen on June 30, 2003), then the PBGC will start paying out at age 50 if you elect to do so. If you fall under the Plan retirement eligibility age of 55 (2003-2009 Flight Attendant Agreement), then the PBGC will start paying at age 55 if you elect to receive benefits then.

The PBGC maximum benefit is the guaranteed maximum for the respective ages on the PBGC chart for the year in which the Plan terminates.

15. How much notice will I get if the Flight Attendant Defined Benefit Pension Plan is terminated?

When a Plan is terminated, the required notice for a standard or a distress termination is 60 days. If the PBGC terminates the Plan no such notice is required.

16. Will the PBGC offer the same annuity options as United?

PBGC Annuity Options for forms of monthly benefit payments:
Straight Life Annuity; Certain and Continuous Annuities for 5,10, 15 years; Joint and 50%, 75% or 100% survivor Annuities and Joint and 50% survivor "pop-up" Annuity. These annuities are calculated using PBGC annuity factors.

United Annuity Options for forms of monthly benefit payments:
Straight Life Annuity; 10 Year Certain Annuity; Level Income Option; Joint and 50%, 66 2/3% or 100% survivor Annuity and Joint and 50%, 66 2/3% or 100% survivor “pop-up” Annuity.

17. Why is the Level Income Option feature not offered as an option with the PBGC?

The Level Income Option feature is essentially an "advance" from United against your future Social Security benefits. The PBGC only insures the pension benefit not any "advance/loan" type of provision that may have been offered by the employer.

If there is a termination of the Flight Attendant Defined Benefit Plan, the PBGC will however, honor the Level Income Option feature for current retirees already collecting their pension under this option. Both the annuity option and the level income option will be recalculated using PBGC factors. The retiree will receive the lesser of the PBGC maximum benefit or the United benefit with the level income option feature.

18. May I change my annuity election if the PBGC takes over the Flight Attendant Defined Benefit Plan?

No. Annuity options and contingent annuitants remain unchanged.

19. If I continue to work at United after the Plan is terminated will I be able to increase my benefit?

No. Continuing to work (at United) after the Plan terminates has no effect on the amount of your guaranteed benefit.

20. Can I collect my early retirement benefit when I'm eligible while I'm still working at United?

No. You must stop working for United to receive the early retirement benefit.

Note: Once you reach your normal retirement age (age 65), you can begin to receive your pension from the PBGC.

21. Does the PBGC's 20% "phase-in" schedule for pension improvements within the last five years apply to the Flight Attendant Defined Benefit Plan?

No. The last improvement to the Flight Attendant Defined Benefit Plan was in October 2, 1997. The modification to the Flight Attendant Pension Plan effective on July 1, 2003 with the 2003-2009 Flight Attendant Agreement created a pension Plan funding savings for United because it was highly unlikely that any Flight Attendant at or near retirement eligibility would accrue a greater pension benefit for at least six years from the effective date of the Plan modification.

22. What is the difference between a Plan participant who is eligible to retire and a terminated vested participant?

A participant who is eligible to retire meets the age and service requirement -- age 55 and 10 years of service or age 50 and 10 years of service as of May 1, 2003 -- for early retirement.

A terminated vested participant meets the vesting requirement of 5 years of service but terminates employment with United before meeting the age and eligibility requirement for early retirement as defined above. The Flight Attendant Pension Plan states that a vested terminated benefit is subject to different reduction tables, depending on date of hire.

Vested Termination Adjustment Factors Chart

(Representing Percentage of Vested Benefit to Be Paid at Age Benefits Begin)

Participants Age at Date Benefits Begin	Hired After March 31, 1980	Hired Before April 1, 1980
65	100	100
64	92.8	100
63	85.6	100
62	78.4	100
61	71.2	100
60	64.0	100
59	60.4	94.0
58	56.8	88.0
57	53.2	82.0
56	49.6	76.0
55	46.0	70.0
54	43.6	66.4
53	41.2	62.8
52	38.8	59.2
51	36.4	55.6
50	34.0	52.0

23. I am age 45 and I was hired on June 1, 1985. What happens to my pension benefit if the Plan is terminated before I reach age 55?

The PBGC will determine a Flight Attendant’s pension benefit in accordance with the Plan provisions and as though employment was terminated on the Plan termination date.  In other words, once a Plan terminates, all active employees are considered to have terminated employment on that date.  It does not matter whether you continue working after the Plan termination date, your PBGC benefit and your retirement eligibility are both determined on the Plan termination date.

If you continue to work until age 50, you would be eligible to receive the benefit accrued up to and frozen on June 30, 2003, but only 34% of the benefit would be payable to you because your benefit would be subject to the Vested Terminated Adjustment Factors. (See chart above)

If you continue to work until age 55, you would be eligible to receive 46% of whichever is greater:

1. the benefit accrued up to and frozen on June 30, 2003, or
2. the benefit accrued up to the Plan termination date calculated on the final average earnings formula. (See question #4)

Plan Termination and Replacement Would Have a Greater Affect on Flight Attendants Furthest from Retirement

Our pension benefit is based on our modest salaries as Flight Attendants. However, it represents an indispensable portion of our individual expected retirement income. Particularly with the onset of recent wage concessions, it is unlikely that we would be able to compensate for the loss of the defined benefit through other means of saving for retirement. The Defined Contribution Plan that United is proposing to substitute for the Defined Benefit Plan, according to United’s own calculations, would yield only a small fraction of the benefits that the Flight Attendant Pension Plan is designed to provide.

Pension Benefit at Age 56 in a Termination and Replacement Scenario

This graph is compiled from assumptions used by United Airlines as management presents its comparison of pension benefits to the court. United’s assumptions include a 4% annual increase in wages, a 7.5% return rate on investments in the Defined Contribution Plan, and a 3% contribution rate as defined in their term sheet. Even as we use United’s assumptions to compare our Defined Benefit Pension Plan with termination and replacement of a Defined Contribution Plan, we learn that 9,879 Flight Attendants who are active Plan participants today would earn a pension benefit that is less than half of what they would have otherwise earned if the Defined Benefit Pension Plan remains intact.

Those Flight Attendants who stand to potentially gain from this scenario are still active, but are currently eligible to retire. Although any improvement would be minimal, this scenario does contemplate a potential gain for these Flight Attendants since their pension benefit was frozen on July 1, 2003 and it would be several years before they could earn a greater benefit under our Defined Benefit Plan.

The demographic of Flight Attendants who stand to lose over 50% of our pension benefit includes those who are furthest away from retirement eligibility. This group includes the Flight Attendant who is age 45 today with 20 years of service. It includes the Flight Attendant who is age 35 today with 10 years of service. It most certainly includes the Flight Attendant who is in his or her 20’s today with about 5 years of service along with any Flight Attendants hired in the future. The potential for individual and collective loss is massive. Plainly, it would be one concession too many.

Stay informed between now and May 11, 2005. Together, we will save our careers.