Starting next year, FedEx Corp. will make changes to its pension program, effectively capping benefits so it can shift employees into a “cash balance” system it established in 2003, as well as 401(k) retirement plans.
The company stressed that it expects to spend about the same amount on its employees’ retirement plans over the long run as it would have spent under the current plan.
Under the new program, FedEx said most eligible employees participating in the company’s traditional pension plan would begin accruing future benefits under a cash balance formula (called a Portable Pension Account), effective June 1, 2008. Any benefits already accrued under a traditional pension benefit formula will be capped as of May 31, 2008 and will be payable monthly at retirement.
FedEx said the new approach to pensions resulted from changes in company accounting rules; establishment of the federal Pension Protection Act; and the fact that retirees are living longer, generating the need for more flexible retirement plans.