Unfortunately many are missing the point. This is about securing gains for those retiring under this contract. End of discussion. The only thing left to discuss is who pays for those gains.
Fedex would never consider increasing benefits between contracts, unless it benefits them either monetarily or by securing operational stability. What if we as a pilot group simply said to Fedex, please give more to those retiring under this contract. Nothing for anyone else. We would be laughed out of the room.
So how are gains secured. By releasing the company from their obligated debt, yet to be incurred, secured by this contract. These gains are significant and require Fedex to make substantial payments into the retirement fund to fully fund the retirement obligation or pay significantly increased penalties for underfunding. Second, by assuming risks now totally incurred by the company. Third, by creating a Variable Plan, releasing them of any penalty payments due to underfunding. Such a plan would most likely have a hurdle rate in excess of 5.5% to preclude costs and penalties associated with a hybrid plan. That, in addition to lost capital in the form of total fund management costs, estimated at between 2%-4%, requires high rates of return for the plan to meet long term payout projections. Certain stabilizing mechanisms can be put in place to reduce fund volatility. However, those cost money, and who pays these expenses?
If this was just about increasing retirement benefits, we could explore avenues already mentioned in many of the previous posts on retirement. Unfortunately, that does not address the real reason we are pursuing retirement changes at this specific time.