DLax85

We are all familiar with the fact the current A fund has not been raised since 1999

We’ve been told it’s too expensive to raise it, and increased PBGC costs are one of the main reasons

However, if we look at the past & current FedEx Pension Fund “Expected Reurn on Assets”, we see that the FedEx accountants & actuaries have been forced to use lower, and lower forecast rates of return to realistically and legally calculate their contributions

At times, these values are published in FedEx investor articles and are also published in public accounting documents

A few simple Google searches reveal these #s:

FY 2002 - 10.9%

FY 2003 - 10.1%

FY 2004 - 9.1%

FY 2009 - 8.5%

FY 2015 - 7.75%

FY 2016 - 6.5%

The lower these “Expected Return on Assets” go, the more expensive our A fund becomes - but from our prospective the MORE VALUABLE!

What does this downward trend tells about how FedEx accountants and actuaries view future market returns?

(Realize pension funds are typically much more “bond heavy” then a typical long term, retirement savings portfolio. Pension fund managers must generate income which matches monthly payouts to retirees)

What “Expected Return on Assets” will the new Variable Benefit Plan assume to calculate Fedexs required (BUT NOW FIXED) annual contributions?

Will FedEx be allowed (or required) to adjust this over the life of the plan?

What will be the plan “hurdle rate”?

What will be the “consultants” Expected Rates of Return on Assets” when they provide us with the software to calculate our individual payout forecasts under the new plan?

Will that differ from FedEx assumption? If so, how & why?

The accountants put a lot of very important information in the “notes /appendix sections”

Let’s read them