Originally Posted by
NotMrNiceGuy
You’re mixing up “company contributions” with the economic cost of a pension. A pension doesn’t become cheap just because discount rates are temporarily high and FedEx hasn’t had to write a check. That only means the plan is currently overfunded, not that it is cost-free.
Here are the numbers on a rounded basis:
1. Pilot pension service cost (new benefits earned each year):
≈ $85 million per year (about 10% of the total annual pension cost of $768 million from the 10-K)
2. 11% DC cost from the last TA (capped):
Pilot payroll ≈ $1.76B (estimate from future TA)
11% DC = $193.6 million per year
Yes — the DC costs more today. But that’s not the real comparison.
The real cost of the pension isn’t “what FedEx contributed this year.” The real cost is the future liabilities created.
3. Each year of pilot accrual creates:
175–200 new retirees
$120k/year average pension
19 years of payments = $400–450 million of new long-term liabilities created every year.
4. Over 20 years that is: ≈ $8–9 billion in new obligations.
Freezing the pension stops that liability growth. That is the economic savings.
I think you need to look at the funding requirements for the pension. Currently, our pension is fully funded to meet its future obligations. The company does not put the money into the pension for each person as they retire. That is not how it works by law. Every pilot on the seniority list or who was vested in the pension and left is already counted as part of their future liability.
Again, we have pilots retiring every year, so why hasn't the company been required to make contributions to the pension since before 2020? Because those pilots retiring are not new obligations.