I think we’re getting closer to the real disagreement — and I appreciate the back-and-forth. Let me try to explain the funding side in a simple and respectful way, because I think we’re talking past each other on what “cost” actually means.

I’ll concede that the company does not put new money into the pension every time a pilot retires.

That’s correct, and I agree with you.

However, company contributions have almost nothing to do with the economic cost of the pension.

They are driven by three accounting levers:

1. Discount rate
2. Expected long-term return on assets
3. Service cost

This is where the misunderstanding/miscommunication is happening.

The discount rate is basically the interest rate the actuaries use to convert future pension payments into a “today” number. This is the biggest lever affecting the pension.

• When discount rates go up, liabilities look smaller, so the plan looks fully funded even if nothing changed.
• When discount rates go down, liabilities jump billions, and suddenly the plan needs cash.

This is why FedEx hasn’t contributed since 2020:

Discount rates rose sharply, which made liabilities appear smaller on paper.

It doesn’t mean the pension is “cheap.”

It means interest rates temporarily made the numbers look good.

2021 – 2.92%

2022 – 4.92%

2023 – 5.22%

2024 – 5.74%

These come from the 10-K, “Retirement Plans”. “The discount rate used in valuing the US Pension benefit obligations was 4.92%.”

This was largely a function of the post-COVID inflationary environment and the resultant federal reserve actions.

Next is the Long Term Return on Assets. FedEx assumes the pension investments will earn about 6.5% per year forever.

This assumption directly reduces the required contributions:

• Higher expected return = lower required contributions
• Lower expected return = higher required contributions

Again, this is an accounting lever, not a measure of the plan’s underlying cost.

Then there is Service Cost. Even when the plan is “fully funded,” pilots still earn new pension benefits every year.

This is the Service Cost, and it is a real cost to the company, regardless of contributions.

FedEx’s total U.S. pension service cost is about $768M per year. The pilot portion is about $70–100M per year (estimated).

This cost exists no matter what the discount rate is because it reflects new benefits earned this year.

FedEx isn’t contributing because:

• discount rates are high
• expected returns are high
• the plan is currently above the minimum funding line

That doesn’t mean the pension is free or cheap. It means accounting assumptions temporarily eliminate required contributions.

The long-term economic cost is in the liabilities created each year — not the short-term contributions.

A freeze has nothing to do with the fact that they contributed $0 since 2020.

A freeze is about:

• eliminating future service cost
• stopping the creation of new long-term liabilities
• removing exposure to discount-rate volatility
• avoiding the risk that contributions will spike when rates fall
• removing PBGC premium costs
• eliminating the need to manage a multi-billion-dollar investment fund

Even if contributions are zero today, they can spike to hundreds of millions if rates fall. FedEx hates that volatility.

I’m not arguing that FedEx is broke or that the pension is underfunded.

I’m only saying that contributions are a misleading way to measure the genuine cost of a pension, because they depend heavily on discount-rate assumptions, not actual economics.

If you look at:

• service cost,
• discount-rate sensitivity,
• return assumptions, and
• future liability creation,

…it becomes clear why FedEx, like almost every Fortune 500 company, wants out of the DB business even when contributions are temporarily zero.

Happy to keep discussing this — it’s a complex topic and I’m not trying to be combative at all. Just trying to clarify how the funding side works.