FedEx announces 2008 pension freeze
FedEx is planning to freeze its traditionally-defined benefit plans, moving employees to an existing cash-balance plan. The FedEx freeze of its USD 11.5 billion plan is effective June 1, 2008.
Watchdog groups have long suspected that older workers are being “squeezed out” of FedEx in order to reduce pension payments and other benefits to employees based on seniority.
FedEx bean-counters may be hoping the news of the pension freeze will cause more of FedEx’s older workers to choose early retirement.
Because benefits earned before the point of the pension freeze are protected by law, workers and retirees who leave employment before the freeze do not stand to lose benefits. A pension freeze only affects those employees who continue to work for the company.
Pension freezes often have the strongest impact on older workers. In 2005, the United States Government Accountability Office (GAO) released a report which found that a typical cash balance plan provides lower benefits for most workers than a traditional plan. The report states that this decline in benefits tends to be largest for older workers.
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