FedEx Announces 2008 Pension Freeze

New York, NYFedEx is planning to freeze its traditionally-defined benefit plans, moving employees to an existing cash-balance plan. The FedEx freeze of its $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.

An Early Retirement "Incentive"?
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.

"Pushed out of the company": Kerri's Account
Kerri (not her real name) worked as a courier for FedEx for 19 years. She alleges she was pushed out of FedEx because of her age and her seniority with the company. "When I started with FedEx, there were a lot more older people working there. I don't know what happened to them. Now it's mostly people in their twenties," she says. "If you're an older employee, they will write you up for anything. I saw this happen to other people I worked with: getting pushed out of the company."

"I wasn't worried then, because my record with the company was great. I won awards for my work and I was proud. I turned 41, and suddenly it seemed like there were all these write ups."

Kerri was fired in 2001.

Facing an Uncertain Future
Kerri worries about her future, and the future of her family. "My husband is 56 and still works for FedEx. He is very, very careful and keeps a low profile. We can't afford to have him get pushed out, too," she adds. Kerri also wonders if the changes at FedEx have contributed to a low morale among couriers. "They used to care about employees. When I started, you had pride drilled into you. No matter what it took, I did it. The new people coming in don't have that attitude of pride in their work."

In the case of couriers and other manual workers, "old" is a relative term. Many of these workers started their careers straight out of high school. When they reach their 50s, they are often considered "old timers". They may face repetitive-stress or other injuries. If their employers do not provide them with the necessary educational training, many old timers may be unable to successfully transition to a desk job.

For many of these workers, "early retirement" may seem like their only option.