FedEx Corporation is a holding corporation with interests in shipping, e-commerce, and business services. It runs through the following segments: FedEx Express, FedEx Ground, FedEx Freight, FedEx Freight Services, and Corporate, Other, and Eliminations.
The FedEx Express segment includes both domestic and international express delivery of goods and freight. The FedEx Ground service focuses on small-box ground delivery. Less-than-truckload freight services are available through the FedEx Freight business unit. The FedEx Services sector covers sales, marketing, IT, communications, customer service, technical support, billing and collection services, as well as certain back-office operations.
The Corporate, Other, and Eliminations category covers corporate headquarters costs for executive officers and other legal and finance activities and various other expenses and credits that aren’t linked to the company’s main line of business. Frederick Wallace Smith established the firm on June 18, 1971, in Memphis, Tennessee.
FedEx to Modernize Retirement Plans
The largest express courier service company in the world, FedEx, revealed new plans to overhaul its retirement programs for the majority of its staff. These changes will occur in 2019 and are a direct result of recent legislative, regulatory, and demographic developments that continue to revolutionize retirement benefit requirements in the United States.
FedEx will continue to offer generous retiree benefits paid for entirely by the company, as well as enhanced 401(k) plans. The firm expects to spend roughly the same amount on its workers’ retirement plans in the long term under the new design and rules as it would have under the old design and rules.
Under the new system, most entitled employees who participate in a pension plan will begin accruing future benefits under a cash balance formula called the Portable Pension Account beginning June 1, 2008. As of May 31, 2008, any benefits accrued under a standard pension benefit formula will be capped and paid out once per month at retirement. These changes will not affect the current retiree’s benefits.
The new pension plan came about because of three recent things that happened.
- New accounting standards are currently being implemented and proposed;
- The recently passed federal Pension Protection Act;
- The changing demographic patterns of the elderly result in longer life expectancies, better health habits, and a desire for more control, mobility, and inheritance of retirement benefits.
The Pension Protection Act, passed in August 2006, allows FedEx to improve its 401(k) retirement plans and add more personnel to the Portable Pension Account, a cash balance feature it began offering in 2003.
In addition, demographic projections suggest that employees must be more proactive in saving for retirement and increasing their participation in 401(k) retirement plans.
Portable Pension Account Benefits
FedEx has outlined many of the changes to its workers in a series of communications that began today, and it will provide additional information and instructional materials in the future.
There are several advantages to the improved Portable Pension Account:
- If someone leaves FedEx, they may take their retirement money with them.
- It is adaptable and allows monthly benefit payments or a lump-sum payment to be selected.;
- A spouse or any other designated beneficiary may be paid pre-retirement death benefits if the employee dies before retirement.
- There is no maximum years of service under which benefits accrue
- The benefits will be given after three years of service, not five years.
- Employees who have qualified for traditional pension benefits under the old plan benefit formula will be eligible to receive transition credits.
Enhanced 401(k) with Higher Company Match
FedEx will boost its matching contributions for most employees and provide extra investment alternatives under the company’s 401(k) plans. To increase savings, FedEx will take advantage of recent legislation that allows it to automatically enroll workers and raise their saving contributions each year.
It’s been said that “saving for retirement is a partnership between FedEx and its employees.” The company has made it clear how important their commitment to each other will be through the years ahead, so they can enjoy financially sound futures together!
FedEx – The Path to Your Retirement
Approximately 12–18 Months Before Retirement
Consider how much money you’ll have in retirement to calculate your total projected household income. Then, create a post-retirement budget to see whether there will be a gap. Planning a budget can help you figure out any necessary post-retirement spending changes, especially if health care costs and long-term care insurance are concerns.
Determine whether you qualify for Retiree Health Coverage. If you retire on a certain day, it’s possible that your decision is influenced by whether or not you’ve met the Retiree Health Coverage criteria. To find out whether you are entitled, call the FedEx Benefits Center to request information on whether or not you’re qualified. Alternatively, go to the HR Portal under Benefits and Compensation and then select the Retirement and Stock Information option.
Estimate your health care and other significant expenditures after retirement that may influence when you retire. Even if you do not meet the FedEx Ground Retiree Health Coverage requirements, you should anticipate that any health coverage you acquire once you retire will be considerably more expensive than your current health coverage. A web search can help you obtain personalized health coverage quotations from several insurance providers. The resources listed in the Retiree Health Coverage section may be used to learn about retirement health coverage, eligibility, and associated expenses.
Think about what your spouse will get if you die first in retirement, depending on how much life insurance you have. You should also consider choosing a payment option that provides benefits for your spouse in the Pension Plan. It might be good to think about whether your spouse has his or her own personal retirement benefits too.
Check on your beneficiary designations from time to time and make any necessary adjustments. Keep in mind any FedEx-sponsored or required life insurance, as well as policies or other benefits you may have outside of FedEx.
Approximately 9–12 Months Before Retirement
Consider whether you need individual life insurance because FedEx Ground’s provided life insurance benefits will cease when you retire. For more information about converting certain life insurance coverage, contact Aetna Life Insurance. If you’re a FedEx Ground managing director or officer, call MetLife for life insurance conversion alternatives.
Consider long-term care insurance, especially given that Medicare does not cover it. The US Department of Health and Human Services has comprehensive information on long-term care insurance.
Gather and document your important papers, such as birth certificates, marriage certificates, will, insurance policies, Social Security card, tax data, deeds, beneficiary forms, titles, statements from investments, and pension plans. Notify family members and beneficiaries where to find these critical documents (e.g., home safe deposit box; bank safe deposit box). The court might require your original will for probate. This means that they have to see the document with writing on it. It is best to keep this in a safe place, like in a lawyer’s office, if you have one.
Consider your estate planning. Before you dismiss this topic as being too difficult or believe that a will may handle everything for you, think again. Your property, checking and savings accounts, stock, retirement accounts, collectibles, real estate holdings, automobiles, and other assets make up your estate. So, estate planning is for everyone—not just the wealthy. A thorough estate plan will protect your assets after you pass away and while you are incapacitated.
Approximately 6–9 Months Before Retirement
Take advantage of retirement education tools that address issues such as lifestyle modifications, acquiring a hobby, maintaining a healthy lifestyle, and volunteering possibilities. LifeCare is one such website that provides an abundance of information.
If you are eligible for Medicare at retirement (typically age 65), you should apply for Part B of Medicare before your employer-sponsored insurance coverage ends. Only Part A is offered automatically. When you reach age 65, notify the Social Security Administration by contacting your local Social Security office.
Educate yourself about the necessity for a Medigap, Medicare Advantage, or Medicare Part D policy, which adds to Medicare after it begins. The website contains basic information on Medicare alternatives.
Approximately 3–6 Months Before Retirement
Consider your planned retirement date. Employees who meet the Pension Plan’s requirements for credited service accrue a year of service after they have earned at least 1,000 hours of service during the plan year (June 1 through May 31). If your retirement date starts on October 31, you may not earn a year of service for the plan year, for example.
Also, please keep in mind that benefits under the Pension Plan are paid on the first of the month, whether or not you have already retired and chosen your pension plan options. For instance, if your retirement date is November 2 or 30, you will receive the same commencement date of December 1. A retirement date of November 1 might have a commencement date of November 1.
Important: In general, your first monthly benefit will be paid out around one to two months following your retirement date. Any delays in submitting the necessary forms or recording your retirement date in the FedEx Human Resources Information System may cause a delay in when you can receive your first payment.
Approximately 1–3 Months Before Retirement
If you want to delay your FedEx Pension Plan benefits, you’re not alone. Depending on your specific circumstances, you may elect to defer the start of your Pension Plan compensation until a later date. If you have any questions regarding your benefit commencement alternatives, contact the FedEx Retirement Service Center (RSC).
Ask for a retirement kit if you have a vested Pension Plan benefit. To start the retirement process, go to retirement.fedex.com or call the FedEx Retirement Service Center (RSC) at least 30 days but no more than 90 days prior to your benefit commencement date.
You will get a retirement package including your Pension Plan benefit calculation, an explanation of available payment options, and directions on how to begin receiving payments.
Less Than 30 Days Before Retirement
Notification of your plan to retire should be given to your supervisor at least two weeks before you retire.
Your employer must present a filled Employee Separation Form, H-705, which includes your planned retirement date. In addition, your supervisor should use the Employee Change Request page on the Job tab of the HR Portal to retire. The Employee Change Request and the H-705 must be completed before your retirement date in order for your retirement to proceed smoothly. If you do not complete the transactions on time, your first pension plan benefits payment may be delayed.
If you are qualified and want to enroll in Retiree Health Insurance, please call the FedEx Benefits Center. If you meet the requirements, you have until your retirement date to enroll in Retiree Health Coverage.
All required Pension Plan forms should be submitted to the FedEx Retirement Service Center (RSC). The instructions in your retirement package will help you make your Pension Plan selections. Ensure you submit your response before the kit’s stated deadline. After you’ve made your selections, you must notify and authorize them with the FedEx Retirement Service Center.
You can’t be an active employee at any domestic or international FedEx firm in order to receive your Pension Plan benefits and/or RSP.
Review the Retiree Health Coverage and COBRA packet. Choose which one you want by the date in this packet. If you’re eligible for Retiree Health Coverage, contact FedEx to find out how to enroll. You’ll automatically get a packet at your house that explains COBRA coverage too.
Important: You have until the end of your retirement date to select Retiree Health Coverage.
Once you leave a FedEx firm, think about your Retirement Savings Plan (401(k)), which offers several distribution possibilities. You may get a one-time payout of your entire account balance. Vanguard will provide information for applying for your benefits 45 days after, as reflected in the FedEx Human Resources Information System, your termination or retirement date. If your RSP account balance is more than $1,000, you have the option of postponing receipt of your payments until age 70.
The FedEx Retiree Club invites you to become a member. You may stay in touch with the individuals you’ve worked with during your career, as well as create new connections as a member of the Club. What you make of it is entirely up to you! Stay connected with current club activities via our award-winning monthly magazine and online site.
Anyone who has left a FedEx organization around the world is eligible for membership. Active or former employees with five years of permanent continuous service and are participating in a FedEx retirement plan are also welcome.
FedEx Retirement is a good thing. It allows employees to retire when they are ready, rather than being forced out because of age or disability. This helps the company retain talent and reduce turnover costs associated with hiring and training new workers while also allowing people who want to stop working the opportunity for early retirement.
The decision whether or not this package is right for you will depend on your personal situation and needs, but it’s worth looking into if you feel like you might be getting close to retirement anyway!