From the Negotiating Committee - 11/3/17
From the Negotiating Committee - 11/3/17


November 3, 2017

Fellow FedEx Pilot,

On October 31 we presented our variable benefit plan concept to FedEx. It was an important first step with FedEx to introduce the framework of an alternative path that has the ability to provide FedEx pilots with an improved retirement benefit. To briefly explain how we got to this point, we would like to provide the following information.

As you may recall, in April 2016 the MEC tasked the Negotiating Committee with preparing an in-depth analysis of our collectively bargained retirement benefits, concentrating on the Defined Benefit plan, also known as the “A Plan.” With information provided directly by FedEx and their actuaries, the Negotiating Committee, R&I Committee, ALPA Staff, and outside consultants were able to prepare a comprehensive analysis of the current plan design. With the information presented, we then examined a broad array of retirement plans, including plans within and external to the airline industry. We analyzed various formula changes to the current plan to determine the impact on the benefit and the subsequent accounting and funding cost impact on FedEx.

As a corollary to the above analysis, your MEC then directed us to continue down a path that included a significant research and development effort focusing on another type of Defined Benefit Plan – the Variable Benefit Plan. After selection of our consultant, David Blitzstein we engaged the consulting services of Cheiron Incorporated – an actuarial and consulting firm that specializes in, and has developed extensive modeling with variable plans. There are similar plans in the retirement industry that go by different trade names and each have a variety of options or design features based on the specific needs of their respective employee group. As highly compensated employees, we also have very specific plan design requirements and limitations that capitalize on Cheiron’s proprietary modeling with a great amount of design success.
When we began the research and development project it was apparent we needed to establish overriding goals to maintain our focus and to aid as our “localizer” course to prevent us from veering too far afield.

These high level goals were accepted by your MEC:

  1. Design a sustainable retirement plan that generates adequate replacement income for FedEx Pilots across generations
  2. Adopt a durable retirement plan that is financially sustainable and affordable under all economic conditions
  3. Establish a retirement plan that simplifies future bargaining
  4. Include provisions which insures ALPA’s role commensurate with the risk and value associated with the retirement plan
  5. Adopt best practice governance and administrative structures which embrace these stated goals and principles

While FedEx takes some time to evaluate the variable benefit plan concept, we will begin to provide education material to you. In that regard, we need to begin at square one and build upon that information to ensure that the material we are providing is actually useful to you. Your feedback is welcomed and encouraged.

On this link you will find a narrated PowerPoint presentation. This presentation will answer some fundamental questions about why we have undertaken this effort and information regarding the basic structure of variable plans. Additionally, we have provided this link here to a summary of previously provided education videos and communications.

As always, we remain steadfastly committed to improving the retirement outlook for our membership.


Captain Patrick May
Negotiating Committee Chairman

Captain Jim Plover
Negotiating Committee

Captain Mike Weskalnies
Negotiating Committee

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