FedEx PPA Going Away

Discussion in 'FedEx Discussions' started by Preventable, Nov 18, 2019.

  1. Preventable

    Preventable Member

    Well, it’s finally here!

    Looks like any employees hired on or after January 1st 2020 new employees will no longer be able to take part in the portable pension.

    It’s not all bad news though! Starting Jan 1st 2021 Fedex will introduce an all 401k retirement structure with a company match of up to 8%. Existing employees will have the option of keeping the current 3.5 match and their old PPA.

    Honestly, switching over seems pretty tempting. I won’t be able to get the 6% compensation credit for almost another 10 years and you are only losing 0.5% contribution for much more flexibility, and at least historically much better returns.

    That being said I will probably stick with the pension. I like the idea of having an asset like this that is mostly insulated from the market, and will be a relatively simple lifetime payment whenever I separate from FedEx.
     
  2. MAKAVELI

    MAKAVELI Well-Known Member

    Can we roll over our portable into our 401k?
     
  3. Operational needs

    Operational needs Virescit Vulnere Virtus

    You can bet that within the next few years they will cap the PPA and after that you will be forced to use the 401k whether you want to or not.
     
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  4. vantexan

    vantexan Well-Known Member

    I was just remembering how we had a choice, then didn't. And the ones who gave up the traditional for the PPA didn't get the extra "transition credits" the ones who were later forced into the PPA got. I hate that I was right on this one, but I predicted awhile back that eventually the PPA would be eliminated. Whenever FedEx gives more, such as in the new pay plan, they take away somewhere else to pay for it. I'm just glad they sold the traditional plan to MetLife. They can't resist finding a way to screw employees somehow to eke out more profit.
     
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  5. vantexan

    vantexan Well-Known Member

    Somewhere Oldfart is screaming.
     
  6. Route 66

    Route 66 I’m Gonna Puma Pants Member

    I’d like to think it’s from some gig fat smelly bubba widening his rectum.
     
  7. Preventable

    Preventable Member

    You guys saying they’ll yank the PPA eventually it doesn’t really make much difference honestly, unless you have to contribute like 15% to get the full 8%. Which I would make sure to do, I would maybe just contribute less to espp or my Roth IRA... this actually seems like sort of a dumb move from FeDex unless their main motive is just simplification.

    Yes in the future they will not have to pay old timers a 8% compensation credit... and not everybody will take advantage of the full match because they are too dumb/not financially disciplined enough... but remember most part timers aren’t eligible for the pension, but as far as I know they will be eligible for the 8% match... so actually from where I stand this is a huge win for part timers.
     
  8. vantexan

    vantexan Well-Known Member

    Eewwwwww!
     
  9. vantexan

    vantexan Well-Known Member

    A part-timer who's making say $20k a year probably won't be able to contribute much into his 401k. But let's say a 50 year has $100k in his portable. I don't know what current percentages are but if it's 8% that's $8k plus a little over $4k in interest from the 1% per quarter. Remember also that the company was also matching what was it, a dollar for each $2 of the first 3.5% you saved in your 401k? I've been gone 2.5 years so don't remember exact amounts, but seems to me a bump up to 8% won't come close to what you were getting. Remember the PPA is completely company paid, but you'll have to come up with up to 8% of your own money to get the match also. I'm betting the company will save at least half, probably more, of what it was shelling out.
     
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  10. Preventable

    Preventable Member

    Yeah could see that, but I think half is a little over optimistic. It almost makes sense to me though to switch unless I know I am going to be with Fedex 10+ more years. And the 4-4.5% interest credit is based on your PPA balance not your compensation credit... but that is hardly a balance to get super excited over, but not terrible.

    And yes the max comp credit is 8%... it is based on points equal to age+years of service.

    under 55 is 5%
    55-64 is 6%
    65-74 is 7%
    75+ is 8%
     
  11. dezguy

    dezguy Well-Known Member

    Nah man. His wife conveniently won the lottery, didn't you hear?
     
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  12. 59 Dano

    59 Dano This is 1980, can't you afford a f***ing haircut?

    Yeah it was another one of those quirky impossible to believe things that only happen to him and MF.
     
  13. Anytime any company comes up with something new it most likely isn't in your best interest.
     
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  14. vantexan

    vantexan Well-Known Member

    Right, 1% a quarter so on a $100,000 account that would be a little over $4k in interest. Totally separate from the PPA payment on your balance. So in this example that's $12k+ with an 8% PPA payment. A topped out courier making $70k a year would get $5600 to match his $5600 contribution with just the 401k. So yes, I think the company is going to save some serious money on this.
     
  15. McFeely

    McFeely Huge Member

    And just think of how many don’t contribute enough to get the 8% match, they’ll save tons on those people who simply don’t contribute enough or at all.
     
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  16. Operational needs

    Operational needs Virescit Vulnere Virtus

    Of course they will. They’ll convince stupid people this is the best thing since sliced bread, like they did with the ending of the Traditional Pension, and save tons.
     
  17. Leaving this here
     

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  18. Preventable

    Preventable Member

    Oh my bad I misunderstood, your example so his/her balance is 100k and their income is 100k? Because I am pretty sure the 8% PPA credit is based on income. You're muddying the waters a little bit because you are then introducing another guy making 70k.

    And sweet! 6% is honestly easy to hit. Anyone not doing that at the moment is kind of a fool. I am doing 9% just from my yearly automatic increases lol.

    I realize some people struggle due to a myriad of circumstances, but this is an important thing to contribute to. Heck, you could even contribute for a couple years of matching then plunder the 401k and take the 10% hit and still come up ahead? Or am I wrong? I think the only other bad thing about that is that you are barred from contributing for a year after.

    Edit: Not that I will be taking advantage. I am quite happy letting my contributions go up to 10% get the 3.5% match and keep my PPA...

    I am also going to max my roth for the year, but not really sure what to do after that. I have about 10k set aside for a potential house down payment, but from what I've gathered funding the HSA to max (~3000 I think) is a smart choice.

    The rules and regulations surrounding HSA's are pretty intimidating though, well that + the account options don't seem as plentiful/easy to use/cheap (seems most have fees).

    Probably can't afford to save more after that even maxing the HSA might be a stretch.
     
    Last edited: Nov 18, 2019
  19. vantexan

    vantexan Well-Known Member

    You're absolutely right, don't know what I was thinking. OK, let's look at our $70k guy. On the PPA if he grossed $70k income he would get $5600, plus if his account was $100k, and that's an ever increasing amount, he'd get about $4k in interest. So $9600 or so for the year. If he was strictly 401k he'd get $5600 plus what the market did that year. And in either scenario he'd have the option of putting in up to the legal amount allowed, but the company match would be 8% or less depending on which option he chose. So yes he could do better under the new option as long as the market does well. And in a major downturn depending on his allocations and how closely he watched things he might see 25% or more of his account disappear. That would be bad if he's about to retire. This is why the traditional pension was a much better deal. A $25k annual pension is the equivalent of $500k earning 5%. A lot to accumulate on a courier's pay, and if risk adverse in your old age not easy to make 5% either.
     
    Last edited: Nov 19, 2019
  20. Cactus

    Cactus Just telling it like it is

    Seems like Fred and his henchmen are always looking for new ways to f*** the hourlies over. I feel sorry for anyone working there right now. Except for Dano.
     
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