Fedup with fredex

Discussion in 'FedEx Discussions' started by fedex435, Jan 15, 2012.

  1. fedex435

    fedex435 New Member

    I've been a courier with Fedex for 9yrs. I keep hearing about how our pension is nothing like it used to be. When I was first hired my manager at the time he told me that you take your highest five years of earnings and you will receive 50% upon retirement. My monthly benefit now would be around $325. Thats about 1/4 of my earnings. Can somebody explain what changed with the pension? I work at a small station and don't believe the veteran couriers have any clue. When the news came out about our wonderful new raises I about lost it. My Senior manager will be at our station sometime this week giving us the company line as to why we should be happy with the raises. He told us a while back that you didn't want to be maxed out because then you wouldn't have anything to look forward to!!! I wanted to punch the *********** in the gut. I asked a few coworkers if that bozo really said that. I want to educate myself as much as possible so when I confront my senior I can intelligently call him on all of his BS. Your help would be greatly appreciated...any suggested sites or how to do this?
    Lasted edited by : Jan 15, 2012
  2. MrFedEx

    MrFedEx Engorged Member

    If you've been with FedEx for 9 years, you should have had 5 years under the Traditional Plan, which was cleverly eliminated in 2008. After that, everyone was forced over to the PPP or Piss Poor Pension, which isn't really a pension at all, but a really crappy annuity. Rather than try to explain it all, review some of the past posts (of which there are many) about Fred's retirement scam.
  3. vantexan

    vantexan Well-Known Member

    I'll have a go...under the old plan you were fully vested after 5 years, which means you are entitled to a monthly payment upon retiring at atleast 55. Take your highest 5 paid years before the pension was terminated in 2008, average them together, take 2% of that number, multiply the 2% by the number of years you worked at least 1000 hrs that year, and you'll have your annual pension. Divide by 12 and you'll have your monthly payment. For example, your 5 highest paid years averaged to 40,000. Take 2% which is $800, multiply it by years of service(the maximum you can count is 25, even if you work more years than that). 25 times $800 is $20,000, which is 50% of your highest annual average(50% is the most you can get). You got the full pension at 60, and could take it as early as 55, but each year you took it early would cost you 3% a year, or 15% less at 55.

    The new cash balance plan places a percentage of your annual gross pay into an account for you, and pays interest on the account in the amount of 1% each quarter of whatever you have in the account. There are 4 percentages that determine how much goes into the account, 3, 5, 7, and 9%. You'll start at 3%, and you'll eventually move up into the higher percentages based on a point system, which is your age plus years of service combined. Thus if you start at 25, you'll have 75 points at age 50(75 being required to reach 9%). The sad part is that if you are only getting 3% raises and 3% placed in your retirement plan, you'll have very little in that plan the first 10 years. The old pension would've most likely earned you at least a $500 to $600 a month payment after your first 10 years.

    Hope this helps!
  4. P1 Lates

    P1 Lates New Member

    Go with your instincts and sock the SOB in the gut anyway!
  5. Mr. 7

    Mr. 7 The monkey on the left.

    Why bother confronting your Sr.?
    It's not his deal. He and you have no say in what you or anyone at FDX are gonna get.
    Remember, FDX hired you from the neck, down.
  6. Ricochet1a

    Ricochet1a New Member

    You barely had 5 years before the Defined Benefit Pension Plan (DBPP) was axed - so you'll have vesting for that service.

    Here's how you calculate (rough) what you'll receive under the DBPP.

    Take the average of what you earned each FedEx FY under the DBPP, then multiply that by total years (retain fractions) then multiply that by 2% - that is your payment for the DBPP portion of your pension starting at age 60.

    For example, assume you had 5.5 years while the DBPP was in effect. You'd average your earnings for those years (let's just use an easy $35,000), then multiply that by 5.5 then that again by 2%. The answer is your ANNUAL pension payment starting at age 60. Divide that by 12 to get your monthly "check".

    In this case, it is 5.5 * $35,000 * 0.02 = $3,850 Annual Pension under DBPP portion of your pension

    Divide that by 12 to get a monthly payment of $320.83 starting at age 60.

    This IS NOT inflation adjusted - so you will receive $320.83 in actual dollars starting at age 60. Whatever the value of that $320 per month is in TODAY's terms is uncertain.

    If you assume a 3% average annual inflation rate, here's what that $320 will be equivalent to in 2012 dollars - have to make assumptions about your current age:

    Age 30 now (pension start in 2042) : Annual pension worth $1,567 in 2012 dollars or $130.60 per month in 2012 dollars.

    Age 40 now (pension start in 2032) : Annual pension worth $2,114 in 2012 dollars or $176.21 per month in 2012 dollars.

    Age 50 now (pension start in 2022) : Annual pension worth $2,858 in 2012 dollars or $237.77 per month in 2012 dollars.

    The "intent" of a DBPP is that as your wages are constantly adjusted for inflation, the average of your high 3 or high 5 years (depending on how a company structures it) is constantly increasing - so there ISN'T the diminishing returns you see above. If you work till age 60 (the "intent" of a DBPP) you are constantly receiving adjustments for inflation, so your actual pension works out to 50% of your average earnings for the last few years you worked.

    When FedEx dumped the DBPP, the averaging was done for the years BEFORE and including 2008 - NOT AFTER. This is how FedEx was able to (for accounting terms) accurately quantify the pension liability of the DBPP.

    For those FedEx employees which were at 20+ years of service at the time of the pension being gutted, they will actually benefit a bit. This is due to their having enough time to "max out" their DBPP (but NOT receiving the inflation adjustments which occur with averaging the last years of employment - presumably the highest paid), AND to their receiving the cash payments under the Portable Pension Plan. For those who had 25+ years of service as of 2008 AND were age 50 or older - they'll make out rather handsomely - since under the DBPP, any service over 25 years didn't get used in the calculation for definiing annual pension payment. This is why there are so many people in their early 50's hanging on for dear life - they have their DBPP at full value (although losing some ground with inflation), AND they are collecting PPP "contributions" of about 7% or their gross instead of the 5% everyone under 50 years of age receives. This is another fact that FedEx doesn't widely advertise, but it is readily present in its retirement literature.

    Your PPP is done on a pure cash basis. You will have received 5% of your gross earnings (presuming you are under age 50) for each year the PPP has been in existance.

    Assume you quit tomorrow, and had 4 years under the PPP and received an average of $35,000 gross for each year (done to make the math easy here, the amount is done for each year with a "contribution" done after the end of each FedEx Fiscal Year).

    $35,000 * 0.05 = $1,750 annual "contribition" by FedEx into the PPP portion of you pension benefit.

    If you had that for each of the 4 years under the PPP = $7,000 cash balance in your PPP. You should be receiving notification by FedEx with the balance in your PPP periodically.

    This sum is "invested" at the whopping rate of 4%. The annual inflation rate is between 2.5 and 3%. So you are making between 1 and 1.5% in real returns. Meanwhile, FedEx is "holding" those monies (they are NOT with a third party), and while paying you the 4%, is saving itself its market rate on bonds (which is currently between 7 and 8%). FedEx is making bank on your PPP, while you are receiving a moderate amount above inflation.

    Here's what that $7,000 will be worth (I can use 2012 dollars directly here) assuming diffferent ages.

    Age 30 now (draw on PPP in 2042) : $10,975 in 2012 terms. That is the SUM TOTAL of your PPP account balance 30 years from now in 2012 dollars. Admittedly this is only for 4 years of work, but you can see it won't hold you for any amount of time. Once you draw this sum, it is GONE.

    Age 40 now (draw on PPP in 2032) : $9,447 in 2012 terms. Again, this is the SUM TOTAL of your PPP account balance 20 years from now in 2012 dollars for the "contributions" made for the 4 years between 2008 and 2011 with $35,000 gross. Once you draw this sum, it is GONE.

    I ran the calculations for a new-hire employee to see what their pension payout would be if they had no time under the DBPP way back (not going to take the time to repeat it here). It worked out that when you compared the DBPP to the PPP, the PPP only pays out about 35% of the amount the DBPP did (assuming no time under DBPP). You lost 65% of your pension when FedEx dumped the DBPP. Those that had more years under the DBPP lost a decreasing amount - while those with more than 25 years and age 50+ in 2008 actually gained from the whole scheme.

    In otherwords, under the DBPP, an employee could (in combination with Social Security and their own personal IRA investments) live a retirement at approximately 100% of their pre-retirement income (DBPP 50%, SS 35%, IRAs 15%).

    Under the PPP, an employee could live a retirement at approximately 67% of their pre-retirement income (PPP 17.5%, SS 35%, IRAs 15%).

    FedEx has shifted the "burden" of paying your retirement to YOU. If you want to maintain the same retirement as you would've had under the DBPP, you need to max out your 401k contribitions, along with IRA contributions.


    This was the "straw that broke the camel's back" for me and why I made plans to get out and did indeed do so.

    Your total retirement has been reduced by one-third, by Express converting to the PPP and NOT paying a full 13% contribution as they would need in order to have financial equivalency with the DBPP.

    If you stay with FedEx - I hope you enjoy BOTH your lower middle class standard of living (working in a non-union company) AND having to work part-time after you "retire" in order to maintain they meager lifestyle you've been accustomed to while working for FedEx.
  7. vantexan

    vantexan Well-Known Member

    I may have missed it in there but did you mention that they are giving an extra 4% in "make-up" contributions to those over 40 in the PPP for 5 years? Not that it matters much but those qualifying for the 9% contribution are getting 13%. I've been getting 11%. Frustrating that my 11% is based on much lower pay than the topped out guy who's getting 13%. Still, it's with interest about $5k a year for me and will finance my escaping this "career."
  8. 55+

    55+ Member

    My manager tried to throw that line "You don't want to max out. You would have nothing to shoot for" I simply replied. Then why would I want to reach 100% on my goals? I would have nothing to shoot for!...He got very red in the face and never mentioned it again.
  9. over9five

    over9five Moderator Staff Member

    He couldn't laugh at that? You made a great comeback!
  10. MrFedEx

    MrFedEx Engorged Member

    My manager has said the exact same thing to employees. That makes me think that is the official company response.


    It is...policy 2-5-6-3.r "when employee asks about top-of-range pay, state, in no uncertain terms in a manner that does not allow for further discussion, that FedEx's policy is as stated 'Why would you want to reach top-of-range _______ (enter EE#), then you have nothing left to shoot for, sign here, this is considered an OLCC and will go in your P E R M A N E N T R E C O R D!!! (cue omninous music and escort out of office)"

    Just sayin"....
  12. Cactus

    Cactus Just telling it like it is

    It's gotta' be. I've heard a manger or two use that response at our station too.
  13. Ricochet1a

    Ricochet1a New Member

    There is a talking points memo that management has that addresses pay questions from their employees.

    There is a list of commonly asked questions and a company recommended response for the manager to use to the question.

    This is why the same trite (insulting the intelligence of the person asking the question) reponse is common across the nation - it is part of the "playbook" that FedEx management is given to respond to honest questions - but questions for which FedEx cannot give an honest answer and not create even more discontent among the employees.

    When a manager gives you one of the pre-canned FedEx responses to a pay question - you immediately know that,

    1) They think you are an idiot, since only an idiot would think the responses even address the question

    2) Have absolutely no regard for you as an employee - since by giving the pre-canned responses to legitimate questions, they deem you not worth the time to come up with a truthful and direct repsonse.

    Everyone knows the answer as to why employees aren't topped out - but if FedEx management were to give the real answer, the KoolAid drinkers would start to think for themselves and that would cause problems for FedEx.
  14. fedex435

    fedex435 New Member

    Talked to Sr Mgr today. I told him the "raises" are ridiculous. He told me he spoke with MT3 a while back. MT3 said that fedex couldn't give anymore out because they had only so much put aside to give. My Sr pointed out that Fedex gave 120 some million in raises. I told him that doesnt seem like much when fedex made close to 1/2 billion in a quarter. MT3 said the plan is to have couriers maxed out in there 8 to 10th year. I asked about the pension that has been cut and he blamed it on the govt. He said the only people that would get the old pension like Fedex used to have is fed govt workers. I told him that don't trust management. In all honesty i dont know what to think.
  15. Ricochet1a

    Ricochet1a New Member

    The 120 million "set aside" for raises was 120 million they DIDN'T want to throw at the covered job classifications. That will be an expense they feel they shouldn't have to bear, but must or face the consequence of potential unionization.

    I pointed out earlier that it would cost Express about $600-$750 million annually (above current compensation) to properly bring all the covered crafts under a plan that would be in alignment with unionized compensation rates. FedEx doesn't want to pay that extra money - that is money that they use to grow the company (historic examples: ZapMail, Kinkos purchase, MD11 conversions, European expansion back in the late 80's - big flop). If it wasn't for Express being able to pay its wage labor non-union rates - the company would've either flopped due to the mismanagement, or (more likely) the Memphis executive management team would've been shown the door by the shareholders.

    There will NEVER be any 8 to 10 year top out without a union contract in place. The whole trend in Express going back to the late 90's has been to gradually squeeze the wage labor force for increases in productivity while restraining their compensation.

    If you feel you want a real raise, sign a union representation card and get your coworkers to do the same.

    Leave, organize or bend over. Right now Express employees are being bent over just a bit more each year. I got fed up with it, so I left. If you can't leave and are tired of being bent over - ORGANIZE.
  16. vantexan

    vantexan Well-Known Member

    Don't take anyone's word on it, just do the math. Take starting pay for your payscale, calculate 3% and add to starting pay. That's the first raise. Keep doing that and see for yourself how many 3% raises it will take to get to midway point where you'll qualify for 5% raises. In the past I was told I'd top out in 7 to 8 years. That was 11+ years ago. I'm at 13 years and 42% of range, won't even qualify for 5%. By the way don't become a swing driver unless you are either going to stay a swing, or prepared to take a serious paycut if you go back to regular courier. After you've been a swing awhile you'll realize why many choose to take the cut and go back. I hope you are young and can wait until your 30's to get better raises. With a bad economy you may have to just settle for whatever FedEx gives. If your options are limited then you might do yourself a favor and try not to stress over it, just deal with it. I say that from dealing with a plugged up artery which in part was due to stress. Know that FedEx wants as much out of you as possible and will give as little as possible back. Either plan to leave or accept it, you won't be able to change it. Just don't believe the hype, you'll set yourself up for disappointment later.
  17. vantexan

    vantexan Well-Known Member

    I forgot you are a 9 year employee which means you are most likely in your early to mid-30's. Hang in there, at least by the time you are 50 like me you'll have been at better pay for awhile.
  18. Ricochet1a

    Ricochet1a New Member

    Let's assume that FedEx will raise the topout rate by 3% a year to keep pace with inflation. Ahem...

    Then assume (wait for it), that a FedEx employee will receive a 5% pay raise each and every year till they hit top out.

    How long will it take them to reach top out?

    If you have Excel, you can do this on your own in a minute.

    Assume current Market Level A starting wage of $15.53 and top out of $23.59 as of March.

    It will take them just over 21 years to hit top out.

    If that employee hired in today, they'd top out in 2033 at a wage of about $45

    Yes, $45...

    The effects of inflation over the next 21-22 years will make a current wage of $23.59 equivalent to $45 in 2033.

    This is all assuming that there will be full-time Couriers in the not so distant future...

    So there you have it, a 22 year top out time. Oh wait, that assumes that you'll be receiving a 5% wage increase each and every year.

    Look at the past 7 years and the average wage increase over that time has been about 4%.

    How long to top out with 4% wage increases and the top being raised 3% to account for inflation?

    I get just over 47 years. That is when the curves for $15.53 * (1.04 ^ # Years) intersects with the curve of $23.59 * (1.03 ^ # Years).


    Depending on the whims of Fred, you will top out (as a new hire today) somewhere between 22 and 47 years from now. NOT the 8 or 10 that many wishful thinkers are pondering.

    If you make the assumption that the top "only" get an average 2.5% over time bump - which has been the average over the past few years....

    You hit top out in year 29...

    If you work for Express and have less than 10 years with the company

  19. MrFedEx

    MrFedEx Engorged Member

    LOL!! The "plan" is to have couriers topped-out in 8-10 years. What a bold-faced EFFING lie!! Perhaps the better question to ask would be if Dave, Fred, and MT3 are also covered under the PPP. I can assure you that they (and the pilots) are not. You cannot trust management at this company...ever.

    Please remember that the "justification" for ending the Traditional Pension Plan (ended in 2008) was that "FedEx needed to fully fund it's pension plan according to the ERISA laws". This is pure 100% crap. FedEx saw an opportunity to kill the retirement plan and did so, playing-off of the financial problems that passenger airlines were experiencing. Fedex had no financial peril whatsoever, so this was a screwing-over of employees...plain and simple. Our old retirement plan, which wasn't particularly generous, went the way of the dodo.

    $120M sounds like a lot of money until you look at the profitability of the company and how little wages have been raised over the last 20 years. Fred has simultaneously raised our out-of-pocket costs at every opportunity while giving-out piddly raises that didn't even keep up with the cost of living. That's quite a feat.

    Until we have a union, there is absolutely no reason or incentive for upper management to deal with us fairly. Time to sign those cards and start understanding that being in a union is your only real alternative to the lousy treatment you are receiving.
  20. LTFedExer

    LTFedExer New Member

    I know if raises had stayed the way they were when I started (Jan 2000, 2 raises/year), I'dve topped out ages ago. When you were told that, I imagine it was the same. Problem is, they change the way the raises are given every year. You can almost bet next year will be different.

    BTW......I am 3 cents below the 50% line.