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DB: New Lease On Life?

Despite some headaches, the PPA is giving pension room to morph and maybe even survive

By Anne Field | Updated on April 01, 2007

Last March, $29.4 billion Memphis-based FedEx Corp. disclosed that it would expand its four-year-old cash balance plan to cover all eligible employees, not just new ones. It was no coincidence the announcement followed on the heels of two watershed events for defined benefit plans: the release of FAS 158, the new accounting rule that will compel companies to mark to market their pension liabilities and assets and report them on their balance sheets, and the signing into law of the Pension Protection Act, which legitimized cash balance plans and revised rules for determining employers’ minimum contribution levels.

FedEx CFO Alan B. Graf Jr. readily acknowledged the connection when he announced the changes: “In light of the unacceptable risk and volatility that the accounting rule and funding changes are presenting, FedEx is making necessary changes to ensure that the company will remain competitive and help our employees prepare for a comfortable retirement.”

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