MEMPHIS, Tenn. - The proposed pilots' contract at Federal Express includes establishing a participant-directed defined contribution plan.
If the 3,500 pilots in the independent Federal Express Pilots Association ratify the proposed agreement in February, they will be enrolled in the new plan, known in the airline industry as a "B" plan.
FedEx, a subsidiary of FDX Corp., then would contribute 6% of each pilot's gross salary (up to a maximum of $9,600 annually) to the fund. The plan may quickly become substantial in size, as the pilots' new contract with FedEx includes a 17% salary increase over five years; the average FedEx pilot's salary now is $142,000.
Bob Clement, a spokesman for the pilots' union, said that while many details still must be finalized, it is likely Vanguard Group of Investment Cos., Malvern, Pa., would be awarded management and record keeping of the new pilots' plan. Specific investment options haven't been determined, Mr. Clement said. Vanguard is the bundled provider of FedEx's current 401(k) plan, he said.
FDX had about $4.6 billion in its defined benefit plan and $2.994 billion in its existing defined contribution plan as of June 30, according to the Money Market Directory.
Darlene Faquin, a spokeswoman for Federal Express, said that under an agreement with the pilots' union, the company would not discuss specifics of the contract until it has been ratified. She would not confirm the size of the retirement plans or current managers and record keepers.
Pilots' participation in the company 401(k) and defined benefit plan would be unaffected by the terms of the new contract.
FedEx's employer match on the 401(k) plan is 50% on up to $1,000 of a pilot's contribution per year.
The addition of a B plan for pilots would bring FedEx's pilot benefits closer to the industry standard. Most major airlines offer their pilots B plans, according to comparison data from Air Inc., Atlanta, which tracks airline industry statistics.
If FedEx pilots approve the new contract, US Airways Group Inc. will be the only major U.S. airline that doesn't offer its pilots a B plan, according to Air Inc.
The board of the pilots' association is analyzing the proposal, Mr. Clement said. This analysis will accompany ratification ballots, which will be issued in early January and will be counted in early February.
