v3.25.2
RETIREMENT PLANS
 12 Months Ended
May 31, 2025
Retirement Benefits [Abstract]  
RETIREMENT PLANS RETIREMENT PLANS
We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans, and postretirement healthcare plans.
The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in either expense or accumulated other comprehensive income of unrecognized gains or losses and prior service costs or credits. We use MTM accounting for the recognition of our actuarial gains and losses related to our defined benefit pension and postretirement healthcare plans as described in Note 1. The funded status is measured as the difference between the fair value of the plan’s assets and the PBO of the plan.
A summary of our retirement plan costs for the years ended May 31 is as follows (in millions):
202520242023
Defined benefit pension plans$278 $363 $236 
Defined contribution plans1,144 968 955 
Postretirement healthcare plans87 85 92 
Pension plans MTM gain(515)(561)(650)
$994 $855 $633 
The components of the MTM adjustments for the years ended May 31 are as follows (in millions):
202520242023
Actual versus expected return on assets$75 $(67)$2,492 
Discount rate change(1,024)(1,139)(3,395)
Demographic experience:
Current year actuarial loss196 67 142 
Change in future assumptions247 577 110 
Pension plan amendments, including curtailment gains(9)1 1 
Total MTM gain$(515)$(561)$(650)
2025
Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 6.50%, which was lower than our expected rate of return of 6.75%. Performance was driven by public equities and alternatives, offset by fixed income gains due to higher interest rates. The weighted-average discount rate for all our pension and postretirement healthcare plans increased from 5.53% at May 31, 2024 to 5.87% at May 31, 2025. The demographic experience in 2025 reflects an update to our retirement rate assumption.
2024
Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 6.80%, which was higher than our expected rate of return of 6.50%. Performance was driven by public equities and alternatives, offset by modest losses in fixed-income due to higher interest rates. The weighted-average discount rate for all our pension and postretirement healthcare plans increased from 5.17% at May 31, 2023 to 5.53% at May 31, 2024. The demographic experience in 2024 reflects an update to our retirement rate and short-term cash balance interest crediting assumptions.
2023
Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was (2.70%), which was lower than our expected rate of return of 6.50%. Negative portfolio returns derived due to losses in both equities and our fixed-income assets due to market volatility and rising interest rates. The weighted-average discount rate for all our pension and postretirement healthcare plans increased from 4.21% at May 31, 2022 to 5.17% at May 31, 2023. The demographic experience in 2023 reflects an update to our short-term cash balance interest crediting assumption.
PENSION PLANS. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account (“PPA”). Under the PPA, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The PPA benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service). Benefits under this formula were capped on May 31, 2008 for most employees.
We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on earnings and years of service and are funded in compliance with local laws and practices. The majority of our international obligations are for defined benefit pension plans in the United Kingdom.
In 2020, we announced the closing of our U.S.-based defined benefit pension plans to new non-union employees hired on or after January 1, 2020. We introduced an all-401(k) plan retirement benefit structure for eligible employees with a higher company match of up to 8% across all U.S.-based operating companies in 2022. During calendar 2021, current eligible employees under the PPA pension formula were given a one-time option to continue to be eligible for pension compensation credits under the existing PPA formula and remain in the existing 401(k) plan with its company match of up to 3.5%, or to cease receiving compensation credits under the PPA and move to the new 401(k) plan with the higher match of up to 8%. Changes to the new 401(k) plan structure became effective January 1, 2022. See Note 1 for additional information on potential amendments to our pension plan offered to Federal Express pilots.
POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental, and vision coverage to eligible U.S. retirees and their eligible dependents and a small number of international employees. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988.
The U.S. postretirement healthcare benefit is a lump-sum benefit in a notional retiree health reimbursement account (“HRA”) for eligible participants. The HRA is available to reimburse a participant for qualifying healthcare premium costs and limits the company liability to the HRA account balance. The amount of the credit is based on age at retirement. Retiree health coverage was closed to most new employees hired on or after January 1, 2018.
PENSION PLAN ASSUMPTIONS. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages.
Weighted-average actuarial assumptions used to determine the benefit obligations and net periodic benefit cost of our plans are as follows:
U.S. Pension PlansInternational Pension PlansPostretirement Healthcare Plans
202520242023202520242023202520242023
Discount rate used to determine benefit obligation5.94 %5.58 %5.20 %4.40 %4.29 %4.21 %5.60 %5.63 %5.37 %
Discount rate used to determine net periodic benefit cost5.58 5.20 4.25 4.29 4.21 3.09 5.63 5.37 4.35 
Rate of increase in future compensation levels used to determine benefit obligation5.36 5.29 5.13 3.11 3.06 3.04 — — — 
Rate of increase in future compensation levels used to determine net periodic benefit cost5.29 5.13 5.11 3.06 3.04 2.89 — — — 
Expected long-term rate of return on assets6.75 6.50 6.50 3.59 3.55 2.26 — — — 
Interest crediting rate used to determine benefit obligation4.10 4.32 4.23 2.30 2.90 2.40 — — — 
Interest crediting rate used to determine net periodic benefit cost4.32 4.23 4.00 2.90 2.40 3.70 — — — 
Our U.S. Pension Plan assets are invested primarily in publicly tradable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. As part of our strategy to manage pension costs and funded status volatility, we follow a liability-driven investment strategy to better align plan assets with liabilities.
Establishing the expected future rate of investment return on our pension assets is a judgmental matter, which we review on an annual basis and revise as appropriate. Management considers the following factors in determining this assumption:
•the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;
•the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time, net of all fees and expenses; and
•the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.
For consolidated pension expense, we assumed a 6.75% expected long-term rate of return on our U.S. Pension Plan assets in 2025 and 6.50% in 2024 and 2023. The historical annual return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was 6.90%, net of all fees and expenses, for the 15-year period ended May 31, 2025.
The investment strategy for our U.S. Pension Plan assets is to utilize a diversified mix of public equities, fixed-income, and alternative investments to earn a long-term investment return that meets our pension plan obligations. Our largest asset classes are Corporate Fixed Income Securities and Government Fixed Income Securities (which are largely benchmarked against the Bloomberg Barclays Long Government, Bloomberg Barclays Long Corporate, or the Bloomberg Barclays 20+ STRIPS indices), and U.S. and non-U.S. Equities (which are mainly benchmarked to the S&P 500 Index and MSCI indices). Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage portfolio risk.
The following is a description of the valuation methodologies used for investments measured at fair value:
•Cash and cash equivalents. Level 1 investments include cash, cash equivalents, and foreign currency valued using exchange rates. Level 2 investments include short-term investment funds, which are collective funds priced at a constant value by the administrator of the funds.
•Domestic, international, and global equities. Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded.
•Fixed income. We determine the fair value of Level 2 corporate bonds, U.S. and non-U.S. government securities, and other fixed-income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.
•Alternative Investments. The valuation of Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity, and the long-term nature of such assets. Investments in private equity, debt, real estate, hedge funds, and other private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables, and performance multiples.
The fair values of investments by level and asset category and the weighted-average asset allocations for our U.S. Pension Plans and our most significant international pension plan at the measurement date are presented in the following tables (in millions):
Plan Assets at Measurement Date
2025
Asset Class (U.S. Plan)Fair ValueActual %
Target
Range %(1)
Quoted Prices in
Active Markets
Level 1		Other Observable
Inputs
Level 2		Unobservable
Inputs
Level 3
Cash and cash equivalents$641 2 %
0 - 5%
$34 $607 $— 
Equities
25 - 40
U.S. large cap equity(2)
3,804 14 1,678 — — 
International equities(2)
2,869 11 1,994 — — 
Global equities(2)
1,224 5 — — — 
U.S. SMID cap equity671 2 662 9 — 
Fixed-income securities
40 - 60
Corporate6,625 25 — 6,625 — 
Government(2)
4,142 16 — 2,277 — 
Mortgage-backed and other(2)
1,648 6 — 229 — 
Alternative investments(2)
4,972 19 
15 - 25
— — 1,083 
Other5 — (16)21 — 
Total U.S. plan assets$26,601 100 %$4,352 $9,768 $1,083 
Asset Class (International Plan)
Cash and cash equivalents$12 3 %$12 $— $— 
Fixed-income securities
Corporate(2)
118 34 — — — 
Government(2)
184 53 141 — — 
Other(2)
35 10 — — — 
Total international plan assets$349 100 %$153 $— $— 
(1)Target ranges have not been provided for international plan assets as they are managed at an individual country level.
(2)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the total.
Plan Assets at Measurement Date
2024
Asset Class (U.S. Plan)Fair ValueActual %
Target
Range %(1)
Quoted Prices in
Active Markets
Level 1		Other Observable
Inputs
Level 2		Unobservable
Inputs
Level 3
Cash and cash equivalents$577 2 %
0 - 5%
$130 $447 $— 
Equities
25 - 40
U.S. large cap equity(2)
3,376 13 1,382 — — 
International equities(2)
2,631 10 1,780 — — 
Global equities(2)
1,397 5 — — — 
U.S. SMID cap equity926 4 916 10 — 
Fixed-income securities
40 - 60
Corporate6,502 25 — 6,502 — 
Government(2)
4,194 16 — 2,335 — 
Mortgage-backed and other(2)
1,514 6 — 205 — 
Alternative investments(2)
4,777 19 
15 - 25
— — 1,075 
Other(97)— (111)14 — 
Total U.S. plan assets$25,797 100 %$4,097 $9,513 $1,075 
Asset Class (International Plan)
Cash and cash equivalents$8 2 %$8 $— $— 
Fixed-income securities
Corporate(2)
62 18 — — — 
Government(2)
177 52 149 — — 
Other(2)
94 28 — — — 
Total international plan assets$341 100 %$157 $— $— 
(1)Target ranges have not been provided for international plan assets as they are managed at an individual country level.
(2)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the total.
The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):
U.S. Pension Plans
20252024
Balance at beginning of year$1,075 $937 
Actual return on plan assets:
Assets held during current year(63)59 
Assets sold during the year75 30 
Purchases, sales, and settlements, net(4)49 
Balance at end of year$1,083 $1,075 
The following tables provide a reconciliation of the changes in the pension and postretirement healthcare plans’ benefit obligations and fair value of assets over the two-year period ended May 31, 2025 and a statement of the funded status as of May 31, 2025 and 2024 (in millions):
U.S. Pension PlansInternational
Pension Plans		Postretirement Healthcare Plans
202520242025202420252024
Accumulated Benefit Obligation (“ABO”)$25,501 $25,756 $938 $885 
Changes in PBO and Accumulated Postretirement Benefit Obligation (“APBO”)
PBO/APBO at the beginning of year$26,284 $26,426 $1,018 $990 $1,162 $1,169 
Service cost499 544 38 38 26 27 
Interest cost1,447 1,362 43 42 65 61 
Actuarial (gain) loss(581)(514)(4)3 2 18 
Benefits paid(1,674)(1,534)(39)(39)(62)(89)
Settlements— — (20)(11)— — 
Other— — 37 (5)2 (24)
PBO/APBO at the end of year$25,975 $26,284 $1,073 $1,018 $1,195 $1,162 
Change in Plan Assets
Fair value of plan assets at the beginning of year$25,797 $24,826 $602 $579 $— $— 
Actual return on plan assets1,661 1,674 6 12 — — 
Company contributions817 831 64 50 59 67 
Benefits paid(1,674)(1,534)(39)(39)(62)(89)
Settlements— — (22)(11)— — 
Other— — 33 11 3 22 
Fair value of plan assets at the end of year$26,601 $25,797 $644 $602 $— $— 
Funded Status of the Plans$626 $(487)$(429)$(416)$(1,195)$(1,162)
Amount Recognized in the Balance Sheet at May 31:
Noncurrent asset$746 $— $88 $73 $— $— 
Current pension, and other benefit obligations(33)(35)(25)(22)(79)(81)
Noncurrent pension, and other benefit obligations(87)(452)(492)(467)(1,116)(1,081)
Net amount recognized$626 $(487)$(429)$(416)$(1,195)$(1,162)
Amounts Recognized in AOCL and not yet reflected in Net Periodic Benefit Cost:
Prior service cost (credit)$(32)$(39)$3 $3 $(39)$(43)
Our pension plans included the following components at May 31 (in millions):
PBOFair Value of
Plan Assets		Funded Status
2025
Qualified$25,855 $26,601 $746 
Nonqualified120 — (120)
International Plans1,073 644 (429)
Total$27,048 $27,245 $197 
2024
Qualified$26,152 $25,797 $(355)
Nonqualified132 — (132)
International Plans1,018 602 (416)
Total$27,302 $26,399 $(903)
The table above provides the PBO, fair value of plan assets, and funded status of our pension plans on an aggregated basis. The following tables present our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. The fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets at May 31 were as follows (in millions):
PBO Exceeds the Fair Value
of Plan Assets
20252024
U.S. Pension Benefits
Fair value of plan assets$— $25,797 
PBO(120)(26,284)
Net funded status$(120)$(487)
International Pension Benefits
Fair value of plan assets$268 $239 
PBO(784)(728)
Net funded status$(516)$(489)
ABO Exceeds the Fair Value
of Plan Assets
20252024
U.S. Pension Benefits
ABO(1)
$(115)$(124)
Fair value of plan assets— — 
PBO(120)(132)
Net funded status$(120)$(132)
International Pension Benefits
ABO(1)
$(627)$(575)
Fair value of plan assets242 216 
PBO(757)(703)
Net funded status$(515)$(487)
(1)ABO not used in determination of funded status.
Contributions to our qualified U.S. Pension Plans for the years ended May 31 were as follows (in millions):
20252024
Required$— $— 
Voluntary800 800 
$800 $800 
For 2026, no pension contributions are required for our U.S. Pension Plan as it is fully funded under the Employee Retirement Income Security Act. However, we expect to make voluntary contributions of up to $600 million to the plan in 2026.
Net periodic benefit (income) cost for the years ended May 31 were as follows (in millions):
U.S. Pension PlansInternational Pension PlansPostretirement Healthcare Plans
202520242023202520242023202520242023
Service cost$499 $544 $651 $38 $38 $44 $26 $27 $37 
Interest cost1,447 1,362 1,218 43 42 34 65 61 55 
Expected return on plan assets(1,721)(1,598)(1,688)(21)(18)(14)— — — 
Amortization of prior service credit(8)(7)(7)1 — (2)(4)(3)— 
Actuarial losses (gains) and other(521)(590)(487)4 13 (25)2 16 (138)
Net periodic benefit (income) cost$(304)$(289)$(313)$65 $75 $37 $89 $101 $(46)
Amounts recognized in other comprehensive loss were primarily related to amortization of prior service cost in our U.S. Pension Plans of $8 million in 2025 and $7 million in 2024 ($6 million, net of tax, in 2025 and $6 million, net of tax, in 2024).
Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (in millions):
U.S. Pension PlanInternational
Pension Plans		Postretirement
Healthcare Plans
2026$1,758 $60 $79 
20271,793 56 90 
20281,839 61 100 
20291,879 74 110 
20301,935 81 121 
2031-203510,292 453 672 
These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.
Future medical benefit claims costs are estimated to increase at an annual rate of 6.90% during 2026, decreasing to an annual growth rate of 4.0% in 2045 and thereafter.