MEMPHIS, TN (TruckingNewsNow.com) — FedEx Corp. is entering into an agreement with Metropolitan Life Insurance Company (“Metropolitan Life”) to purchase a group annuity contract and transfer approximately $6 billion of the company’s U.S. pension plan obligations.

The transaction will transfer responsibility for pension benefits to Metropolitan Life for approximately 41,000 FedEx retirees and beneficiaries who satisfy certain conditions and currently receive a monthly benefit from participating FedEx tax-qualified U.S. domestic pension plans (the “Pension Plans”). There will be no change to the pension benefits for any plan participants as a result of the transaction. Details will be provided to retired participants and beneficiaries whose continuing payments will be fulfilled by Metropolitan Life. The transaction, which is subject to certain closing conditions, is expected to close on May 10, 2018.

“FedEx is committed to maintaining financially secure pension benefits for our retirees and their beneficiaries,” said Alan B. Graf, Jr., executive vice president and CFO, FedEx Corp. “This transaction better positions FedEx to manage future pension plan costs, and retirees will receive the same pension benefit from a highly rated insurance company. Transferred pension benefits will be protected by the State Guaranty Association in the state where the retirees live.”

By transferring these obligations to Metropolitan Life, FedEx will reduce its U.S. pension plan liabilities by approximately $6 billion. The purchase of the group annuity contract will be funded directly by assets of the Pension Plans. Following the annuity purchase and transfer, the Pension Plans will remain well funded.

As a result of the transaction, FedEx expects to recognize a one-time non-cash pension settlement charge, which will be included in the fiscal 2018 year-end mark-to-market pension accounting adjustments that will be reported in the company’s fiscal 2018 fourth quarter earnings release.

During the 2017 and 2018 fiscal years, FedEx made voluntary contributions of $4.5 billion to the Pension Plans, including the most recent contribution of $1.5 billion following the U.S. Tax Cuts and Jobs Act, which was enacted in December 2017.