v3.26.1
RETIREMENT PLANS
 12 Months Ended
May 31, 2026
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):
202620252024
Defined benefit pension plans$185 $278 $363 
Defined contribution plans1,264 1,144 968 
Postretirement healthcare plans90 87 85 
Retirement plans MTM adjustments(647)(515)(561)
$892 $994 $855 
The components of the retirement plans MTM adjustments for the years ended May 31 are as follows (in millions):
202620252024
Actual versus expected return on assets$(1,386)$75 $(67)
Discount rate change462 (1,024)(1,139)
Demographic experience:
Current year actuarial loss230 196 67 
Change in future assumptions64 247 577 
Pension plan amendments, including curtailment gains(17)(9)1 
Total retirement plans MTM adjustments$(647)$(515)$(561)
2026
Net of all fees and expenses, the actual rate of return on our U.S. Pension Plan assets was 12.40%, which was higher than our expected rate of return of 7.00%. Performance was driven by public equities, but all asset classes were additive. The weighted-average discount rate for all our pension and postretirement healthcare plans decreased from 5.87% at May 31, 2025 to 5.72% at May 31, 2026. The demographic experience in 2026 reflects an update to our short-term cash balance interest crediting assumption.
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 assets 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 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.
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.
In connection with the Spin-Off, and effective June 1, 2026, all eligible Freight employees transitioned to a newly established, dedicated pension plan. Refer to Note 20 for additional information.
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 our 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
202620252024202620252024202620252024
Discount rate used to determine benefit obligation5.76 %5.94 %5.58 %4.88 %4.40 %4.29 %5.47 %5.60 %5.63 %
Discount rate used to determine net periodic benefit cost5.94 5.58 5.20 4.40 4.29 4.21 5.60 5.63 5.37 
Rate of increase in future compensation levels used to determine benefit obligation5.46 5.36 5.29 3.35 3.11 3.06 — — — 
Rate of increase in future compensation levels used to determine net periodic benefit cost5.36 5.29 5.13 3.11 3.06 3.04 — — — 
Expected long-term rate of return on assets7.00 6.75 6.50 4.07 3.59 3.55 — — — 
Interest crediting rate used to determine benefit obligation4.07 4.10 4.32 2.70 2.30 2.90 — — — 
Interest crediting rate used to determine net periodic benefit cost4.10 4.32 4.23 2.30 2.90 2.40 — — — 
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 7.00% expected long-term rate of return on our U.S. Pension Plan assets in 2026, 6.75% in 2025, and 6.50% in 2024. The historical annual return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was 6.50%, net of all fees and expenses, for the 15-year period ended May 31, 2026.
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
2026
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$696 2 %
0 - 5%
$26 $670 $— 
Equities
30 - 35
U.S. large cap equity(2)
4,149 15 1,556 — — 
International equities(2)
2,908 10 1,717 — — 
Global equities(2)
1,745 6 — — — 
U.S. SMID cap equity528 2 517 11 — 
Fixed-income securities
40 - 60
Corporate7,013 25 — 7,013 — 
Government(2)
4,327 15 — 2,240 — 
Mortgage-backed and other(2)
1,691 6 — 230 — 
Alternative investments(2)
5,170 18 
20 - 30
— 3 1,142 
Other226 1 (34)260 — 
Total U.S. plan assets$28,453 100 %$3,782 $10,427 $1,142 
Asset Class (International Plan)
Cash and cash equivalents$14 4 %$14 $— $— 
Fixed-income securities
Corporate(2)
118 34 — — — 
Government(2)
179 52 121 — — 
Other(2)
33 10 — — — 
Total international plan assets$344 100 %$135 $— $— 
(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
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.
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
20262025
Balance at beginning of year$1,083 $1,075 
Actual return on plan assets:
Assets held during current year11 (63)
Assets sold during the year100 75 
Purchases, sales, and settlements, net(52)(4)
Balance at end of year$1,142 $1,083 
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, 2026 and a statement of the funded status as of May 31, 2026 and 2025 (in millions):
U.S. Pension PlansInternational
Pension Plans		Postretirement Healthcare Plans
202620252026202520262025
Accumulated Benefit Obligation (“ABO”)$26,491 $25,501 $931 $938 
Changes in PBO and Accumulated Postretirement Benefit Obligation (“APBO”)
PBO/APBO at the beginning of year$25,975 $26,284 $1,073 $1,018 $1,195 $1,162 
Service cost446 499 40 38 27 26 
Interest cost1,514 1,447 48 43 66 65 
Actuarial (gain) loss811 (581)(31)(4)(23)2 
Benefits paid(1,684)(1,674)(34)(39)(69)(62)
Settlements— — (35)(20)— — 
Other— — (28)37 4 2 
PBO/APBO at the end of year$27,062 $25,975 $1,033 $1,073 $1,200 $1,195 
Change in Plan Assets
Fair value of plan assets at the beginning of year26,601 25,797 644 602 — — 
Actual return on plan assets3,220 1,661 20 6 — — 
Company contributions316 817 60 64 65 59 
Benefits paid(1,684)(1,674)(34)(39)(69)(62)
Settlements— — (35)(22)— — 
Other— — 5 33 4 3 
Fair value of plan assets at the end of year28,453 26,601 660 644 — — 
Funded Status of the Plans$1,391 $626 $(373)$(429)$(1,200)$(1,195)
Amount Recognized in the Balance Sheet at May 31:
Noncurrent asset$1,479 $746 $74 $88 $— $— 
Current pension, and other benefit obligations(12)(33)(24)(25)(78)(79)
Noncurrent pension, and other benefit obligations(76)(87)(423)(492)(1,122)(1,116)
Net amount recognized$1,391 $626 $(373)$(429)$(1,200)$(1,195)
Amounts Recognized in AOCL and not yet reflected in Net Periodic Benefit Cost:
Prior service cost (credit)$(24)$(32)$2 $3 $(35)$(39)
Our pension plans included the following components at May 31 (in millions):
PBOFair Value of
Plan Assets		Funded Status
2026
Qualified$26,974 $28,453 $1,479 
Nonqualified88 — (88)
International Plans1,033 660 (373)
Total$28,095 $29,113 $1,018 
2025
Qualified$25,855 $26,601 $746 
Nonqualified120 — (120)
International Plans1,073 644 (429)
Total$27,048 $27,245 $197 
The table above provides the PBO, fair value of plan assets, and funded status of our pension plans on an aggregated basis. The following tables present our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. The fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets at May 31 were as follows (in millions):
PBO Exceeds the Fair Value
of Plan Assets
20262025
U.S. Pension Benefits
Fair value of plan assets$— $— 
PBO(88)(120)
Net funded status$(88)$(120)
International Pension Benefits
Fair value of plan assets$264 $268 
PBO(712)(784)
Net funded status$(448)$(516)
ABO Exceeds the Fair Value
of Plan Assets
20262025
U.S. Pension Benefits
ABO(1)
$(77)$(115)
Fair value of plan assets— — 
PBO(88)(120)
Net funded status$(88)$(120)
International Pension Benefits
ABO(1)
$(463)$(627)
Fair value of plan assets112 242 
PBO(553)(757)
Net funded status$(441)$(515)
(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):
20262025
Required$— $— 
Voluntary275 800 
$275 $800 
During the next 12 months, 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 $700 million to the plan during the next 12 months.
Net periodic benefit (income) cost for the years ended May 31 were as follows (in millions):
U.S. Pension PlansInternational Pension PlansPostretirement Healthcare Plans
202620252024202620252024202620252024
Service cost$446 $499 $544 $40 $38 $38 $27 $26 $27 
Interest cost1,514 1,447 1,362 48 43 42 66 65 61 
Expected return on plan assets(1,829)(1,721)(1,598)(26)(21)(18)— — — 
Amortization of prior service credit(8)(8)(7)— 1 — (3)(4)(3)
Actuarial losses (gains) and other(581)(521)(590)(42)4 13 (24)2 16 
Net periodic benefit (income) cost$(458)$(304)$(289)$20 $65 $75 $66 $89 $101 
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 2026 and $8 million in 2025 ($6 million, net of tax, in 2026 and $6 million, net of tax, in 2025).
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
2027$1,931 $40 $78 
20281,946 62 88 
20291,954 74 98 
20301,948 81 109 
20311,999 88 120 
2032-203610,507 462 666 
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 8.30% during the fiscal year 2027, decreasing to an annual growth rate of 4.00% in 2050 and thereafter.