Tax cuts hasten demise of US corporate pensions
FedEx just spent $6 billion buying an annuity from MetLife. It’s joining a growing list of U.S. companies offloading pension obligations. Lower U.S. tax rates are encouraging more firms to do the same. It’s good for older workers, but it’s another nail in the coffin of employer-provided retirement security for millennials.
December’s corporate tax cuts make it easier for FedEx and others to do just that. Companies can take a tax deduction on pension contributions at the old 35 percent rate until September. With the new rate at 21 percent they effectively recoup 14 percent of any contribution, so it’s a good time to top plans up. FedEx even borrowed to help it do so.
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