FedEx Corporation has formally petitioned the U.S. Supreme Court to review a controversial decision by the Sixth Circuit Court of Appeals that revived a pair of proposed class-action lawsuits against the shipping giant and the Kellogg Company. The central legal dispute concerns whether the companies violated the Employee Retirement Income Security Act (ERISA) by using decades-old actuarial assumptions to calculate pension benefits for retirees who chose joint-and-survivor annuities. FedEx argues that the Sixth Circuit’s interpretation of federal benefits law is fundamentally flawed and creates an unsustainable standard for plan sponsors nationwide, potentially exposing hundreds of major corporations to multi-billion dollar liabilities for following long-established pension practices.
The litigation represents a critical juncture in the interpretation of "actuarial equivalence," a technical but vital component of how private pension plans determine payouts. At the heart of the matter is the transition from a standard Single Life Annuity (SLA)—which provides payments for the life of the employee only—to a Joint and Survivor Annuity (JSA), which provides a reduced monthly payment during the employee’s life but continues payments to a surviving spouse after the employee’s death. Under ERISA, these two forms of payment must be "actuarially equivalent," meaning they should have the same present value based on standardized mathematical assumptions regarding interest rates and life expectancy.
The Core Conflict: Outdated Tables and Modern Longevity
The plaintiffs in the underlying lawsuits, representing a class of retired FedEx and Kellogg’s employees, allege that the companies utilized mortality tables from the 1970s and 1980s to calculate their benefits. Because life expectancy has increased significantly over the last half-century, using older mortality tables often results in a lower present value for the survivor portion of a pension. The retirees contend that by failing to update these tables to reflect modern longevity data, the companies effectively "shortchanged" them, providing monthly payments that are lower than what they would receive under more contemporary actuarial standards.
FedEx’s petition to the Supreme Court asserts that ERISA does not explicitly require companies to use the most recent mortality tables available when calculating optional forms of benefits. Instead, the company argues that as long as the plan specifies the actuarial assumptions used and those assumptions were reasonable at the time the plan was established or amended, the plan complies with federal law. The shipping giant maintains that the Sixth Circuit’s ruling erroneously imposes a "reasonableness" requirement that must be reassessed continuously, a move FedEx claims is not supported by the text of the statute.
Chronology of the Legal Challenge
The path to the Supreme Court began several years ago as part of a broader wave of "actuarial equivalence" litigation targeting Fortune 500 companies.
- Initial Filings (2020-2021): Retirees filed separate class-action complaints against FedEx and Kellogg, alleging that the use of outdated mortality tables (specifically those dating back to 1971 and 1983) resulted in a forfeiture of benefits in violation of ERISA’s non-forfeiture provisions.
- District Court Dismissals (2022): In the initial rounds of litigation, federal district courts in Tennessee and Michigan largely sided with the employers. The courts ruled that ERISA’s "actuarial equivalence" requirement did not mandate the use of "reasonable" assumptions for all purposes, particularly when the plan documents clearly defined the methods for calculation.
- The Sixth Circuit Reversal (2024): The plaintiffs appealed to the U.S. Court of Appeals for the Sixth Circuit. In a consolidated opinion, the appellate panel reversed the lower court decisions. The Sixth Circuit held that the term "actuarial equivalence" inherently implies the use of updated and reasonable data. The court ruled that if a plan uses assumptions that are so out of date that they no longer reflect reality, the resulting benefits cannot be considered "equivalent" to the standard single-life annuity.
- The Petition for Certiorari (September 2026): FedEx, acting as the lead petitioner, filed its request for the Supreme Court to hear the case. The company argues that the Sixth Circuit has created a "circuit split," diverging from how other appellate courts have interpreted the intersection of actuarial standards and ERISA compliance.
Supporting Data and Actuarial Standards
The financial stakes of this legal battle are underscored by the shifting landscape of American longevity. In 1971, the average life expectancy for a 65-year-old male in the United States was approximately 13 additional years. By 2020, that figure had risen to approximately 18 years.
Actuaries use mortality tables, such as the RP-2014 or the more recent Pri-2012, to project these lifespans. When a pension plan uses a 1971 table, it assumes the retiree and their spouse will die sooner than they likely will. Consequently, the "cost" of providing a survivor benefit appears lower to the plan, leading to a steeper reduction in the retiree’s monthly check to "pay" for that survivor protection.
Analysis from benefits consultants suggests that the difference between using a 1970s-era table and a 2010s-era table can result in a 5% to 15% difference in monthly pension payments for some retirees. For a large-scale plan like FedEx’s, which covers tens of thousands of participants, the aggregate difference in liabilities could reach hundreds of millions of dollars.
Furthermore, interest rate assumptions play a parallel role. Most plans use a "segment rate" or a fixed percentage to discount future payments to the present. If a plan uses an artificially high interest rate combined with an old mortality table, the present value of the survivor benefit is further suppressed, compounding the alleged "shortchanging" of the retiree.
Official Responses and Legal Arguments
In its petition, FedEx emphasizes the need for "predictability and finality" in pension administration. The company’s legal counsel argues:
"The Sixth Circuit’s decision transforms a settled administrative task into a moving target. If plan sponsors must update their actuarial assumptions every time a new study is published, the cost of maintaining defined-benefit plans will skyrocket, perversely incentivizing companies to terminate these plans altogether."
Conversely, representatives for the retirees have hailed the Sixth Circuit’s decision as a victory for workers’ rights. "ERISA was enacted to ensure that when a worker is promised a pension, they receive the full value of that promise," said a lead attorney for the plaintiffs. "Using 50-year-old data to calculate benefits in the 21st century is not an ‘equivalence’—it is a windfall for the corporation at the expense of the retiree’s surviving spouse."
Kellogg’s, though a separate entity, has filed a brief in support of FedEx’s position, noting that the "actuarial equivalence" definition has remained largely unchanged in the statute for decades, suggesting that Congress did not intend to mandate constant updates to the underlying tables.
Broader Industry Impact and Implications
The Supreme Court’s decision on whether to grant certiorari will be closely watched by the Department of Labor, the Treasury Department, and the Pension Benefit Guaranty Corporation (PBGC). If the Supreme Court declines to hear the case, the Sixth Circuit’s ruling will stand as a potent precedent, likely triggering a new surge of litigation across the Midwest.
The implications for the corporate sector are significant:
- Financial Reporting: Many companies may be forced to re-evaluate their pension liabilities on their balance sheets, potentially leading to large non-cash charges.
- Plan Amendments: To avoid litigation, many sponsors may feel compelled to voluntarily update their mortality tables, which would increase the ongoing cost of funding the pension.
- The Shift to 401(k)s: Legal experts suggest that increasing the regulatory and litigation risk associated with defined-benefit pensions will accelerate the trend of companies freezing these plans in favor of defined-contribution plans (401(k)s), which shift the actuarial risk from the employer to the employee.
The case also touches upon a broader debate regarding the "reasonableness" standard in ERISA. While the IRS provides specific tables that must be used for determining minimum funding requirements, it has historically allowed more flexibility for determining "actuarial equivalence" for benefit options, provided the assumptions are stated in the plan. The Sixth Circuit’s ruling suggests that this flexibility is not a license to use obsolete data.
Conclusion and Future Outlook
As the Supreme Court considers the petition, the legal community is divided on the likely outcome. Some scholars argue the Court may see this as a technical matter best left to the IRS and Treasury to regulate through formal rulemaking. Others believe the high court will intervene to resolve the growing inconsistency in how different circuits handle ERISA’s anti-forfeiture and equivalence mandates.
For the retirees of FedEx and Kellogg, the stakes are deeply personal, involving the monthly income they rely on for housing, healthcare, and basic necessities. For the defendants, the case represents a defense against what they characterize as "litigation-driven regulation" that seeks to rewrite the terms of pension agreements decades after they were established.
If the Supreme Court takes the case, a decision would likely be expected by the summer of 2027. Until then, the pension industry remains in a state of uncertainty, waiting to see if the math of the past will continue to govern the payouts of the future.
