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Retirement Plans | 12 Months Ended
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May 31, 2016
Retirement Plans [Abstract] |
Retirement Plans | NOTE 1 3: 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 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. 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 AOCI of unrecognized gains or losses and prior service costs or credits. During 2015, we adopted mark-to-market 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 projected benefit obligation (“PBO”) of the plan. A summary of our retirement plans costs over the past three years is as follows (in millions):
|  | 2016 |  | 2015 |  | 2014
Defined benefit pension plans | $ | 214 |  | $ | (41) |  | $ | 99
Defined contribution plans |  | 416 |  |  | 385 |  |  | 363
Postretirement healthcare plans |  | 82 |  |  | 81 |  |  | 78
Retirement plans mark-to-market adjustment |  | 1,498 |  |  | 2,190 |  |  | 15
|  | $ | 2,210 |  | $ | 2,615 |  | $ | 555
The components of the pre-tax mark-to-market losses are as follows (in millions): |  |  |
|  | 2016 |  | 2015 |  | 2014
Actual versus expected return on assets | $ | 1,285 |  | $ | (35) |  | $ | (1,013)
Discount rate changes |  | 1,129 |  |  | 791 |  |  | 705
Demographic assumption experience |  | (916) |  |  | 1,434 |  |  | 323
Total mark-to-market loss | $ | 1,498 |  | $ | 2,190 |  | $ | 15
2016 The actual rate of return on our tax-qualified U.S. domestic pension plans (“U.S. Pension Plan s”) assets of 1.2% was lower than our expected return of 6.50% primarily due to a challenging environment for global equities and other risk-seeking asset classes. The weighted average discount rate for all of our pension and postretirement healthcare plans declined from 4.38% at May 31, 2015 to 4.04% at May 31, 2016. The demographic assumption experience in 2016 reflects a change in disability rates and an increase in the average retirement age for U.S. pension and other postemployment benefit plans. 2015 The implementation of new U.S. mortality tables in 2015 resulted in an increased participant life expectancy assumption, which increased the overall projected benefit obligation by $1.2 billion. The weighted average discount rate for all of our pension and postretirement healthcare plans declined from 4.57% at May 31, 2014 to 4.38% at May 31, 2015. 2014 The actual rate of return on our U.S. Pension Plan assets of 13.3% exceeded our expected return of 7.75% primarily due to a favorable investment environment for global equity markets. The weighted average discount rate for all of our pension and postretirement healthcare plans decreased from 4.76% at May 31, 2013 to 4.57% at May 31, 2014. 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. Under the Portable Pension Account, 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 Portable Pension Account 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). B enefits 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. T he majority of our internationa l obligations are for defined benefit pension plans in the Netherlands and the United Kingdom. The TNT Express acquisition added a number of defined benefit pension plans, the most significant of which are in the Netherlands, Germany, Italy and Belgium. At May 31, 2016, the total projected benefit obligation for all of these defined benefit plans is $907 million and the total fair value o f assets is $761 million. The assets of the largest acquired plan are primarily invested in fixed income managed funds. At May 31, 2016, the weighted averag e discount rate for all of these defined benefit plans is 2.25% and the expected return on assets used to calculate 2017 expense is 3.29%. Our international pension PBO at May 31, 2016, is approximately 6% of the total pension obligation, and therefore, disaggregated disclosures have no t been provided. POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental and vision coverage to eligible U.S. retirees and their eligible dependents. 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. Postretirement healthcare benefits are capped at 150% of the 1993 per capita projected employer cost, which has been reached and, therefore, these benefits are not subject to additional future inflation. PENSION PLAN ASSUMPTIONS. W e use a measurement date of May 31 for our pension and postretirement h ealthcare plans. Management reviews the assumptions used to measure pension costs on an annual basis. Economic and market conditions at the measurement date impact thes e assumptions from year to year. Actuarial gains or losses are generated for changes in assumptions and to the extent that actual results differ from those assumed. These actuarial gains and losses are immediat ely recognized and expensed in the fourth quarter mark-to-market adjustment.
Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation ("APBO"), are as follows:
|  | Pension Plans |  | Postretirement Healthcare Plans
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Discount rate used to determine benefit obligation | 4.13 | % |  | 4.42 | % |  | 4.60 | % |  | 4.41 | % |  | 4.60 | % |  | 4.70 | %
Discount rate used to determine net periodic benefit cost | 4.42 |  |  | 4.60 |  |  | 4.79 |  |  | 4.60 |  |  | 4.70 |  |  | 4.91 |
Rate of increase in future compensation levels |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| used to determine benefit obligation | 4.46 |  |  | 4.62 |  |  | 4.56 |  |  | - |  |  | - |  |  | - |
Rate of increase in future compensation levels |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| used to determine net periodic benefit cost | 4.62 |  |  | 4.56 |  |  | 4.54 |  |  | - |  |  | - |  |  | - |
Expected long-term rate of return on assets - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Consolidated | 6.50 |  |  | 7.75 |  |  | 7.75 |  |  | - |  |  | - |  |  | - |
Expected long-term rate of return on assets - Segment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Reporting | 6.50 |  |  | 6.50 |  |  | 6.50 |  |  | - |  |  | - |  |  | - |
The expected average rate of return on plan assets is a long-term, forward-looking assumption. It is required to be the expected future long-term rate of earnings on plan assets. Our 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; 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 6.5% expected long-term rate of return on our U.S. Pension Plan assets in 2016 and 7.75% in 2015 and 2014. W e lowered our EROA assumption in 2016 as we continued to implement our asset and liability management strategy. In lowering this assumption we considered our historical returns, our current capital markets outlook and our investment strategy for our plan assets, including the impact of the duration of our liabilities. Our actual return in 2016 was less than the expected return. Our actual returns in 2015 and 2014, however, exceeded those long-term assumptions. Our actual return on plan assets has contracted from 2015 due to lower than expected return s on public equities. For the 15-year period ended May 31, 2016, our actual returns were 6.9%. The investment strategy for pension plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, 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 Barclays Long Government/Long Corporate Index), and U.S. and International Large Cap Equities (which are mainly indexed to the S&P 500 Index and other global 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. O ur investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk. In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio. The f ollowing is a description of the valuation methodologies used for investments meas ured at fair value: Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. These 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. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. These Level 2 investments include mutual funds. Fixed income. We determine the fair value of these 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 these 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 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 incorporat e factors such as contributions and distributions, market transactions, market comparables and performance multiples. In accordance with recently updated accounting standards, certain investments in 2016 and 2015 that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified as Level 1, 2 or 3 in the below fair value hie rarchy but are included in the t otal. As a result, a reclassification has been made to the prior year's plan asset classification table to conform to the current year's presentation, which also resulted in the removal of the prio r year L evel 3 asset roll-forward. S ee Note 2 for additional information. The fair values of investments by level and asset category and the weighted-average asset allocations for our U.S. P ension P lans at the measurement date are presented in the following table (in millions):
|  | Plan Assets at Measurement Date
|  | 2016
|  |  |  |  |  | Target |  | Quoted Prices in Active Markets |  | Other Observable Inputs |  | Unobservable Inputs
Asset Class | Fair Value |  | Actual % |  | Range % |  | Level 1 |  | Level 2 |  | Level 3
Cash and cash equivalents | $ | 568 |  | 2 | % |  | 0-5 | % |  | $ | 76 |  | $ | 492 |  |  |
Equities |  |  |  |  |  |  | 35-55 |  |  |  |  |  |  |  |  |  |
| U.S. large cap equity(1) |  | 3,257 |  | 14 |  |  |  |  |  |  | 750 |  |  |  |  |  |
| International equities(1) |  | 3,381 |  | 15 |  |  |  |  |  |  | 2,685 |  |  | 121 |  |  |
| Global equities(1) |  | 2,794 |  | 12 |  |  |  |  |  |  |  |  |  |  |  |  |
| U.S. SMID cap equity |  | 913 |  | 4 |  |  |  |  |  |  | 913 |  |  |  |  |  |
Fixed income securities |  |  |  |  |  |  | 45-65 |  |  |  |  |  |  |  |  |  |
| Corporate |  | 6,608 |  | 29 |  |  |  |  |  |  |  |  |  | 6,608 |  |  |
| Government |  | 5,148 |  | 22 |  |  |  |  |  |  |  |  |  | 5,148 |  |  |
| Mortgage backed and other(1) |  | 347 |  | 2 |  |  |  |  |  |  |  |  |  | 146 |  |  |
Alternative investments(1) |  | 322 |  | 1 |  |  | 0-5 |  |  |  |  |  |  |  |  |  | 48
Other |  | (321) |  | (1) |  |  |  |  |  |  | (305) |  |  | (16) |  |  |
|  | $ | 23,017 |  | 100 | % |  |  |  |  | $ | 4,119 |  | $ | 12,499 |  | $ | 48
(1) | 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.
|  | 2015 |  |  |
|  |  |  |  |  |  |  | Target |  | Quoted Prices in Active Markets |  | Other Observable Inputs |  |
Asset Class | Fair Value |  | Actual % |  | Range % |  | Level 1 |  | Level 2 |  |
Cash and cash equivalents | $ | 738 |  | 3 | % |  | 0-5 | % |  | $ | 36 |  | $ | 702 |  |  |
Equities |  |  |  |  |  |  | 35-55 |  |  |  |  |  |  |  |  |  |
| U.S. large cap equity(1) |  | 4,291 |  | 19 |  |  |  |  |  |  | 302 |  |  |  |  |  |
| International equities(1) |  | 3,064 |  | 14 |  |  |  |  |  |  | 2,429 |  |  | 1 |  |  |
| Global equities(1) |  | 2,579 |  | 11 |  |  |  |  |  |  |  |  |  |  |  |  |
| U.S. SMID cap equity |  | 979 |  | 4 |  |  |  |  |  |  | 979 |  |  |  |  |  |
Fixed income securities |  |  |  |  |  |  | 45-65 |  |  |  |  |  |  |  |  |  |
| Corporate |  | 6,455 |  | 28 |  |  |  |  |  |  |  |  |  | 6,455 |  |  |
| Government |  | 4,645 |  | 20 |  |  |  |  |  |  |  |  |  | 4,645 |  |  |
| Mortgage backed and other(1) |  | 213 |  | 1 |  |  |  |  |  |  |  |  |  | 153 |  |  |
Alternative investments(1) |  | 226 |  | 1 |  |  | 0-5 |  |  |  |  |  |  |  |  |  |
Other |  | (184) |  | (1) |  |  |  |  |  |  | (181) |  |  | (3) |  |  |
|  | $ | 23,006 |  | 100 | % |  |  |  |  | $ | 3,565 |  | $ | 11,953 |  |  |
(1) | 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):
|  | 2016 |  |  |  |  |  |
Balance at beginning of year(1) | $ | - |  |  |  |  |  |  |
Actual return on plan assets: |  |  |  |  |  |  |  |  |
| Assets held during current year |  | 2 |  |  |  |  |  |  |
| Assets sold during the year |  | - |  |  |  |  |  |  |
Purchases, sales and settlements |  | 46 |  |  |  |  |  |  |
Balance at end of year | $ | 48 |  |  |  |  |  |  |
(1) | Investments classified in prior years as Level 3 that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have been removed from the fair value hierarchy in accordance with retrospective adoption of recently updated accounting standards. See Note 2 for additional information.
The following table provides 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, 2016 and a statement of the funded status as of May 31, 2016 and 2015 (in millions):
|  |  | Pension Plans |  | Postretirement Healthcare Plans
|  |  | 2016 |  | 2015 |  | 2016 |  | 2015
Accumulated Benefit Obligation ("ABO") | $ | 28,845 |  | $ | 26,793 |  |  |  |  |  |
Changes in Projected Benefit Obligation ("PBO") and |  |  |  |  |  |  |  |  |  |  |
| Accumulated Postretirement Benefit Obligation ("APBO") |  |  |  |  |  |  |  |  |  |  |
PBO/APBO at the beginning of year | $ | 27,512 |  | $ | 24,578 |  | $ | 929 |  | $ | 883
| Service cost |  | 662 |  |  | 653 |  |  | 40 |  |  | 40
| Interest cost |  | 1,180 |  |  | 1,096 |  |  | 42 |  |  | 41
| Actuarial loss |  | 277 |  |  | 2,231 |  |  | (64) |  |  | 6
| Benefits paid |  | (912) |  |  | (815) |  |  | (78) |  |  | (73)
| Business acquisition |  | 907 |  |  | - |  |  | - |  |  | -
| Other |  | (24) |  |  | (231) |  |  | 36 |  |  | 32
PBO/APBO at the end of year | $ | 29,602 |  | $ | 27,512 |  | $ | 905 |  | $ | 929
Change in Plan Assets |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at the beginning of year | $ | 23,505 |  | $ | 21,907 |  | $ | - |  | $ | -
| Actual return on plan assets |  | 223 |  |  | 1,718 |  |  | - |  |  | -
| Company contributions |  | 726 |  |  | 746 |  |  | 42 |  |  | 37
| Benefits paid |  | (912) |  |  | (815) |  |  | (78) |  |  | (73)
| Business acquisition |  | 761 |  |  | - |  |  | - |  |  | -
| Other |  | (32) |  |  | (51) |  |  | 36 |  |  | 36
Fair value of plan assets at the end of year | $ | 24,271 |  | $ | 23,505 |  | $ | - |  | $ | -
Funded Status of the Plans | $ | (5,331) |  | $ | (4,007) |  | $ | (905) |  | $ | (929)
Amount Recognized in the Balance Sheet at May 31: |  |  |  |  |  |  |  |  |  |  |
| Noncurrent asset | $ | 53 |  | $ | 26 |  | $ | - |  | $ | -
| Current pension, postretirement healthcare and other |  |  |  |  |  |  |  |  |  |  |
|  | benefit obligations |  | (31) |  |  | (34) |  |  | (40) |  |  | (42)
| Noncurrent pension, postretirement healthcare and other |  |  |  |  |  |  |  |  |  |  |
|  | benefit obligations |  | (5,353) |  |  | (3,999) |  |  | (865) |  |  | (887)
Net amount recognized | $ | (5,331) |  | $ | (4,007) |  | $ | (905) |  | $ | (929)
Amounts Recognized in AOCI and not yet reflected in |  |  |  |  |  |  |  |  |  |  |
| Net Periodic Benefit Cost: |  |  |  |  |  |  |  |  |  |  |
|  | Prior service credit and other | $ | (546) |  | $ | (668) |  | $ | - |  | $ | -
Amounts Recognized in AOCI and not yet reflected in |  |  |  |  |  |  |  |  |  |  |
| Net Periodic Benefit Cost expected to be amortized in |  |  |  |  |  |  |  |  |  |  |
| next year's Net Periodic Benefit Cost: |  |  |  |  |  |  |  |  |  |  |
|  | Prior service credit and other | $ | (121) |  | $ | (121) |  | $ | - |  | $ | -
Our pension plans included the following components at May 31 (in millions):
|  |  |  |  | PBO |  | Fair Value of Plan Assets |  | Funded Status
2016 |  |  |  |  |  |  |  |  |  |  |  |
| Qualified |  |  |  |  | $ | 27,543 |  | $ | 23,017 |  | $ | (4,526)
| Nonqualified |  |  |  |  |  | 261 |  |  | - |  |  | (261)
| International Plans |  |  |  |  |  | 1,798 |  |  | 1,254 |  |  | (544)
| Total |  |  |  |  | $ | 29,602 |  | $ | 24,271 |  | $ | (5,331)
2015 |  |  |  |  |  |  |  |  |  |  |  |
| Qualified |  |  |  |  | $ | 26,365 |  | $ | 23,006 |  | $ | (3,359)
| Nonqualified |  |  |  |  |  | 271 |  |  | - |  |  | (271)
| International Plans |  |  |  |  |  | 876 |  |  | 499 |  |  | (377)
| Total |  |  |  |  | $ | 27,512 |  | $ | 23,505 |  | $ | (4,007)
The table above provides the PBO, fair value of plan assets and funded status of our pension plans on an aggregated basis. The following table presents our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. T he 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
|  |  | 2016 |  | 2015
Pension Benefits |  |  |  |  |
| Fair value of plan assets | $ | 23,867 |  | $ | 23,099
| PBO |  | (29,251) |  |  | (27,132)
| Net funded status | $ | (5,384) |  | $ | (4,033)
|  |  | ABO Exceeds the Fair Value of Plan Assets
|  |  | 2016 |  | 2015
Pension Benefits |  |  |  |  |
| ABO(1) | $ | (28,493) |  | $ | (26,413)
| Fair value of plan assets |  | 23,865 |  |  | 23,099
| PBO |  | (29,249) |  |  | (27,132)
| Net funded status | $ | (5,384) |  | $ | (4,033)
(1)ABO not used in determination of funded status. Cont ributions to our U.S. Pension P lans for the years ended May 31 were as follows (in millions):
|  |  | 2016 |  | 2015
| Required | $ | 8 |  | $ | 388
| Voluntary |  | 652 |  |  | 272
|  | $ | 660 |  | $ | 660
For 201 7, we anticipate making contributions to our U.S. Pension Plans totaling $1.0 b illion (approximately $615 million of which are required). Net periodic benefit cost for the three years ended May 31 were as follows (in millions):
| Pension Plans |  | Postretirement Healthcare Plans
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Service cost | $ | 662 |  | $ | 653 |  | $ | 657 |  | $ | 40 |  | $ | 40 |  | $ | 38
Interest cost |  | 1,180 |  |  | 1,096 |  |  | 1,055 |  |  | 42 |  |  | 41 |  |  | 40
Expected return on plan assets |  | (1,508) |  |  | (1,678) |  |  | (1,495) |  |  | - |  |  | - |  |  | -
Amortization of prior service credit |  | (121) |  |  | (115) |  |  | (115) |  |  | - |  |  | - |  |  | -
Actuarial losses (gains) and other |  | 1,562 |  |  | 2,190 |  |  | 7 |  |  | (64) |  |  | 6 |  |  | 5
Net periodic benefit cost | $ | 1,775 |  | $ | 2,146 |  | $ | 109 |  | $ | 18 |  | $ | 87 |  | $ | 83
Amounts recognized in other comprehensive income ("OCI") for all plans for the years ended May 31 were as follows (in millions): |  |  |
|  |  | 2016 |  | 2015
|  |  | Pension Plans |  | Postretirement Healthcare Plans |  | Pension Plans |  | Postretirement Healthcare Plans
|  |  | Gross Amount |  | Net of Tax Amount |  | Gross Amount |  | Net of Tax Amount |  | Gross Amount |  | Net of Tax Amount |  | Gross Amount |  | Net of Tax Amount
Prior service cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| arising during period | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | (113) |  | $ | (72) |  | $ | (1) |  | $ | -
Amortizations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior services credit |  | 121 |  |  | 76 |  |  | - |  |  | - |  |  | 115 |  |  | 72 |  |  | - |  |  | -
Total recognized in OCI | $ | 121 |  | $ | 76 |  | $ | - |  | $ | - |  | $ | 2 |  | $ | - |  | $ | (1) |  | $ | -
Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):
| Pension Plans |  | Postretirement Healthcare Plans |
2017 | $ | 982 |  | $ | 40 |
2018 |  | 1,010 |  |  | 41 |
2019 |  | 1,091 |  |  | 43 |
2020 |  | 1,201 |  |  | 42 |
2021 |  | 1,287 |  |  | 43 |
2022-2026 |  | 8,424 |  |  | 240 |
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 t o increase at an annual rate of 8.3% during 201 7, decreasing to an annual growth rate of 4.50% in 2037 and thereafter. A 1% change in these annual trend rates would not have a significant impact on the APBO at May 31, 20 1 6 or 20 1 6 benefit expense because the level of these benefits is capped.

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