nfl retirement plans what s all the fuss about
Download
Skip this Video
Download Presentation
NFL Retirement Plans “What’s all the fuss about?”

Loading in 2 Seconds...

play fullscreen
1 / 21

NFL Retirement Plans “What’s all the fuss about?” - PowerPoint PPT Presentation


  • 88 Views
  • Uploaded on

NFL Retirement Plans “What’s all the fuss about?”. Charles Clark and Regine Rucker Thursday, November 29, 2007 Finance 434 - Employee Benefits Dr. David Sinow. Introduction. Retirement pensions Tradition of the American workforce Late start for Sports NFL

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' NFL Retirement Plans “What’s all the fuss about?”' - wayne-kirk


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
nfl retirement plans what s all the fuss about

NFL Retirement Plans“What’s all the fuss about?”

Charles Clark and Regine Rucker

Thursday, November 29, 2007

Finance 434 - Employee Benefits

Dr. David Sinow

introduction
Introduction
  • Retirement pensions
    • Tradition of the American workforce
  • Late start for Sports
  • NFL
    • Nearly $7 billion in revenue annually
    • $193K: Minimum Salary for Rookies
    • $1.1 Million: Avg. NFL Salary
    • Pensions Plans
    • Avg. career 3.5 yrs.
  • Recent Debate
objectives
Objectives
  • History of NFL Retirement Plans
  • Current state of NFL Retirement Plans
    • Comparison to other major professional sport leagues
  • Suggestions to improve benefits of “old-timers”
history of nfl retirement plans
History of NFL Retirement Plans
  • NFLPA
    • Union providing retirement, medical, and disability benefits to players through a collective bargaining agreement (CBA) along w/ NFL
    • 3 of 6 appointed voting trustees on the Retirement Board
    • Organized in 1956
    • “Bert Bell NFL Retirement Plan” of 1962
history of nfl retirement plans1
History of NFL Retirement Plans
  • 1970 – 1st Revision
    • Basis for current plan
    • Formula to calculate monthly pension developed
      • Normal Retirement Age (NRA) = 55
      • Single Life Annuity
      • Vesting Schedule – 5 “Credited Seasons”
      • # of “Credited Seasons” X “Benefit Credit”
        • “Credited Seasons” earned if paid for 3 or more games in a football season
        • “Benefit Credit” = $60 for retirement 1959-66
      • Reductions – Joint/Survivor, Early Pension Benefits, and Social Security Adjustments
history of nfl retirement plans2
History of NFL Retirement Plans
  • 1977 Revision
    • Vesting Schedule - Reduced to 4 yrs.
    • Added lump sum “Early Payment Benefit” (EPB)
  • 1987 Revision
    • Expiration of 1982 CBA
    • $150 Benefit Credit for 1987 and 1988
    • 1989: “Pete Rozelle NFL Player Retirement Plan”
history of nfl retirement plans3
History of NFL Retirement Plans
  • 1993 CBA
    • “Benefit Credit” increase from $60 to $80 for 1959-66 retirees and $150 to $210
      • “Pre-59er’s” included, receiving same rate as 1959-99 retirees
    • Vesting Schedule – Reduced to 3 yrs.
    • Co-counsel, co-actuary system replaced
history of nfl retirement plans4
History of NFL Retirement Plans
  • 1993 CBA
    • Future contributions based on actuarial factors
    • Increases in plan funding
    • Early Retirement Options eliminated for those retired after 1993
    • 401 (k) Plan established w/ 2 for 1 match
    • All benefits tied to salary cap
history of nfl retirement plans5
History of NFL Retirement Plans
  • The “GREAT DEBATE”
    • Benefits of all (current and retired) paid by active players
    • Former Players vs. Current Players
    • Benefit upgrades not received by “old-timers”
    • Union leaders have no obligation to represent former players, nor does management to re-negotiate benefits for “PAST” employees
current retirement plan
Current Retirement Plan
  • CBA allocated 60% of league revenue to player benefits and salaries.
    • Because of this allocation, each NFL player (approximately 1800) paid $82,000 in benefits to former players
  • Although NFL revenues are estimated to be nearly $7 billion, only 2% went to retired players.
    • $96.5 million went to player retirements
    • $31 million went to health benefits
    • $20 million went to disability benefits
current retirement plan1
Current Retirement Plan
  • A player retiring today receives under the collective bargaining agreement
    • Pension funding
    • Group insurance
    • Injury protection
    • Workers’ compensation
    • Pre-season per diem
    • Expenses for travel, board and lodging for off-season workout programs
    • Payments or reimbursements for participating in Rookie Orientation Program
    • Moving and Travel Expenses
    • Postseason Pay
current retirement plan2
Current Retirement Plan
  • A player retiring today receives under the collective bargaining agreement
    • Player medical costs
    • Severance pay
    • Minimum Salary Benefit
    • The Performance Based Pool
    • The Tuition Assistance Plan
    • The NFL Players Health Reimbursement Plan
    • The “88 Benefit” Plan
    • The “Second Career Savings” Plan
    • The “Player Annuity Plan”
bert bell pete rozelle nfl player retirement plan
Bert Bell/Pete Rozelle NFL Player Retirement Plan
  • In April 2006, was estimated to be 93% funded
    • $1.034 billion actuarial liability
  • Assumed investment rate of return is 7.25%
  • Players receive retirement credits based upon years of service in the NFL, not total salary
example former vs current
Example - Former vs. Current

But most players retire w/injuries…incurring major recurring medical expenses!!!

second career savings plan
Second Career Savings Plan
  • Established in 1993
  • Was the first 401(k) plan in professional sports
  • Beginning in the 2007 Plan Year, eligible players are automatically enrolled
  • After a player’s second year, pre-tax contributions up to $20,000 receive a two-to-one match
    • Remember, the IRS limit for contributions for 2007 was only $15,500
nfl player annuity program
NFL Player Annuity Program
  • Established in 1998
  • This DC plan allows former players to receive annuity payments as early as age 35
  • After 4 credited seasons, $65,000 is placed in an annuity account for each subsequent season
  • The NFL Player Annuity Program has approximately $340 million in assets
health and disability benefits
Health and Disability Benefits
  • Free medical coverage for vested retired players and their families for five years after retirement
  • Players can contribute $25,000 per year (for a total of $300,000) to fund medical coverage after their free coverage ends
  • 88 Plan provides reimbursement for certain costs related to dementia up to $88,000
  • Disability benefits can be between $18,000 to $224,000 per year
ways to improve the plan
Ways to Improve the Plan
  • Many of the problems of the NFL pension plan are similar to those of Social Security
    • “Pay as you go” DB plans
    • Increasing health care costs
    • Benefits for many retirees outweighs the amount they put into the system
  • Similar to fixing Social Security, there are two ways to fix NFL pensions
    • Increase pension funding
    • Decrease the benefits of current players
acknowledgements
Acknowledgements
  • Jeff Nixon
    • Buffalo Bills Retiree
    • 1979-84
  • NFL/ NFLPA/ MLB
  • Dr. Sinow
ad