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Major League Baseball Benefit Plans Presented by: Andrew Hill Blair Huang Ted Nocella Mike Wahls - PowerPoint PPT Presentation

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Major League Baseball Benefit Plans Presented by: Andrew Hill Blair Huang Ted Nocella Mike Wahls. Introduction. Comprehensive 3 Part Benefit Plan Part 1: Standard Pension Plan Part 2: Investment Plan Part 3: Health & Welfare Benefits. Introduction. As a whole,

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Major League Baseball

Benefit Plans

Presented by:

Andrew Hill

Blair Huang

Ted Nocella

Mike Wahls


  • Comprehensive 3 Part Benefit Plan

    • Part 1: Standard Pension Plan

    • Part 2: Investment Plan

    • Part 3: Health & Welfare Benefits


As a whole,

  • Major League Baseball’s Plan is:

    • Covers more members

    • Covers them quicker

    • Gives them more benefits throughout life

      Than the other Major Sports Leagues

  • MLBPA deserves much of the credit for this

Mlb pension plan
MLB Pension Plan

Implemented since 1947

Expansion in 1966 by Marvin Miller

Gain more concession on 1972 strike

The compensation is considered generous!

Eligibility and requirements tends to be beneficiary to the players! (ex: 1 day vesting, early access allowed…etc)

Average 10-year retiree earns: $180,000

Eligibility and compensation
Eligibility and Compensation

Apply on all the players, coaches, trainers

Compensation based on “active service” period and contract salary levels.

No specific formula. Benefits are determined by group table( year, classes..)

Accrual rules apply:

Fixed retirement benefit (pre-setup)

Assumed variable benefit (performance)


Question !


  • A 10+ years serving MLB veteran can actual receive an estimate annual payment close to the maximum amount allowed by law!

  • Q: What is the maximum allowed benefit in Defined Benefit Plan (Pension) that is restricted by law?

  • $50,000

  • $185,000

  • $1,000,000

  • MLB pension is out of this cap concern

  • Why do I bother?

Compensation cont
Compensation Cont.

Before 1970: Normal retirement age: 65

After 1970: decrease to 62

Monthly minimum:$1,000 Max out to $185,000 yearly (10+ years )

Payout method: whole life annuity with option of endowment annuity for 120 payment guaranteed (subject to reduced half benefit)

Pension mortality issue
Pension: Mortality Issue

According to the researches:

Career length is inversely associated with the risk of death, likely because those who play longer gain additional incomes, physical fitness, and training.

In addition: the life expectancy of MLB player is higher than other major leagues sports even than normal people.

Pension is real $!!

Investment plan
Investment Plan

  • 2nd major portion of Benefits plan

  • More of a hybrid plan

  • Pension committee decides amount of contribution

  • Contribution is allocated to individual accounts


  • Individual must accrue:

    • At 60 days of service

    • One or more quarters in a year of service

    • Must have accrued in the year in which contributions are made

    • Allocation limit, Lesser of:

      • 7% of salary, or

      • $7500


  • Made to the suspense account on Nov. 15

  • Usually allocated the following March 31st to members individual accounts

  • Amount based on total quarters of active years of service

  • Members get amount per qtr. of service

  • Suspense acct. amount gets divided by # of qtrs. of active service for all eligible members

Plan administration
Plan Administration

  • Administrator establishes and maintains individual accts.

  • Pension Committee provides info. to admin.

  • Committee determines # of investment funds

    • Funds that could be available: money market funds, equity, mutual, fixed income, guaranteed inv. Contracts, pooled inv. Funds established by insurance co., and insurance co. special accts. Fund.

  • Members determine which funds to invest in

  • Members can periodically change portfolio allocation

Member distribution of account
Member distribution of account

  • Member can remove money from investment account if:

    • Inactive for more than one year

    • Becomes disabled

    • Retires

  • If member dies, distr. goes to beneficiary

  • If married, spouse is beneficiary

  • If single, anyone can be appointed beneficiary

Health plan
Health Plan

  • General Health Plan

  • Optional Medicare Supplement

  • Visions and Dental

General health plan coverage
General Health Plan- Coverage

  • Eligible Member

    • Active List for 1+ Days

    • 60 Days of service for MLB

    • 2 years of contract

  • Wives, Dependents

General health plan coverage1
General Health Plan- Coverage

  • Examples

    • Death, Divorce, Eligible Member enters Medicare

  • Effect

    • Under 4 years of service

      • 24 months continued coverage

    • Over 4 years of service

      • Indefinite continuation

General health plan hospital stays
General Health Plan- Hospital Stays

  • Costs

    • 100% Coverage

    • Examples

      • Drugs, nursing costs, machine usage

  • Limitations

    • 120 days

    • Semi private room

      • If a private room, plan will cover cost of semi private room + $20

General health plan outpatient
General Health Plan- Outpatient

  • Examples

    • Prescription Drugs, Physician Services, Initial Prosthetics

  • Staged Payment coverage

    • $500 Deductible

    • 80% coverage for costs above $500

    • Above threshold, plan pays 100%

      • $5,000 for individual

      • $15,000 for family of four

Medicare supplement
Medicare Supplement

  • Procedure

    • Recalculate costs based on Supplemental Plan

    • Supplement pays difference between medical coverage and calculated benefit

  • Staged Coverage

    • Similar to General Plan

    • Thresholds raised

      • $10,000 for an Individual

      • $30,000 for a family of four

Dental and vision benefits
Dental and Vision Benefits

  • Dental

    • 100% of all Routine Maintenance

    • 80% of Approved Charges procedures

      • Examples

        • Root canals, Orthodontics

      • Limited to $5,000

  • Vision

    • $75 per individual for Optometrist

    • $50 per individual for Glass Lenses

    • $75 per individual for Frames

    • $100 per individual for Contact Lenses

Health Plan is



especially for

the baseman!!!


  • Considered “Standard” for any Sports League

    • Not to say there aren’t improvements that can’t be made but..

  • At this point it’s the best, relatively


  • Pension Plan

    • Tied to salary, performance & years of service

      • Allows for players to maintain somewhat relative lifestyle

  • Encourages personal savings (IRA?) for Minor League, Low-level Major League and Mid-Level Major League Players


  • Investment Plan

  • Allows for Major League Baseball to give back some of the massive amount of Money it earns

    • No Player Contribution

    • Like a hybrid plan (individual accounts/profit sharing)

    • Pension Committee decides on $ amount


  • Health & Welfare Plan

    • Comprehensive for coverage

    • Generous coverage amounts

    • Supplemental Medicare help

    • Extended Benefit Amounts

      • 24 months for players with less than 4 years service

      • Life for players with more than 4 year service


  • Two suggestions:

  • Automatic 401(k) plan

    • To help ensure responsible savings for athletes

    • To help ensure Lower level players are taken care of

  • Life coverage for players whose careers are cut short by injury

Thank you
Thank you!