NFL Pension Plan update
Any former player that is vested in the Bert Bell/Pete Rozelle NFL Retirement Plan recently received an Annual Funding Notice. One year ago, I wrote an article about the status of our Pension Plan.
At the time I wrote the article, our Pension Plan was identified as being in the “endangered” status. Unfortunately, in the most recent notice, it is still listed as endangered. In other words, the Assets (money invested in the Plan) are not enough to pay the Liabilities (current and future payments to vested players).
According to the Notice, the Plan is underfunded by $1,339,162,880. That's over a Billion dollars!
Pension law requires that every plan have a procedure for establishing a funding policy to carry out the plan objectives. The most important objective is to make sure the assets needed to pay for the benefits are sufficient to pay both current retirees and future retirees when they eventually tap into their pension.
The NFL owners are required to make contributions to the plan that are determined to be “actuarially” necessary under assumptions and methods set forth in the CBA. Nonetheless, they have been getting away with underfunding the pension plan for quite some time now.
Owner payments to the Pension Plan will need to increase dramatically due to the pension increases negotiated in the 2011 CBA and the fact that players - since 1993 - only need three years to become vested in the pension plan.
The pension plan will be increased three (3) times during the current CBA. It will go from $470 a credited season to:
$560 2012 through 2014
$660 2015 through 2017
$760 2018 through 2020
Meanwhile, thousands of pre-1993 players are still receiving $255 per credited season - plus the additional $108 or $124 per credited season under the Legacy Benefit for a grand total of $363 or $379 per credited season.
It’s no wonder the wives of Hall of Fame players have written a letter to NFL Commissioner Roger Goodell and NFLPA Executive Director DeMaurice Smith asking them to work together to increase pensions for the pioneer players of the NFL.
There is general consensus among former players that the Legacy Benefit did not go far enough in addressing the inequality between pre-1993 player and post-1993 player pensions. The inequality gap has widened considerably since the signing of the 2011 CBA.
Although we would like to see another increase in the pre-1993 pensions, it is also important that the owners address the 1.3 + Billion shortfall in the current plan.
According to the Notice, the money needed to pay all current and projected benefits is $2,945,728,870, but the current value of assets is only $1,606,565,990. Those assets have been invested in a number of stocks, bonds, mutual funds, treasury notes, hedge funds, private equity, cash and real estate. If you want to see how they have performed in the first quarter of 2015, you can click on the following link: Bert Bell/Pete Rozelle NFL Player Retirement Plan - 1Q 2015 Plan Review
You can also see the NFL Retirement Board’s Form 5500 here which details the assets and liabilities and includes the annual payments made to groups managing the Retirement fund, investment companies, lawyers, retirement board staff and other individuals.
Pension Plans are considered in “endangered” status if the funded percentage falls below 80% and in “critical” status if the funded percentage falls below 65%. Right now, our Plan is at 54.5% which should put the plan in critical status, but the Notice says that the “fair market value’ of the assets gives a clearer picture of a plan’s funded status, so apparently by using that method, the Plan is just above the 65% threshold.
Here are the past five year's funded percentages:
2010 | 77.4% |
2011 | 64.5% |
2012 | 51.7% |
2013 | 48.4% |
2014 | 54.5% |
Anytime the Pension Plan is in endangered status, the trustees of the plan are required to adopt a funding improvement plan that establishes steps and benchmarks for pension plans to improve their funding status over a specified period of time.
Robert Smith, Jeff Van Note and Sam McCullum are the retired player trustees of the Retirement Board. The Retirement Board also has three NFL appointed trustees. The full Board adopted a FIP (Funding Improvement Plan) on February 23, 2011 and recently updated that plan on May 14, 2015. Here is a link to the Improvement Plan: FIP - Bert Bell/Pete Rozelle
According to the FIP, the owners are scheduled to make additional contributions that will get the funding percentage up to 80% by 2020.
I hope the former players on the Retirement Board will hold the owners accountable for those contributions.
We will be watching!
