The Fiftieth Super Bowl is over!
Whatever side you were rooting for, if you are in a job that involves a collective bargaining agreement– the fancy name for a union shop—you may have more in common with those tough players than you think. So your field skills are a bit weak and your attempts at defense makes grown men cry. But you can mine for precious metal, drive a truck, and run electrical line.
Most football players, including the Broncos and the Panthers players, are stocking up retirement assets now while they are in the active portion of their careers. Football players and most other sports employees are typically covered by a type of pension plan called “a “multiemployer plan”.
What is this product? Multiemployer pensions, or Trusts, are found in industries where union members work for a large number of companies over the course of their career. It’s common in industries such as construction, mining, and trucking. (and, interestingly, entertainment). Employers negotiate with the union to provide pension benefits. Generally, it’s an hourly fee on top of direct payroll.
The amount contributed by each employer on behalf of the employee is established as part of a collective bargaining agreement and paid on a monthly basis. For example, an employer may be required to contribute $4.00 to the fund for each hour worked by the plans’ participants.
These plans are administered jointly by management trustees selected by employers as well as trustees selected by the union. The board of trustees determines the retirement income benefit based on the contributions negotiated between the union and employers in addition to the investment strategy for the pension fund.
Poor investment returns, coupled with an aging workforce, continue to threaten the long-term viability of multiemployer pension plans (and for that matter, single employer plans as well).
Managing director of research with the Society of Actuaries, which annually analyzes NFL pension filings submitted to the U.S. Department of Labor, confirms that winning the Lombardi Trophy does not matter when it comes to pensions. “Collective bargaining happens to determine what the salaries should be and what the pension plan is and what other benefits should be,” Hall says. “It’s the same labor vs. employer situation. The difference is that we know who the NFL employees are because they are on TV every week.”
Just like some other multiemployer union plans, the NFL plan has gone through some rough years since 2008, with funding levels sinking into troubled territory. The plan funding level reached 48% in 2013. That means the plan had just 48% of assets needed to cover the retirement benefits for all current and future football players. By 2015 — thanks to large contributions from the club owners — funding levels climbed back up to 72%, according to Hall.
The NFL employees are also offered a well-received 401k plan. Together, the multiemployment pension plan plus 401k plan, and with hopefully some personal savings, NFL employees can realize their goal of retiring comfortably.
For those of you who participate in a multiemployer pension plans, here’s the skinny: it would be interesting and important to look at the funding of your plan. The Pension Guarantee Plan, a government agency that shores up pensions of all kind, has a really fascinating website at www.pbgc.gov. Find out the web site for your plan, and hopefully you will see it grow. And your personal account should not be touched until retirement.
If you are offered a 401k plan, it’s up to you to act. If you have both a multiemployer pension, and a well-invested, well monitored 401k plan, you too should be able to retire like Manning. OK, not really. But he can always borrow from Eli.