Originally Posted by thenuge26
From what I have found (and it is hard researching this through all the bullshit "news" sites that don't tell you ****) the NFL wants to freeze their existing pensions which were agreed upon in 2006.
I have no idea what this means compared to what you said. But basically the reasoning is "not many people have pensions anymore, so we want to take away their pensions." What?
Joe pretty much nailed most of this, but basically there are two major types of employer-sponsored retirement plan types: defined benefit and defined contribution.
With defined benefit plans, like a pension, the employer is on the hook for a future payout that is guaranteed for some time period (usually your life or a combination of your and your spouse's life). Often times, most of the money that goes toward funding this benefit comes from the employer with very little (or none) contributed by the employee. These benefits can end up being the equivalent of millions of dollars and are extremely challenging for corporations to accomodate - especially in modern financial market environments.
With a defined contribution plan, like a 401k, the company contribues a defined amount (usually matching some percentage of what you put in, but sometimes that amount is $0). What you end up with depends on some combination of luck, skill and amount saved.
It sounds like the NFL said, "In 2006, we agreed to fund a pension. We did fund that pension from 2006 through 2012. Moving forward, you will keep that pension amount but future contributions will go toward a 401k plan."
Now, instead of retiring with:
A) a guaranteed payout of $100k per year for some unknown number of years (potentially decades) via a pension funded from 2006 through 2036 by the NFL, the ref might retire with
B) a guaranteed payout of $15k per year for some unknown number of years (potentially decades) via a pension funded from 2006 through 2012 by the NFL + whatever the ref manages to save in the 401k plus any employer match.
I think pensions are great (for employees) and I can understand the refs being upset about losing them, especially given that the pay increase is unlikely to offset the loss of that guaranteed future income stream.