Scrappy Jack

iTrader: (2)

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.

rleete

iTrader: (21)

Props for that!

Joe Perez

iTrader: (8)

I forgot to cover this earlier.

This is one more reason why it was advantageous for the referees to force a lockout as opposed to calling a strike. During a strike, the employer (the League) may legally hire permanent workers to replace the striking workers. But during a lockout, the employer may only hire temporary replacement workers. Thus, the jobs of the referees are protected, and they can elect to prolong the situation for as long as they wish. (Remember that they are collecting unemployment benefits while this is going on- another thing they'd be ineligable for during a strike.)




I couldn't have said it any better myself.

Pensions ARE great for employees- at least, they're great for employees who have seniority. Those are the one who will be retiring and reaping guaranteed pension benefits during the time period in which the pension plan is still solvent.

Unfortunately, pension plans are just not sustainable in the long term. As time goes by, and more and more people are collecting pensions relative to the number of people employed, the system gets itself into a state where the amount being payed out of the plan exceeds the amount being paid into it. As a matter of historical precident, every generation of Americans tends to live for a longer time after retirement, and thus, will collect more and more money from a defined-benefit plan than did their predecessors. It's essentially a pyramid scheme, in which each succesive individual expects to collect more from the system than they paid into it (or had paid into it on their behalf), and while this works great for the first generation or two of payees, the system as a whole must inevitably collapse.

This is essentially the same problem which has elevated Medicare / Social Security into a political campeign wedge, and one of the factors that played a role in the bankruptcy of General Motors.

So the NFL is simply saying "Look, this system is unsustainable. Now that we have fulfilled our obligations under the previous contract, let us propose a change to the system for the new contract which will enable everyone to continue to enjoy retirement benefits."

But the refs don't seem to care, they just want as much as they can get for themselves, and to hell with the consequences.

thenuge26

iTrader: (2)

Green Bay's replacement weatherman: