1. Major League Baseball Benefit Plans Andrew Hill Blair Huang
Presented by:
Andrew Hill
Blair Huang
Ted Nocella
Mike Wahls

2. Introduction Comprehensive 3 Part Benefit Plan
Part 1: Standard Pension Plan
Part 2: Investment Plan
Part 3: Health & Welfare Benefits

3. Introduction 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

4. 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

5. 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)

6. Question !
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?

7. 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)

8. 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 $!!

9. Compare to other Sports
Vesting schedule
Major plan type
Compensation
Recent improved benefit
MLB
1 day
Pension,
401k
Dave Garcia(86)
$92,000
Received $175,000(10+ years) Max. allowed by law!
NBA
3 years
John Ezersky(84)
$10,800
Post 65ers landed a 37 % increase in benefits
NFL
3 yeas
Pension, 401k, annuity
Bob Clair(76)
$36,000
25% negotiated increasing+ annuity plan
NHL
2 years
DC plan, 401k
Christian Brown(77)
$12,000
Teams Contributes $45,000(2+ years)

10. 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

11. Limitations 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

12. Contributions 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

13. 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

14. 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

15. Health Plan General Health Plan Optional Medicare Supplement
Visions and Dental

16. General Health Plan- Coverage
Eligible Member
Active List for 1+ Days
60 Days of service for MLB
2 years of contract
Wives, Dependents

17. 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

18. 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

19. 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

20. Medicare Supplement Procedure Staged Coverage
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

21. Dental and Vision Benefits
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

22. Health Plan is Extremely Important especially for the baseman!!!

23. Conclusion 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

24. Conclusion 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

25. Conclusion 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

26. Conclusion 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

27. Suggestions 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

28. Thank you!
Questions?