NFL Pension Pact Called Without Precedent

March 15, 2002 (PLANSPONSOR.com) - More than 2,000 retired football players are in line for a hefty pension increase of as much as 100% in April in what is being heralded as a deal without US precedent, according to a USA Today report.

‘Nobody has reached back and given a (pension) raise to retired workers of anything approaching this magnitude,’ Karen Friedman, policy strategies director at the Pension Rights Center, a Washington, D.C., trade group, told the newspaper.

The pension hikes, hammered out between the players’ union and the National Football League include:

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  • The oldest retirees, about 625 men who played before 1959, will rise from $100 a month to $200 a month for each season they played.
  • About 1,400 younger retirees who played during the 1959 to 1976 period will also go to $200 a month for each season played, up from their current $100 to $185.

Level Playing Field

Pro football’s oldest retirees need to have played a minimum of five seasons to qualify for a pension. The requirement drops to four seasons for post-1973 retirees, and three seasons for pros that have played since the 1992 season. Ordinary retirement age is 55.

Players union executive director Gene Upshaw said the raises recognize the contributions older players made to building the NFL into a multibillion-dollar industry and are designed to ‘level the playing field.’

The raises add about $110 million in new potential benefits to a plan that paid out nearly $28 million in benefits last year. The fund’s assets exceed $700 million, according to USA Today.

Pro football’s retirees were thankful for the extra money, but some said it was not enough.
‘It’s good, but I think we could have gotten a little bit more,’ said Chuck Bednarik, 76, who played 14 seasons for the Philadelphia Eagles and retired after the 1962 season.

‘My generation, we made (the NFL) what it is today. Now, they’ve got more money than they know what do with, and I’ll tell you something else: We played a hell of a lot harder for ours.’

Bednarik’s pension doubles to $2,800 a month under the new plan.

Pru Stock Conversion Triggers Ownership Debate

March 14, 2002 (PLANSPONSOR.com) - Six former executives of Sallie Mae, the education-finance agency, are locked in a pension battle with their former employer in a complex dispute over the rights to $1 million in stock.

The dispute is a historical remnant of a 1993 life-insurance program Sallie Mae instituted to insure the pension benefits for 105 of its highest paid workers. Prudential Life Insurance Co. administered the program, according to a Dow Jones report.

Key issue in the dispute is whether Sallie Mae is entitled to the Prudential stock for paying for the coverage or whether it belongs to the six executives since they were the object of the coverage.

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The Prudential stock came about from the insurance company’s 2000 corporate reorganization to a stockholder-owned concern.  As a result, the Prudential insurance policies on the executives in question were recipients of shares of the insurer’s public offering.

Dow Jones said Prudential has already turned over around 450,000 shares to Sallie Mae, but won’t produce any more until Sallie Mae gets affected employees’ written authorization. It has done so with 72 former and 27 current employees so far, according to Dow Jones.

Share Ownership?

Policies covering the six holdouts were converted into 32,731 shares of Prudential Financial Inc. stock worth slightly more than $1 million.

Sallie Mae has sued the six, seeking their permission for Prudential to turn over any remaining shares; the six executives are countersuing, claiming they deserve the stock.

The company has argued that the six executives have already received the bulk of their total pension benefits. Because most of the pension money has already been paid out, Sallie Mae claims the money from the stock should go into its coffers.

“Our position is that if we were to pay those benefits, it would exceed the benefits we promised to them,” Sallie Mae spokesman Jim Boyle told Dow Jones. “We think it’s a responsibility to our shareholders that we prevent overpayment of compensation to current and former employees.”

Sallie Mae recently changed its corporate name to USA Education Inc.

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