MLB Teams Start Dropping Non-Player Pensions
On the day baseball announced Bud Selig would be paid for just being Bud Selig (reportedly $6 million a year), the Los Angeles Times reports that the Angels and the Red Sox are dropping pension plans for some non-uniformed personnel:
The Angels and the Boston Red Sox are among the first teams to discontinue those pension plans. Some 200-300 non-uniformed employees from each club were informed in November that, as of Jan. 1, teams would no longer contribute to the plans, and new hires would not be able to enroll in them. Other teams are expected to follow suit.
This reflects a trend made across corporate America in recent years. As recently as 1998, 60 percent of Fortune 500 employers offered new hires pensions. That number had shrunk to 24 percent by the end of last year.
In other words, baseball was largely an outlier in offering traditional pensions. Instead, they are following suit with other industries in expanding other types of retirement plans. Again, from the Los Angeles Times:
And the Angels and Red Sox have beefed up existing defined contribution plans — or 401(k) plans — to offset the reduction and eventual elimination of pension plans, bumping matching contributions from about 4% to as much as 10%, according to employees of both teams.
“This wasn’t a cost-saving move,” Angels President John Carpino said when asked how much money the team would save by eliminating pension plans. “It’s about flexibility for employees. We looked at it long and hard and felt the defined contribution program was a better option.”
This is the financial reality for employees across the country, so it isn’t at all surprising baseball is following suit. Still, it will be easy to criticize teams after Forbes reported MLB had a record $9 billion in revenues in 2014 – and outfielders are signing $325 million contracts.