NFL Super Pension Bailout?

Following up on an earlier blog here Ahoran Friedman in The Hill added some color.

Excerpts:

The 2021 law is much worse, allowing plans to become eligible by deliberately becoming more underfunded even after the law is enacted, including by retroactively increasing benefits. Democrats rejected an amendment to prevent this.

All the NFL needs to score taxpayer funding is to get into the red zone for 2022.

Perhaps in order to meet the criteria of the promised bailout, the NFL retroactively increased benefits in 2020, helping boost its existing liabilities by an astonishing 50 percent. As a result, the NFL did not meet its required contributions, even using the 7.25 percent assumption. For 2020, the legal fiction of double-counting past contributions exceeding the minimum as part of plan assets (and also as a “credit balance” to satisfy future required contributions) kept the NFL out of the red zone. But the NFL tore through the credit balance at a pace that would eliminate it in 2026, putting the plan on track for the red zone in 2022. Even a 2031 projection from the NFL might suffice, but that would depend on the resolution of a sloppy statutory ambiguity, likely by the courts.

In 2021, the NFL tripled payments to its actuary, Aon, who fled to the United Kingdom in 2012 to escape President Obama’s punitive tax code and may be protected from the Organization for Economic Cooperation and Development’s proposed new international taxation rules (championed by President Biden) through the U.K.’s carveout for financial services. Appallingly, Democrats specifically prohibited the government from imposing any bailout conditions on plan governance, such as reviewing actuarial and other fees, which are to be paid by taxpayers – rejecting an amendment to remove the prohibition.

In the recent filing, Aon changed plan assumptions, increasing liabilities by $360 million. Will the government argue those assumptions, or any Aon might subsequently make in order to get into the red zone, are unreasonable? Democrats basically handed the taxpayer checkbook over to their union allies and told them to write checks to themselves and their actuaries.

The bailout may set a troubling precedent for state and local government plans, which are underfunded by trillions because of similar flawed practices. The administration has already increased the estimated cost to $97.2 billion, up 13 percent from the congressional score months earlier, but we won’t know the final cost, or whether the NFL will have the audacity to request a bailout, until 2025, the application deadline.

The NFL increasing pensions for retired players may be appropriate, if funded by the NFL. But a bailout that may force taxpayers, who had no role in creating this mess, to pay wealthy NFL players pensions, promised by even wealthier owners, should cause Americans to sack other social schemes to spread around the wealth Democrats are still chasing this year.

One response to this post.

  1. Posted by geoxrge on February 13, 2022 at 6:22 pm

    “The bailout may set a troubling precedent for state and local government plans,”

    Does the multiemployer bailout increase or decrease the chance of a state and local bailout? After the multiemployer bailout, inflation is back in the headlines. Turkey has had to devalue it’s currency. US foreign policy is heavily reliant on the supremacy of the US$.

    Biden also has lots of other spending plans:
    Biden Is Reportedly Planning to Propose the Highest Pay Raise for Feds in 20 Years, at 4.6%
    https://www.govexec.com/pay-benefits/2022/02/biden-reportedly-will-propose-46-raise-feds-2023/361920/

    Reply

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