THIS IS WHY OUR NFL PENSION PLAN IS UNDERFUNDED

June 6, 2008

Dear Alumni:

THIS IS WHY IS OUR NFL PENSION PLAN IS UNDERFUNDED!

On page 1 of the March 17, 2008 Annual Funding Notice for our Bert Bell/Pete Rozell NFL Retirement Plan we were informed that the current funded liability percentage for the 2006 plan year was 51.2% based on actuarial assumptions required by the IRS. This means that the money in the plan is projected to cover only 51.2% of retirement benefits! The NFLPA says that the more accurate figure is 76% based on their actuarial assumptions, but regardless of who is right, the NFL Pension Plan is underfunded.

We were told that the increase in the plan's liability was attributable to the pension benefit increases received under the 2006 CBA. Keep in mind, the increases also went to currently active players that have 3 or more credited seasons. It also includes active players that they assume will become vested in the future.

We were also warned in the Notice that if the Pension Plan became insolvent, the PBGC (Pension Benefit Guaranty Corporation) would only pay a maximum monthly benefit of $35.75 per credited season. For a retired player with 10 credited seasons, that's $357.50 monthly or $4,290 annually. The Notice indicated that the Retirement Plan is not insolvent, nor is it expected to become insolvent. Nonetheless, Gene Upshaw has been going around warning active and retired players that the Pension Plan could be at risk if they continue to increase pensions for retired players.

I believe that Gene Upshaw and the active players are going to use the information in the Notice as one of the reasons for not giving retired players any additional increases to our pensions.

So how did we get to the point where our Pension Plan funding could be at risk?

Well, besides the fact that Groom Law Group and AON Consultants received over 9.5 million dollars from the Pension Fund (rather exorbitant in my opinion), it really all started in 1993 when Gene Upshaw negotiated his first CBA and reduced the number of years required for a player to become vested in the Plan from 4 years to 3 years. This simple change in the vesting will allow thousands of additional players to tap into the Retirement Plan. But why should players that came after 1992 be allowed to receive a pension after only 3 credited seasons and everyone else has to have 4 credited seasons? Is that fair to the thousands of players that came before 1992? Of course not, but nonetheless Gene Upshaw did this to garner the favor of the active players and thereby insure his continued re-election.

But the main reason the NFL Pension Plan is underfunded is this: Gene Upshaw and the active players started giving themselves other retirement type benefits and perks such as the Second Career Savings Plan and the Annuity Plan.

Instead of funding the Pension Plan which would help ALL vested players, both active and retired, Gene and the active players started piling on other benefits that only help the generation of players that came after 1992. In addition to the Second Career Savings Plan and the Annuity Plan, they also gave themselves other generous benefits that will help with their retirement, such as 5 free years of health insurance after retiring, and a health reimbursement account that can help pay for health related costs and insurance premiums for the rest of their lives. They also substantially increased the disability awards which will predominantly benefit only those players that played after 1992 and will continue to drain the Pension Plan of its assets. Funneling the available money into these other benefits has now created a situation that could put our NFL Pension Plan in jeopardy.

Obviously, the increases that retired players received since 1992 have also attributed to the increased liability of the pension plan, but those increases pale in comparison to the amount of money that has been diverted into other benefits that could have been used to fully fund the Pension Plan.

Per the CBA, The NFLPA and the NFL Owners must agree on the total amount of all Player Benefits on an annual basis. This year approximately $704 MILLION will be set aside for All player benefits, both active and retired. Only $125,904,014 of that money went into the Pension Plan according to the Annual Report that covers the period 4/1/06 to 3/31/07. So where is most of the remaining $578,095,986 million being allocated? That's right.....The Second Career Savings Plan, the Annuity Plan, the Health Reimbursement Account, the 5 free years of Medical, the Tuition Assistance Plan, the Player Performance Pool, the list goes on and on......but it only benefits eligible active players and eligible retired players that played in the NFL after 1992.

Can you imagine what ALL retired Player’s Pensions would look like if some of that $578 Million Annual Benefit Money was put into the Retirement Plan! The first thing that would happen is our Retirement Plan would be fully funded and major increases for retired players would be possible. Secondly, retired baseball players would be extremely envious of our Pension Plan instead of the other way around!

Gene Upshaw has told the active players that when they give money to increase retired player pensions, it reduces the amount of money available to them in salaries and bonuses. That’s true, but active players have been giving themselves the “Lion’s Share” of money for benefits since 1992, but instead of helping both themselves and the retired players by funding the Retirement Plan, they have gotten extremely greedy and are now more interested in padding their own pockets instead of helping the pioneers of the game….the players that went on strike to fight for the benefits they now enjoy. Just like Moses, we went to the mountaintop and sacrificed everything, but we will not see the promised land. Most retired players were injured before there was any disability plan or health reimbursement plan. There were no second opinions from doctors. If you could tell how many fingers the trainer held up, you went back into the game! The quality of life for many former players has suffered because of the questionable NFL Team practices and medical practices of our era. At this time, the best way for the NFLPA and the NFL to address this issue is to increase the pension’s for older retired players. When I say older, I mean guys that played before 1993. In the last CBA Gene Upshaw gave pension increases for everyone including the active millionaires, excuse me, players, that were vested and those that will become vested in the future. The amount of money that will need to be put into the Pension Plan as a result of Gene’s allocation of $470 per credited season for players from 1998 and forward is another big reason our Pension Plan is underfunded.

I would wager to say that Peyton Manning is not going to need that extra money in his NFL Pension. But I don’t think Peyton Manning is going to be speaking out about this issue for older retired players any time soon. Both him and his father, Archie Manning are receiving hundreds of thousands of dollars from Gene Upshaw and the NFL Players licensing program. I hope Peyton proves me wrong, he would be a great spokesman for our cause, especially when you look at how horrible the NFL treated one of the other great Colts players of all time, Johnny Unitas, an NFL Legend. Johnny U put the NFL on the map before Peyton was born!

I would venture to say that most retired players, including me, appreciate the increases that Gene Upshaw and the active players have made to retired players pensions since 1993. We are not “ungrateful” as Gene Upshaw has publicly declared……but we are disappointed in the fact that none of these changes would have come about without the relentless criticism and pressure that was put upon the NFLPA by the retired players. Gene will tell people that comments from the retired players have no effect on him and that they are like water on a ducks back….they just roll off him. Does he really think anyone believes that? If it makes him feel better to make statements like that, so be it. If he doesn’t pat himself on the back, who will?…………oh, that’s right…..the active players will!

We waited for a long time for things to be done by our union, but here are a few things most of us don’t want to wait for:

We don’t want to wait until we die……and then have our widow get the benefits. Increase our pension now and let us enjoy it with our wife while we are still alive!

We don’t want to wait until we have Alzheimer’s disease, dementia and post-concussion syndrome and are placed in the old folks home. We would like to improve the quality of our lives now, while we can still remember our loved ones!

We don’t want you to increase Total & Permanent Disability Benefits, Partial Disability Benefits, Line of Duty benefits, or any other injury benefits unless you go retroactive for all players and drop the deadlines for application. Most retired players never even had the option to apply for and receive any of these injury benefits.

Don’t wait until the 2nd knee replacement, to now offer retired players free knee replacement surgery. Where were you when retired players needed you!

Don’t wait until we are in trouble before we can receive funding from the PAT (Players Assistance Trust). Increase our pension now and maybe it will keep us from becoming a player in “Dire Need”.

As you can tell I am being a little sarcastic with the above comments. We are “grateful” to have these other benefits, but you have to see the irony in all of this! We have to wait until were dead, dying or falling apart (physically and mentally) to get what could be provided while we are still alive and functioning in a reasonable manner. And now we find out that our Pension Plan ( THE ONLY BENEFIT THAT MOST RETIRED PLAYERS RECEIVE) could be in jeopardy because active players and recently retired players have raided the piggy bank to pay for all these other perks and benefits. What is equally disturbing is the fact that all the noise we have made over the years is going to help the current players even more than it will help retired players! The eyes of Congress and the Media have now fallen on the NFL and suddenly the Disability Plan is being scrutinized and modified to make it easier to get disability. Who is that going to help? Almost all disability benefits and increases are going to players that retired after 1980, with the most significant increases to players from 1993 and forward.

A lot of the anger and frustration over the Disability Plan has been generated by former players that are from the 1950 to 1980 era of players. But the most significant changes to the plan and increases in benefits won’t even affect the retired players of that era. That, to me is astonishing and absolutely shameful.

I think it’s great that the NFL and NFLPA are now finally realizing that something needs to be done. We hammered them in the press and we will continue to do so until the playing field has been leveled.

I am convinced more and more each day that the only way we can protect the Pension Plan assets and keep the NFL revenue from being diverted into other benefits is through Congressional action.

It amazes me that Gene Upshaw and the NFLPA are neglecting the Pension fund and putting it in jeopardy by lavishing themselves with these other benefits. With the average staring salary in the NFL at over 2.6 million a year, many of the current players don’t even need these other benefits. Here’s a perfect example: The NFLPA had to make the player contribution to the Second Career Savings Plan an automatic deduction because many of the players didn’t even bother to take advantage of the plan. The assets in this plan alone will soon be greater than the entire NFL Pension Plan!

Here is what the Average NFL Salary and Benefits for a starting player over the 10 year period (2002 – 2011) will be:

• NFL Salary: = $26,000,000 Million

• Annuity Plan: = $520,000 (does not include earned interest)

• Second Career Savings Plan: = $132,000 (does not include earned interest)

• 5 Free Years of Health Insurance (Medical Benefits): = $60,000 annual est.

• Health Reimbursement Plan (After 5 Free Years): = $300,000

• Tuition Assistance Plan: = $45,000

• Severance Pay Plan: = $145,000

Total = $ 26,000,000 Million in salary
$1,202,000 + in Other Benefits (does not include earned interest)
$ 56,400 Annually from NFL Pension Plan

This total does not include hundreds of thousands of dollars in additional money that active players can make through NFL Players (formerly known as Players Inc)……….but you better be on Gene Upshaw’s good behavior list. Donovan McNabb certainly is. He made over $900,000 in just one year alone.

One last note: Gene Upshaw has actually been able to convince some of the veteran players that it is in their best interest to give millions of dollars in bonus money to rookies that have never played a single down in the NFL. The bonus money reduces the cap funding for a team which then typically puts a veteran player’s job at risk. If he can get them to accept his rationale for allowing this system to continue, then they will eat any B.S. he serves up. Or……maybe they are just afraid that if they speak up, Gene will cut off their gravy train of money that he distributes through Players Inc.

As Executive Director of the NFLPA and Chairman of NFL Players, the licensing and marketing subsidiary of the NFLPA, Gene Upshaw has way too much power and too much discretion over who gets paid and how much they get, and he can use that power to silence both active and retired players.

Everyone that believes that something should be done to increase retired player pensions and fully fund the Pension Plan should speak out.

"To sin by silence when they should protest makes cowards of men."
Abraham Lincoln

Sincerely,

Jeff Nixon
Buffalo Bills Alumni