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The last sticky point - pensions?

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01-02-2013, 03:48 PM
  #1
struckmatch
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Darren Dreger ‏@DarrenDreger

Entering day, PA wanted NHL to share pension cost. Perhaps bigger issue: teams' ongoing liability to pay the pension after CBA expires.

Darren Dreger ‏@DarrenDreger

Overall pension debate evolves around complex differences. 2 sides hoping to meet around 8pm.

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01-02-2013, 05:03 PM
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DL44
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Don't think its the 'last' sticking point...

Contract length, CBA length, yr 2 salary cap, etc... still need to hammered out and middle ground found i think. Unless the tight lipped sides have already hammered it out without our knowledge...

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01-02-2013, 05:15 PM
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Knowing for what they're fighting for in this new deal, it would be absolutely assanine as of right now to lose a season. That is why I feel confident in the NHL's ability to get a deal done.

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01-02-2013, 05:16 PM
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Quote:
Originally Posted by DL44 View Post
Don't think its the 'last' sticking point...

Contract length, CBA length, yr 2 salary cap, etc... still need to hammered out and middle ground found i think. Unless the tight lipped sides have already hammered it out without our knowledge...
Some media are reporting that both sides have agreed to a 10 year CBA and the PA has offered 7 year max contract length. They are still haggling over pensions, year-to-year contract variance (NHL went to 10% with PA wanting it higher), the salary cap after this year and caps on escrow. I am sure I also read that the NHL has also now offered two compliance buy-outs per team. All of these are still negotiable based on a "package".

edit: PA offered 8 year contract lengths and has softened on cap escrow.

http://www.truehockey.com/articles/C...nWhere-Were-At


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01-02-2013, 05:20 PM
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Not entirely shocking that pensions are important to the NHLPA. Since their share of HRR will be going down, the players are looking for ways of recouping that money through other means. Caps on escrow, pension plan adjustments, etc.

Anyone have any info on what sort of adjustments the NHLPA is looking to make to the pension plan? The only things I can think of that would benefit the players are adding more scenarios that would credit players for games played, requiring the NHL to use the maximum contribution rate regardless of games played, and increasing the number of seasons covered by the plan in case of early retirement due to injury (currently the equivalent to 5 seasons).

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01-02-2013, 05:31 PM
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LadyStanley
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SXM HNIC radio was talking about this today. Hrudey was on (when a player he was involved in pensions).

As it stands today, the type of pension is "Direct Contribution" (i.e., US players get legal max $45k put in "bank account", Canadian players get legal max $25k put aside plus $20k "check" for which they have to pay taxes on).

The players seem to want a "Direct Benefit" pension (where they get to draw monies annually down the road). A major change (and potentially onerous for future owners who owe the $$s rather than "today").



(Meant to have this as post #2, got sidetracked by lunch and other stuff)

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01-02-2013, 05:43 PM
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LadyStanley
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Jason Kay ‏@JKTHN Business world trend is to switch to Defined Contribution plans. Takes the guesswork out of liability, which for the NHL could be massive.





(OK, so it's "defined contribution" hard to take notes when driving)

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01-02-2013, 05:44 PM
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Quote:
Originally Posted by LadyStanley View Post
SXM HNIC radio was talking about this today. Hrudey was on (when a player he was involved in pensions).

As it stands today, the type of pension is "Direct Contribution" (i.e., US players get legal max $45k put in "bank account", Canadian players get legal max $25k put aside plus $20k "check" for which they have to pay taxes on).

The players seem to want a "Direct Benefit" pension (where they get to draw monies annually down the road). A major change (and potentially onerous for future owners who owe the $$s rather than "today").



(Meant to have this as post #2, got sidetracked by lunch and other stuff)
I've have just gone thru this with the last 2 companies I have worked with. Most companies today are moving TO a Defined Contribution pension plan from a Defined Benefit pension plan. The savings for businesses when they make this switch are huge. One company I worked with saved over $100M by making this switch within the first couple of years. I can really see the NHL fighting this if the NHLPA is asking for a Defined Benefit pension plan. If you can find a Defined Benefit pension plan, that's gold.

Defined benefit plans are why companies like GM are in so much trouble. They had employees work for them for 30 years and then end up living into their 80s and collecting pensions for 30 years. Very expensive and unknown liabilities.


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01-02-2013, 06:02 PM
  #9
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Originally Posted by cbcwpg View Post
I've have just gone thru this with the last 2 companies I have worked with. Most companies today are moving TO a Defined Contribution pension plan from a Defined Benefit pension plan. The savings for businesses when they make this switch are huge. One company I worked with save over $100M by making this switch. I can really see the NHL fighting this if the NHLPA is asking for a Defined Benefit pension plan. If you can find a Defined Benefit pension plan, that's gold.
I work at an asset management firm that handles a large DB plan. Basically, DB puts all the investment risk on the employer where DC puts all the investment risk on the employee.

From a strict asset liability matching point of view a pension plan is most soundly funded with purely inflation linked bonds (TIPS in the US and Reals in Canada). Given that inflation linked bonds are providing less than 1% return over inflation you don't need a finance degree to see how much you need to save today to pay for retirement with these bonds. Hint: pretty much the only thing you'll have to withdraw is what you originally saved.

To get around this reality plans take risk by investing in corporate bonds, stocks, commodities, real estate, infrastructure, and hedge funds. If you've watched the news this decade you might have noticed this doesn't always work. When it doesn't work either the employee or employer is left holding the bag. DC vs DB decides who that is.

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01-02-2013, 06:13 PM
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Quote:
Originally Posted by struckmatch View Post
Darren Dreger ‏@DarrenDreger

Entering day, PA wanted NHL to share pension cost. Perhaps bigger issue: teams' ongoing liability to pay the pension after CBA expires.
$2.3m a year, and the NHLPA wants the owners to kick in pension money?!

Hey, NHLPA members: it would be more than prudent for you to employ your own financial planner, and he or she can help you set up a living-expenses budget and divide up your annual salary and invest your money so you can plan for the future.

Or, more than likely the team that is presently paying you (oops!) your $2.3m salary will have their own withholding / investment / 401(k) plan(s) that you can sign up for.

This advice is free of charge.

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01-02-2013, 06:17 PM
  #11
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I think they're just seeing if they can get it, and if they don't, the NHL backs off something else in turn.

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01-02-2013, 06:23 PM
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Quote:
Originally Posted by Butch 19 View Post
$2.3m a year, and the NHLPA wants the owners to kick in pension money?!

Hey, NHLPA members: it would be more than prudent for you to employ your own financial planner, and he or she can help you set up a living-expenses budget and divide up your annual salary and invest your money so you can plan for the future.

Or, more than likely the team that is presently paying you (oops!) your $2.3m salary will have their own withholding / investment / 401(k) plan(s) that you can sign up for.

This advice is free of charge.
The pension plan is a left over from the days where the players were not making the kind of money they make today. IMO the whole pension plan should be eliminated or at least eliminated to those players that exceed a certain threshold of earnings.

If you make the average of $2.3M for just 4 seasons, that's $9.2M. Compare that to someone who makes $50,000 avg. for 40 years = $2M.

If you are just too stupid to set up your own retirement fund making $9.2M over your career, then that's just not very bright I would say, and too bad for you. Set the threshold @ $9M. As soon as your career earnings exceed that level, you no longer qualify for getting a pension. If your career ends and you have not made the threshold, the NHL will give you a pension.

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01-02-2013, 06:23 PM
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Quote:
Originally Posted by Sideline View Post
I work at an asset management firm that handles a large DB plan. Basically, DB puts all the investment risk on the employer where DC puts all the investment risk on the employee.

From a strict asset liability matching point of view a pension plan is most soundly funded with purely inflation linked bonds (TIPS in the US and Reals in Canada). Given that inflation linked bonds are providing less than 1% return over inflation you don't need a finance degree to see how much you need to save today to pay for retirement with these bonds. Hint: pretty much the only thing you'll have to withdraw is what you originally saved.

To get around this reality plans take risk by investing in corporate bonds, stocks, commodities, real estate, infrastructure, and hedge funds. If you've watched the news this decade you might have noticed this doesn't always work. When it doesn't work either the employee or employer is left holding the bag. DC vs DB decides who that is.
Thanks for that, it was really helpful.

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01-02-2013, 06:31 PM
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Quote:
Originally Posted by LadyStanley View Post
Jason Kay ‏@JKTHN Business world trend is to switch to Defined Contribution plans. Takes the guesswork out of liability, which for the NHL could be massive.





(OK, so it's "defined contribution" hard to take notes when driving)
LMAO yeah the guesswork switches to the players.

Defined contribution pensions, the employee may contribute as well the employer. The money is then invested, somewhere. The investment does well no problem the investment does poorly, too bad.

Defined Benefit, the employer owes the employee x dollars no ifs ands or buts..There is no risk to the player it is spelled out how much he gets.

Companies are ramming the defined contribution plans to their employees, go figure. I guess they all want to do better by their employees

or put simply, one defines how much you contribute, the other defines how much you get.

Which one would you rather have?


Last edited by Confucius: 01-02-2013 at 06:38 PM.
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01-02-2013, 06:54 PM
  #15
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No way is the NHL going to start paying for pensions. The NFL just fought with their refs over this exact same issue.

Fact is, pensions are an outdated form of compensation.

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01-02-2013, 06:54 PM
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SBJLizMullen 3:39pm via Web Hear NHL's pension proposal was a very major issue for the players, but sides may be trying to resolve that problem. #NHL

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01-02-2013, 06:58 PM
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No way is the NHL going to start paying for pensions. The NFL just fought with their refs over this exact same issue.

Fact is, pensions are an outdated form of compensation.
Start? I think they always were, I think they want to put the risk back on the players.

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01-02-2013, 07:04 PM
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Quote:
Originally Posted by cbcwpg View Post
The pension plan is a left over from the days where the players were not making the kind of money they make today. IMO the whole pension plan should be eliminated or at least eliminated to those players that exceed a certain threshold of earnings.

If you make the average of $2.3M for just 4 seasons, that's $9.2M. Compare that to someone who makes $50,000 avg. for 40 years = $2M.

If you are just too stupid to set up your own retirement fund making $9.2M over your career, then that's just not very bright I would say, and too bad for you. Set the threshold @ $9M. As soon as your career earnings exceed that level, you no longer qualify for getting a pension. If your career ends and you have not made the threshold, the NHL will give you a pension.
Just make sure you factor in taxes.. Players lose a ton to taxes

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01-02-2013, 07:06 PM
  #19
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Quote:
Originally Posted by LadyStanley View Post
SXM HNIC radio was talking about this today. Hrudey was on (when a player he was involved in pensions).

As it stands today, the type of pension is "Direct Contribution" (i.e., US players get legal max $45k put in "bank account", Canadian players get legal max $25k put aside plus $20k "check" for which they have to pay taxes on).

The players seem to want a "Direct Benefit" pension (where they get to draw monies annually down the road). A major change (and potentially onerous for future owners who owe the $$s rather than "today").



(Meant to have this as post #2, got sidetracked by lunch and other stuff)
Defined contribution and defined benefit. Sorry, I am a financial planner.

The difference is potentially huge to owners as they would be on the hook for performance on the pension as well. Just ask how that has gone in states like Wisconsin or for the UAW.

Companies are moving away from defined benefit towards defined contribution so they have no commitment after the contributions are made. Performance of the underlying assets have made many defined benefit plans unsustainable based on the original guarantee and lack of performance, reducing the ability for the pension to be properly funded.

I would think the owners would want nothing to do with a defined benefit plan.

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01-02-2013, 07:06 PM
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http://www.nydailynews.com/blogs/ran...meetings-wedne
NY Daily News looks at the pension plan funding issue

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01-02-2013, 07:13 PM
  #21
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Defined contribution and defined benefit. Sorry, I am a financial planner.

The difference is potentially huge to owners as they would be on the hook for performance on the pension as well. Just ask how that has gone in states like Wisconsin or for the UAW.

Companies are moving away from defined benefit towards defined contribution so they have no commitment after the contributions are made. Performance of the underlying assets have made many defined benefit plans unsustainable based on the original guarantee and lack of performance, reducing the ability for the pension to be properly funded.

I would think the owners would want nothing to do with a defined benefit plan.
I guess that is why there is a disagreement.

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01-02-2013, 07:23 PM
  #22
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LMAO yeah the guesswork switches to the players.

Defined contribution pensions, the employee may contribute as well the employer. The money is then invested, somewhere. The investment does well no problem the investment does poorly, too bad.

Defined Benefit, the employer owes the employee x dollars no ifs ands or buts..There is no risk to the player it is spelled out how much he gets.

Companies are ramming the defined contribution plans to their employees, go figure. I guess they all want to do better by their employees

or put simply, one defines how much you contribute, the other defines how much you get.

Which one would you rather have?
Employees want defined benefit DB

Employers want defined contributuion DC

In the case of one of the companies I worked for, all that happened was we came to work one day and we were told they were changing our pension plans to DC. They did convert our current DB pension plans to a monetary value ( no where near the value they should have ) so we could reinvest into whatever RRSP we wanted. And they also spent many hours and presentations trying to sell the employees on the benefits of having a DC plan ( ie: the main point was we were now in control of our money and could invest it where we want. Good point until the markets all collapsed )

Well, when it comes to pensions.. As an employee, Defined Benefit pensions is the hill I will die on for... Let's just see if the NHL players also make this their last stand.

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01-02-2013, 07:29 PM
  #23
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Originally Posted by cbcwpg View Post
Employees want defined benefit DB

Employers want defined contributuion DC

In the case of one of the companies I worked for, all that happened was we came to work one day and we were told they were changing our pension plans to DC. They did convert our current DB pension plans to a monetary value ( no where near the value they should have ) so we could reinvest into whatever RRSP we wanted. And they also spent many hours and presentations trying to sell the employees on the benefits of having a DC plan ( ie: the main point was we were now in control of our money and could invest it where we want. Good point until the markets all collapsed )

Well, when it comes to pensions.. As an employee, Defined Benefit pensions is the hill I will die on for... Let's just see if the NHL players also make this their last stand.
The place I work at also wanted to switch to DC from DB. It got settled, the current employees stay on DB new employees get DC. Hmm down the road there will be alot of unhappy campers.

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01-02-2013, 07:30 PM
  #24
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No way is the NHL going to start paying for pensions. The NFL just fought with their refs over this exact same issue.

Fact is, pensions are an outdated form of compensation.
I cant imagine the NHL agreeing to this after just fighting a battle to ease the burden on small and medium market teams.

Can't see the NHL let themselves get caught in that trap.

Anyway maybe if they have more control the players will get some practice in handling their own money.

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01-02-2013, 08:19 PM
  #25
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I cant imagine the NHL agreeing to this after just fighting a battle to ease the burden on small and medium market teams.

Can't see the NHL let themselves get caught in that trap.

Anyway maybe if they have more control the players will get some practice in handling their own money.
My guess is that the NHL would want to look at defined contribution options, but at a reduced percentage or the current formula. Also, which side of HRR it counts towards will be key.

If I was the NHL, I would want nothing to do with managing the plan either, which is likely a point of agreement with the NHLPA.

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