The reason why employees and unions like defined benefit pension plans– and why employers don’t like them– is simple. In a defined benefit plan, the risk of poor investment choices is on the employer, because the employee is entitled to a certain benefit, and if the plan’s investments are awful, the employer has to make up the difference.

In a defined contribution plan, on the other hand, the employee bears all the risk. If the stock market tanks, guess what– your 401(k) just became worthless. Same if you invest it in the wrong kind of stock.

From a pure economic-theory standpoint, defined contribution plans make no sense. An employer is a larger organization which is better able to absorb market risk than an individual employee. (Aggregate people into a multiemployer fund and you’re even better off.) Higher risk investments generate higher returns on average, but being higher risk, they are also more likely to fail completely. That means that a defined-benefit plan should outperform a defined-contribution plan when both are properly invested– it can absorb more market risk. Even when you subtract out what you have to pay the plan trustees to do the investing (which isn’t really that much if you have a large enough plan), it’s still way ahead of defined-contribution.

And that’s not even taking into account the fact that most employees are, well, employees, not stockbrokers, and invest 401(k) money in asset balances which are wildly out of whack with the risk profile that they should be adopting given their financial situation (which varies a lot depending on age of employee and how much you’ve already got socked away). The end result is a ton of people who either don’t save enough because they put too much money in low-risk investments like bonds, or lose everything because they put too much money in super-high-risk investments like stock of a single company (usually their own, which is doubly idiotic since if the company goes bust they’re out of a job AND a pension).

So why are defined-benefit plans out of fashion? Well, there are some red herrings like “they’re not mobile” (rubbish, it’s easy to transfer the value of a defined-benefit plan if it operates on a cash balance basis) and “they’re bankrupting state governments” (public-sector pension plans, unlike private-sector pension plans like the referees’ plan, are basically unregulated and thus state legislators are free to write insane, obviously false assumptions like “we’re going to make 8 percent return on investment every year” into the plans, figuring that THEY won’t be around when taxes have to be raised later on to pay for the damn things) but the basic reason is “because American workers have absurdly little bargaining power and employers can force defined-contribution plans on them.” Unionized employees actually have some degree of bargaining power and thus resist 401(k)-type retirement plans, but nowadays unions are basically in retreat in most sectors… including the NFL, where the referees are now under pressure to give up their pension plan.

Too expensive?

Corporations generally have to fund a defined benefit plan as they went, so each pay period, the employer had to set aside the full corporate contribution amount for each employee.

When 401k cae around, the employer only need match what the emploee contributed, up to a certain amount.

The only people who expect pensions in 2012 are clueless labor union members. In the private sector — you know, the real world — they have been phased out long ago for things like a 401(k). Pensions do not even exist anymore. Except in cities all across California that are going bankrupt because of them.

That doesn’t even address the fact that the refs are part-time employees. But sure, go ahead and demand a fixed sum payment of regular occurrence after you’ve retired just because the owners have a lot of money.

I’ve never had a pension, but have a pretty decent understanding of labor relations.

Many of these pensions were negotiated benefits. Nobody made business owners give employees these benefits. They were negotiated in a business setting, just like any other business agreement.

If the refs can negotiate a pension (I doubt it, since the NFL has dug their heels in at this point), then why would you care?

1 3/16 Options and 24/32 Porsches

In real dollars, the switch to a 401k is a loss of $30,000 per current official, per year.

Could you phrase that in terms of options and Porsches please?

Why is that? Since i have been in the workforce, they have not been around so i couldnt guess why they have gone away. Too expensive?

Seems weird to be demanding a pension for a part time gig.

They’re asking to keep what they already have and grandfather current officials. New ones would go to 401k.

Even Peter king has slightly changed his tune here. For a couple of MMQBs he said that the NFL did away with definied benefit pensions for employees – now he writes for “most” employees. Wonder who still gets those?

That doesn’t even address the fact that the refs are part-time employees. But sure, go ahead and demand a fixed sum payment of regular occurrence after you’ve retired just because the owners have a lot of money.

They could easily be replaced, you would just have to spend more than a few days calling DII refs like the NFL did.

Here’s the thing – they can’t be easily replaced. Unless BCS conference officials decide to take the job – and they won’t unless the union is broken – you’re left with bottom-of-the-barrel jabronis from the LFL, DII and III, and high school.

Pass Interference calls are a straight up coin flip, you have no idea which way the call is going, especially since they are letting them push/grab all the way down the field.

I actually prefer they let more stuff go than call more PI. I think that’s what they’ve been doing. Unless, of course, it happens to my team.

you don’t like gift Superbowls???

Why is that ridiculous?

Because it takes money out of the owners’ hands, and that bothers our friend here

Why is that ridiculous?

They are part time employees that work maybe 20 days a year. I’ll be generous and put in travel/training/etc, and they work 60 days a year. And they are already well compensated for that level of effort.

I was wondering what you were doing in a sports discussion

Just shows they’re egregiously not prepared.

And thats the NFL’s fault. But still, fuck the normal refs.

When the regular refs drop their ridiculous demand for a “pension”, maybe then we can have them back.

Why is that ridiculous?