Annual Review and Update .......................................................................................................8
Penalties for Non-Compliance ...................................................................................................9
Construction of and Modifications to FIP ...............................................................................10
3 INTRODUCTION
This document constitutes an update to the Funding Improvement Plan (FIP) for the Bert Bell/Pete Rozelle NFL Player Retirement Plan (Retirement Plan), which was originally adopted by the Retirement Plans Retirement Board on February 23, 2011, in accordance with federal law. The FIP provides the bargaining parties, the National Football League Management Council (NFL Management Council), and the National Football League Players Association (NFLPA), with a contribution arrangement that is expected to enable the Retirement Plan to increase its funding percentage. Section 305 of the Employee Retirement Income Security Act of 1974, as amended, and the parallel section 432 of the Internal Revenue Code, establish endangered status (also referred to as yellow zone) and critical status (also referred to as red zone) for multiemployer defined benefit pension plans based on the plans funded level and whether the plan is expected to experience a funding deficiency in the current or next six years (for endangered status) or in the current or next three or four years (for critical status). A plan in the yellow or red zone is subject to certain requirements intended to improve the plans funded level. A plan that is not in the yellow or red zone is in the green zone, and none of the yellow or red zone requirements apply. On June 28, 2010, the actuary for the Retirement Plan certified that the Retirement Plan was in endangered (yellow zone) status for the Plan Year beginning April 1, 2010 because the Retirement Plan was less than 80 percent funded on April 1, 2010. In response to this certification, the Retirement Board adopted a FIP effective February 23, 2011. The Retirement Board will update the FIP annually based on the actual experience of the Plan. This update was adopted May 15, 2014 and supersedes the updated FIP that was adopted on July 24, 2013. It
4 includes experience and data for the Plan as of April 1, 2013 and reflects additional contributions negotiated by the collective bargaining parties.
5 FIP REQUIREMENTS
A FIP consists of benefit reductions, contribution increases, or both, that are reasonably expected over a ten-year period to meet two benchmarks: (1) reduce the plans unfunded liabilities by at least one third and (2) avoid an accumulated funding deficiency, i.e., a failure to meet minimum funding requirements for a plan year. A FIP must be based on reasonably anticipated experience and reasonable actuarial assumptions regarding investment income and other experience of the plan over a period of future years. If, before the ten year period ends, the actuary certifies that the plan is no longer in endangered status (e.g., the plan is at least 80 percent funded and not expected to have a funding deficiency in the current or next six years) and the plan is not then in critical status, the FIP requirements end. Funding Improvement Period The ten year period or funding improvement period begins on the first day of the first plan year beginning after the earlier of (1) the second anniversary of the date of the adoption of the FIP, i.e., the first plan year beginning after February 24, 2013 or (2) the expiration of the collective bargaining agreement (CBA) (covering at least 75% of active participants) in effect on the due date for certification of the plans status, i.e., the first plan year beginning after March 3, 2011. For the Retirement Plan, the funding improvement period therefore begins April 1, 2011 (the first Plan Year beginning after March 3, 2011) and ends March 31, 2021.
6 Schedule Generally speaking, once a FIP is adopted, the bargaining parties must agree on a schedule consisting of increased contributions or future benefit reductions, or both, which would allow the Retirement Plan to satisfy the funding benchmarks of federal law by the end of the ten- year funding improvement period. If the bargaining parties cannot agree, then the Retirement Board is required to implement a status quo or default schedule after the expiration of the then-current CBA that, among other things, assumes that the Retirement Plan will provide no new pension benefit accruals. To meet its FIP obligations, the bargaining parties agreed and the Retirement Board adopted a schedule of increased contributions, the most current version of which can be found below, under FIP SCHEDULE.
7 OPERATION OF RETIREMENT PLAN IN THE YELLOW ZONE
While operating under a FIP, the Retirement Plan is subject to certain restrictions during the funding improvement period extending from April 1, 2011 and ending on March 31, 2021 (or earlier if the Plan is no longer certified to be endangered). Adoption of Collective Bargaining Agreements or Participation Agreements: The Retirement Board cannot accept a collective bargaining agreement or participation agreement that provides for (1) a reduction in the level of contributions for any participants, (2) a suspension of contributions with respect to any period of service, or (3) any new exclusion of any younger or newly added employees from plan participation. Plan Amendments: The Retirement Plan may not be amended so as to be inconsistent with the FIP. The Retirement Plan can be amended to increase benefits, however, if the actuary certifies that the benefit increase is consistent with the FIP and that such increase is paid for with contributions that are not required to meet the benchmarks under the FIP schedule or schedules. Since the original FIP was adopted on February 23, 2011, the Retirement Plan was amended to increase certain benefits to take into account the 2011 CBA between the NFL Management Council and NFLPA. The Retirement Plans actuary has certified that the benefit increases are consistent with the FIP and are paid for with contributions that are not required to meet the benchmarks under the FIP schedule.
8 FIP SCHEDULE
The Funding Improvement Plan Schedule below shows the estimated contributions and funded percentage of the Retirement Plan during the remaining portion of the funding improvement period.
Funding Improvement Plan Schedule (millions) April 1, 2013 Updated FIP Schedule Plan Year Ending Estimated Contribution Estimated Funded Percentage* 03/31/2012 $172.1 52% 03/31/2013 $105.0 48% 03/31/2014 $299.7 56% 03/31/2015 $320.8 62% 03/31/2016 $281.7 68% 03/31/2017 $260.1 73% 03/31/2018 $260.7 78% 03/31/2019 $168.3 80% 03/31/2020 $139.2 80% 03/31/2021 $119.0 81% *Funded percentage is estimated as of the end of the Plan Year The original FIP adopted on February 23, 2011 was developed with the intention of achieving a funded percent of 80% by the end of the funding improvement period. The Retirement Plans actuary has estimated that the current estimated contributions will result in the Retirement Plan reaching that benchmark by March 31, 2019, consistent with last years FIP and two years ahead of the original FIP. The updated FIP is based on the census data, asset information actuarial assumptions, and plan provisions which were used for the actuarial valuation as of April 1, 2013. Employer contributions were projected using the actuarial assumptions and methods stated in the applicable collective bargaining agreement.
10
ANNUAL REVIEW AND UPDATE
The Retirement Board will review the FIP and schedules annually and make changes, as appropriate, to satisfy the FIP requirements.
11
PENALTIES FOR NON-COMPLIANCE
A contributing employers failure timely to contribute to the Retirement Plan at the rates required by the schedule that the bargaining parties have adopted or that has been imposed by the Retirement Board will result in the deficient amounts being treated as delinquent employer contributions under the Retirement Plan. Employers are subject to an excise tax if they fail to make contributions required under the FIP. The amount of the excise tax is the amount of the unpaid contribution. The Department of Labor has the authority to assess a penalty of up to $1,100 per day against the Retirement Board if it does not timely adopt a funding improvement plan or if the Retirement Plan does not meet the funding improvement benchmarks (reduce the Retirement Plans unfunded liabilities by one third (or fund the plan to 80%) and avoid an accumulated funding deficiency) by the end of the funding improvement period.
12 CONSTRUCTION OF AND MODIFICATIONS TO FIP
The Retirement Board reserves the right, in its sole and absolute discretion, to construe, interpret, and/or apply the terms and provisions of the FIP in a manner that is consistent with the law. Any and all constructions, interpretations and/or applications of the Retirement Plan (and other Retirement Plan documents) or the FIP by the Retirement Board, in its sole and absolute discretion, shall be final and binding. Subject to applicable law and notwithstanding anything herein to the contrary, the Retirement Board further reserves the right to make any modifications to the FIP that the Retirement Board, in its sole and absolute discretion, determines are necessary and/or appropriate (including, without limitation in the event of the issuance of any future legislative, regulatory, or judicial guidance).