There are few things more American than apple pie, Coca-Cola, and baseball–but while the crack of a bat in the ballpark is a sure harbinger of springtime, it’s also the sound of retirement security. That’s right! We talk a lot about public employees and their pensions, but did you know that Major League Baseball players also get a pension? And even though retirement security isn’t as exciting as a bases-loaded, bottom-of-the-ninth, two-strikes, Casey-at-the-bat situation, it is something we love to cheer on here at NPPC.
For many Americans, the folks earning pensions are mostly public workers. Teachers, firefighters, and state and local government employees pay into their defined-benefit plans, and after several decades of service to their communities, they can retire with a guaranteed percentage of their income for life. The same goes for baseball’s major leaguers, including Major League Baseball managers, coaches, trainers, and players. However, we’d say they have it a little bit easier than the public servants do. According to the Society of Actuaries, if you’re lucky enough to make it ten years in the majors, you can start collecting a $285,000 per year pension at 62. There are pro-rated plans for players who take early retirement–10 years of pro-ball can take a toll on the body, after all–and they all earn access to medical benefits for life starting on day one in the Major Leagues. And for the guys that don’t get called up to the majors? Well, there’s a Minor League Players Pension Plan, too.
The interesting caveat about the Major League Players Pension Plan is that the annual payout is not dependent on the player’s salary throughout their career. For a player like David Ortiz, who earned over $160 million during his 20-year career, the MLB pension might seem like chump change. For Alex Rodriguez, who signed a ten-year contract with the New York Yankees in 2008 for $27.5 million per year (at age 32!) and who made an astounding $480 million during his time playing in the MLB, it might mean even less. But of the 3,546 retirees collecting their benefits, indeed they aren’t all A-Rods and Big Papis. They are a collection of baseball players enjoying what we hope all Americans can achieve one day: a guaranteed, secure retirement income for life.
Professional baseball isn’t the only sport that provides players with a retirement plan. The NHL, NFL, and NBA all offer their retirees defined-benefit plans. Baseball did it first, though, initiating its pension plan in 1947. It has remained well-managed; as of 2018, it was 88% funded. And just like public union members, baseball players have taken demonstrative action to preserve and improve their retirement benefits. The very first MLB strike happened in 1972, when players refused to take the field due to the demand for better pay and pension benefits, a move that delayed the season for nearly two weeks. In August 1985, players went on strike for two days, seeking better benefits after Major League Baseball signed a lucrative television deal two seasons earlier. That time, players not only saw an increase in the MLB’s contribution rate but also raised the minimum salary by 50%, from $40,000 per year to $60,000. It’s worth noting that 38 years later, in 2023 the minimum salary is $600,000.
So as we slide into the 2023 season, take a moment to consider the pros who have security coming to them beyond the dugout. Like life, baseball can be unpredictable. Are the San Diego Padres going to take it all in October? They might, but we can’t be sure. One thing we DO know is that all Americans deserve the peace of mind that comes with a defined-benefit pension. And if you can’t have Nolan Ryan’s pitching arm or Ken Griffey, Jr.’s swing, then a lifetime of security is the next best thing.
