Now about the pension plan. The NFL changed its longstanding pension plan for employees, including assistant coaches, in March. In doing so the NFL allowed teams to either stay in a league plan or, presumably for less money, join a plan for a lower benefit level that teams would find on their own. Nine teams up to now have chosen to do their own plans, including Dallas and New England. Indianapolis likely will not opt out. But even if the Colts stay in the league plan, Moore and Mudd could be affected because of previous teams that employed them, according to Polian.
This is where it gets complicated. Employees who retire and take their pension can take it in one of three ways. One is as a lump sum, which is most desirable because then retirees can take the entire pension and invest the benefits as they see fit. The benefits belong to them and their heirs as long as the money lasts. Two is as an annuity, with annual payouts until the retiree dies. Three is as an annuity with annual payouts until the retiree and his spouse both die.
Obviously, the older a coach is when he retires, the less his life expectancy is. In the cases of Moore and Mudd, both of whom have had recent health concerns, they obviously wanted a lump-sum payment. But neither club or league lawyers could assure them that they'd be able to take a lump-sum payment if they retired beyond this year. Not because of what the Colts would do with their pension plan. ("The Colts will fund our plan fully,'' said Polian.) But because of what their previous employers would do. Mudd worked previously with San Diego, San Francisco, Seattle, Cleveland and Kansas City. Moore worked for Pittsburgh, Minnesota, Detroit and New Orleans.
If any of those teams funded their pension plan at less than 80 percent of the minimum standard for pension plans, Moore and Mudd risked not being able to take their retirement pensions in a lump sum. San Francisco and New Orleans are likely to opt out of the league pension plan; Minnesota might. So even though the Colts are likely to fund, as Polian says, neither the Colts nor advisers to Moore and Mudd could guarantee that they'd be able to take the lump-sum payment.
"This has been going on since February,'' said Polian. "And the fact is we just couldn't answer whether they'd be able to take the lump-sum or whether they'd have to take the pro-rata portion of the pension in an annuity. We think they'd be able to take the lump-sum, but can I look at both of them and say, 'Everyone's going to fund and you'll be able to take a lump sum when you retire?' And the answer was no.''
So Mudd and Moore, sure they'd be able to get the lump-sum if they opted out before the clubs changed, decided to retire now and take the full benefit. As one retirement planner without direct knowledge of the NFL's system told me over the weekend, it could be the difference between getting $1.2 million and being finished with your pension, or taking $60,000 a year until both a retiree and his spouse died. Under this scenario, if a retired coach took the annuity and died after seven years and his wife after eight, they'd get a total of $480,000 from their pension, instead of a lump-sum payment of $1.2 million, which presumably they could grow into a larger nest egg through investments.
