Fred Couples-type PGA "pension": $247 million

[Jim Nugent]

PGA players won't have to pinch pennies when they retire, if projections of what their pensions are worth hold true.  A guy starting today, e.g., who has a career like Fred Couples has, was just told by the PGA that he should get $247 million when he retires:

"At a meeting hosted by commissioner Tim Finchem last week, players were given some examples of their projected retirement payouts.

For example, a 2006 rookie who has a Fred Couples-type career - more than 20 very successful years on tour - can expect to receive a pension of about $247 million, according to the tour's figures.

OK, you say, but not many players have as good a career as Couples. True, but consider the case of a player who has a Don Pooley-like career, 20 years on tour averaging about 75th on the money list. He can expect a payout of about $142 million, not bad for a so-called journeyman."

http://sports.yahoo.com/golf/pga/news;_ylt=AlJKIBpg2GPT2XEwWgE5RmEogsUF?slug=pga.golfnotes&prov=st&type=lgns

Have the Enron, or Social Security, accountants been at work again?  Would be fun to see how they came up with these numbers, which must be wildly, exorbitantly exaggerated.    

[Kevin_Reilly]

The power of compounded returns (w/o tax) coupled with optimistic assumptions = eye opening results.  Would love to see the assumptions used.

[Mike Benham]

Perhaps the "pension" money is invested in TPC developments ...  

It looks like the follow-on TV contract with The Golf Channel will be lucrative ...

[David Kelly]

From the looks of those numbers the PGA retirement fund is going to dwarf CalPERS.

[RJ_Daley]

...are only projections, educated guesses at best, but even if they are grossly overstated, the tour's bottom feeders will still be very well taken care of barring a major long-term economic catastrophe.

My guess is the projections aren't even educated guesses, are grossly overstated, don't apply to the reality of the tour bottom feeders, and like many so-so athletes, the won't be taken care of unless they take care of themselves by learning and practicing good money management.  

247 million as a retirement nest egg must be a misprint.  Maybe they are talking about total money earned both in prizes and endorsements, but not what is "saved" for retirement".  Or maybe the only thing in the quote that I could believe is a long-term economic catastrophe is at hand... but only for the rest of us that can't hit a golf ball or pass a football phenomenally well...

[Doug Siebert]

Well, I just hope that whatever assumptions the tour is using they aren't making any promises of such to their players backed by government guarantees.  Its one thing for the government pension guarantee to be asked to rescue underfunded pensions of regular working stiffs, but if 30 years from now they have to make up the difference for some 75th ranked schlub who was promised $142 million but there's only enough money to give him $71 million I'm going to burn down the White House.

I suspect they are making some pretty stupid assumptions, like that the growth in prize money enjoyed over the past 10 years will continue out infinitely into the future.

[Philip Gawith]

If Fred Couples is at $247m, how many billions would Tiger get?

[Tony_Muldoon]

I suppose it shouldn't be a surprise that the best job in the world comes with the best pension too.

Did anyone say something about golf not being fair?

[ForkaB]

Even with relatively low inflation, $247mm will only be worth about $60mm in 2006 dollars when that tour rookie reaches age 65 in 2046.  By that time, life expectancy will be well into the 100's, so that $60mm will need to last the guy 40+ years.  For a Couples-like career (i.e. top 10-20 of his generation) that's nothing spectacular.

[Mike_Young]

I do know they have an exceptional p[lan and the congressman from Michigan (Fred something I believe) got it passed thru congress with certain exemtions.  It is the best in Sports.  But right now if a guy makes 15 cuts a year and stays on tour 15 years his plan is worth over 20 million.  I don't know how to calculate these types of things bt if a guy just makes a cut this year almost $30,000 goes to his plan that week.

[Tom_Doak]

These aren't just wild projections.  Between all of its official corporate partners and TPC earnings, the Tour has been investing very lucratively for many years, and the players will make a windfall from it.  That's why Tim Finchem and Deane Beman before him are pretty bulletproof in the commissioner's chair.

[Dan Herrmann]

And the TOUR is a not-for-profit.  Whoever got the IRS to agree with that deserves a huge pension too.

I know they don't have to legally, but I hope they go back and help out the touring pros from the earlier days who need help.

[Andy Scanlon]

Who says defined benefit plans are on the verge of extinction?    

Of course, the Tour will have no problem funding its plan to ensure the payout projections, right?

I'd be interested to know how the PGA Tour's pension plan is apparently prospering while the pension plans of other (for-profit?!?) corporations are either being frozen or terminated on a seemingly daily basis.  Maybe they should get on the horn with the Tour's pension folks to learn how to administer a successful pension plan!

[Tom_Doak]

Andy:

It's a lot easier to run a pension plan when you've only got 100 employees a year and most of them are making "executive" salaries.

[B. Mogg]

Of course in 2030 a US$ may only be worth 0.25 Reminbi!

[Jim Nugent]

These aren't just wild projections.  Between all of its official corporate partners and TPC earnings, the Tour has been investing very lucratively for many years, and the players will make a windfall from it.  That's why Tim Finchem and Deane Beman before him are pretty bulletproof in the commissioner's chair.

Tom, I would be willing to bet a large amount of money that no player gets $247 million from the PGA pension plan.  Sight unseen, I would also bet they are plugging in rates of return that are impossible to achieve over any length of time.  

If anyone knows the actual numbers, I'm all ears.  

 

[Ben Cowan-Dewar]

Of course in 2030 a US$ may only be worth 0.25 Reminbi!

Brett,
I like that, but wasn't Couples the one who asked if Japan was a part of Asia? He probably wouldn't care about the RMB, if he was spending on native soil...