DB to DC Move Hits Major League Baseball

Two major league baseball teams have discontinued pension plans for non-uniformed staff.

The Los Angeles Angels and the Boston Red Sox are among the first teams to discontinue defined benefit (DB) pension plans for non-uniformed staff.

According to the Los Angeles Times, Major League Baseball owners voted last January to allow individual teams to reduce or discontinue pension plans for non-uniformed personnel, a group that includes front-office executives and support staff, scouts, minor league staff and some broadcasters.      

Two- to three-hundred non-uniformed employees from the Angels and Red Sox were informed in November that as of January 1, the teams would no longer contribute to the pension plans, and new hires would not be able to enroll in them. Other teams are expected to follow suit, the L.A. Times says.

The two teams have enhanced their existing defined contribution (DC) plans to offset the reduction and eventual elimination of pension plans by increasing employer matching contributions from about 4% to as much as 10%, employees said.

“This wasn’t a cost-saving move,” Angels President John Carpino said when asked how much money the team would save by eliminating pension plans, according to the Times. “It’s about flexibility for employees. We looked at it long and hard and felt the defined contribution program was a better option.”

Carpino noted his team’s decision to scrap the pension plan reflects a nationwide shift from DB to DC plans.