Pension plan for millionaires
According to estimates, the NBA gives an average annual salary of $7 million to a player, yet an estimated 60 percent of them go bankrupt just 5 years after retirement. A lavish lifestyle (multiple mansions, luxury vehicles, private jets and yachts), gambling and substance addiction, ill-advised investments and run-ins with the law lead them to financial struggles. Literally from rags to riches and back to rags.
But the league had addressed the situation so that at least those who had made questionable decisions with their finances can have some monetary relief. The NBA has had a pension plan since 1965 with the purpose of providing financial security and perhaps, peace of mind for retired players.
For an NBA player to be eligible for monthly pension payments, he must have played in the league for at least three years and is under contract for at least one season. This also means that a player is also on the team’s injured or suspended list for at least one day or on the inactive list for at least three games during a season.
The amount is dependent on the number of seasons the player had and the average salary over the highest three seasons, with those playing 10 or more years getting the highest payouts. Experience will be a factor.
The earliest retired players can get their pension is when they reach 45 but the league encourages players to wait until they get to 62, which is the maximum age limit, to get the highest possible payment. Choosing an option to receive compensation at different ages will affect the amount to be received. A player with a minimum of 10 years in the league can get a maximum of $215,000 annually.
Funds for the pension plan come from the * league, teams and player contributions. The National Basketball Retired Players Association (NBRPA) and the National Basketball Players Association (NBPA) are responsible for the improvement of benefits for retired players.
Aside from pension payments, retired NBA players receive lifetime health care coverage after 3 years in the league. Spouses and children also get the benefits if they were in the league for at least 10 years. The Players Health Insurance Program (PHIP) offers comprehensive coverage for medical, dental and vision costs.
Educational programs are also available for retired players, since a good percentage of them did not finish college. The program encourages retired players to pursue advanced studies and provide financial support and tuition reimbursement.
Since records had not been made public, the number of retired players who had availed themselves of the pension plan is unknown, but it is estimated that several hundreds of retired players have been receiving monthly pensions.
The NBA pension plan is considered to be the best retirement program in professional sports leagues and has gained positive feedback from among those leagues. Yes indeed, there is a pension plan for millionaires, or, for the 60 percent former millionaires.