NBA Defined Benefit Plan

[Nanogeek]

I spoke with a former NBA player this morning while getting my hair cut in Charlotte. He said the NBA pension plan is if a player spends 10 years in the league then they are guaranteed $300k per year for life though payments do not begin until 65 but can be accelerated at actuarially reduced rates. Vesting at lower levels occurs after as little as 3 years in the league. Pretty generous.

[Devilzsidewalk]

I spoke with a former NBA player this morning while getting my hair cut in Charlotte. He said the NBA pension plan is if a player spends 10 years in the league then they are guaranteed $300k per year for life though payments do not begin until 65 but can be accelerated at actuarially reduced rates. Vesting at lower levels occurs after as little as 3 years in the league. Pretty generous.

so this investopedia article is wrong? (its from 2010 though)

NBA players have one of the most generous pension plans in all of professional sports. They are vested into their pension plans after playing at least three seasons in the league. The minimum benefit for a player that retires at the age of 62 is $56,988 per year - not a bad retirement for a three-year career. The maximum benefit for any player is $195,000, and it takes 11 years of NBA service to qualify for this benefit.

then somebody on stackexchange said this:

The pension plan in the NBA is calculated as $306 for every month in the NBA.

For example Gary Payton played in the NBA for 17 seasons or 204 months. 204x306=62,424. Gary Payton's pension will be $62,424 per year or $5,202 per month. A player with only three years in the NBA would get $11, 016 per year or $918 per month.
The pension is eligable to players strating the age of 50, A player can opt to collect the pension at the age of 45 but only 2/3 of what it would be at 50.
The minimum season to be eligible to NBA pension is three seasons of playing.

I think these were older articles though, stuff may have changed

[DBoys]

As of 2011 CBA
Current Benefit. As of the date of this Agreement, the Normal Retirement Pension payable under Section 3.2 of the Pension Plan shall be $518.92 per month for each year of Credited Service payable in accordance with the provisions of the Pension Plan.

The CBA specified increases in that benefit, per a formula. But it's easy to see the general gist of things.

A 10 year veteran would get about $5200/month, or about $62,400 per year. That "NBA veteran" who said he'll get $300K every year for life, by being a 10-year veteran, was full of nonsense.

[Devilzsidewalk]

is it retroactive to past players

[Nanogeek]

As of 2011 CBA
Current Benefit. As of the date of this Agreement, the Normal Retirement Pension payable under Section 3.2 of the Pension Plan shall be $518.92 per month for each year of Credited Service payable in accordance with the provisions of the Pension Plan.

The CBA specified increases in that benefit, per a formula. But it's easy to see the general gist of things.

A 10 year veteran would get about $5200/month, or about $62,400 per year. That "NBA veteran" who said he'll get $300K every year for life, by being a 10-year veteran, was full of nonsense.

In 2009 the NBA defined benefit plan had 317 beneficiaries which received $24.1 million in benefits. That's $76k per beneficiary. With the average player career length at 6 years and it being a shallow tail as you go out towards longer careers its obvious if a 10 year vet was only getting $62k that the average wouldn't be $76k. This guy had no reason to be "full of nonsense". The numbers don't lie.

[DBoys]

Of course he's full of nonsense in saying each 10-year vet is guaranteed to get 300K a year, since what I cited was directly from the current CBA itself.

[bringWallyBack]

Who pays? Where does the money come from?

[DBoys]

Who pays? Where does the money come from?

It comes from the owners, as part of the 50-51% of revenues the players get under the CBA.