Hockey Players Have More Stable Pension Than Other Professional Athletes

Reports from the Society of Actuaries (SOA) reveal the funded status for pension plans of professional athletes.

 

The National Hockey League (NHL) is doing better than the National Football League (NFL) and the National Basketball Association (NBA). The SOA reports that assets for minimum required funding is $170.4 million for the NHL plan and liability for minimum required funding is $124.8 million, leading to a funded ratio for funding purposes of 137%.

 

However, looking at the market value of assets at $170.4 million and current liability of $338.7 million, the NHL plan has an unfunded current liability of $168.3 million, or a funded ratio of 50%. All numbers are as of the year ending April 30, 2017.

 

Still, the NHL plan, even on a market value basis, is doing better than other plans for professional athletes.

 

The SOA reports that assets for minimum required funding for the NFL plan is $2.0 billion and liability for minimum required funding is $2.6 billion, leading to an unfunded liability for minimum funding of $0.6 billion, or a funded ratio of 78%. Looking at a market value of assets of $1.9 billion and a current liability of $5.5 billion, the NFL plan has an unfunded current liability of $3.6 billion, or a funded ratio of 35%. These numbers are for the year ending April 1, 2016.

 

For the NBA plan, assets for minimum required funding are $296 million and liability for minimum required funding is $482 million, resulting in an unfunded liability for minimum funding of $186 million, or a funded ratio of 61%. The market value of assets is $277 million and the current liability is $901 million, resulting in an unfunded current liability of $624 million, or a funded ratio of 31%.

 

The SOA notes that NHL players earn one-fourth of a year’s benefits for every 20 credited games; benefits are fully vested as soon as they are earned. Ten full years of benefits results in the maximum benefit payable by law. The plan considers age 62 to be standard retirement age, but players may begin receiving retirement benefits as early as age 45 with reductions to reflect that they likely will receive benefits for a longer time.

 

NFL players have been covered by its pension plan since 1962. Players are fully vested after three credited seasons or five years of service in other capacities (for example, as a coach), but the amount of retirement benefits is based on the number of credited seasons. The plan considers age 55 to be the standard retirement age. If a player waits until later to start his benefit, it is increased to reflect that he will likely receive it for a shorter time.

 

NBA players have had a pension plan since 1965. The retirement benefit amount depends on the number of credited seasons and is fully vested after three years. After 10 seasons, players earn the maximum benefit payable by law. The plan considers age 50 to be standard retirement age, but as early as age 45 players may begin receiving reduced benefits, reflecting that they will probably receive them for a longer time.