How NBA pensions work (2024)

Thanks in large part to the actions of modern-era players like Chris Paul, LeBron James, Caron Butler and James Jones (among others), the NBA’s pension program has significantly improved in recent years. This greatly benefits the old-school players, who haven’t always seen eye-to-eye with the game’s modern stars.

NBA players have had a pension plan since 1965. Any player with at least three years of service in the NBA receives a monthly pension payment and access to other benefits (such as life-long healthcare coverage, a college-tuition reimbursem*nt program and more). In order to accrue a year of service, a player must be under contract for at least one game during the NBA season (whether they’re active or inactive doesn’t matter).

According to the National Basketball Retired Players Association, after the changes in 2017, pensions increased by nearly 50 percent for players who start receiving payments at 50 years old – with corresponding increases for players who start receiving payment at later ages. Previously, the age-50 benefit paid out $559 per month per year of service. Now, it pays out more than $800 per month per year of service.

Also, the pre-1965 pension benefit amount (which is paid to players who were in the league before the pension plan was established) increased from $300 to $400 per month per year of service.

On average, former players are now earning an additional $300 per month, according to Scott Rochelle, the President and CEO of the NBRPA.

Players can start receiving payments as early as 45 years old, but the payments are reduced since they’ll be receiving the payments over a longer period of time. Players are encouraged to hold off on receiving payments until they’re age-62 (if possible) in order to receive the highest-possible payments.

A 62-year-old who played 10 or more years in the NBA will earn over $215,000 annually from his pension. For comparison, “a 10-year NFL veteran who retired prior to 1993 receives [a pension] of approximately $30,000-40,000 a year, pretax, at age 55,” according to the San Francisco Chronicle. (The minimum that a retired NBA player will receive at age-62 is $56,988 annually, and that’s just for someone with three years of service).

Making these improvements to the pension program required an additional $33 million annually in funding – a cost that the NBA and the current players agreed to split equally.

“The overall response that we received was great appreciation, relief and a sense of confidence that the retired players were being taken care of and still part of this family,” Rochelle said.

“It’s great to see that today’s players recognize how important it is to give back to these retired players in a major way,” said Caron Butler, who’s on the NBRPA’s Board of Directors. “I think it’s special. The retired players are happy because you sacrifice your body and give everything to this game, so to be appreciated on the back end speaks volumes. We’re so grateful to play for a league like the NBA that understands the importance of taking care of us and our families. Once you’re part of this fraternity, it’s a lifetime thing.”

EDUCATIONAL PROGRAMS

The college-tuition reimbursem*nt program is another recent addition that’s helping many retired players. If a former player wants to go back to school and enroll in college courses, they can get their tuition reimbursed up to $33,000 annually.

“In addition to improving the pension program, they included an educational component with it as well,” Butler explained. “Now, retired players who didn’t finish their degrees can go back to the school and the guys who did get their degrees can further their education even more. They provided enough funding to make $120,000 available to every person who has ever played in the Association.”

As of September 30, 2019, there were 51 players who submitted pre-approval forms for tuition reimbursem*nt and 28 had been approved. Since then, it’s estimated that more than 25 additional players have applied for the program.

“Adonal Foyle earned a Master’s in Business Administration through one of our programs with Purdue Sports Global,” Rochelle said. “Vladimir Stepania earned a Master’s degree through Anaheim University through one of our programs. Adrienne Goodson, a former WNBA player, also earned a Master’s degree through one of our programs. It’s great because we know that we’re making an impact. And it really does help when we talk about those success stories because it pushes other retired players to take advantage of our services as well.”

“For many years, we’ve seen that once a player is no longer playing at a university, they’re done with you,” Butler added. “The scholarship is no longer good and you can’t pivot back to someday finish your education. Now, with this program, you’re able to go back and further your education and you’re going to get the financial assistance that you need. Not everyone walks away from the game of basketball with millions of dollars, so to have this financial support speaks volumes.”

The NBA and NBRPA also have educational programs for active players and newly retired players that teach them how to be fiscally responsible. This – coupled with increased salaries and the fact that the NBA matches active players’ 401(k) contributions up to 140 percent – should lead to more players walking away from the game with significantly more money in savings.

“If you look at the sheer size of the contracts and compensation, plus the NBA matching 401(k) contributions up to 140 percent, they’re setting the players up to never ever be broke,” Rochelle said. “It helps when there’s a cultural push to make sure that players are doing the right things with the money that they’re earning. You see that now with players who are saving all of their game checks and just living off their endorsem*nt money. Smart things like that are becoming more commonplace since there’s been a cultural shift toward fiscal responsibility. Nobody wants to show up in the headlines as a cautionary tale of a young athlete who burned all of their money. We’re seeing less of that, and I know we’re going to continue seeing that less and less because of the educational programs that we have now.”

HEALTHCARE FOR LIFE

When 13-year NBA veteran Earl “The Pearl” Monroe started experiencing health issues in 1991 – just one year after he was inducted into the Hall of Fame – he was told by the NBA and NBPA that they couldn’t help him. In the coming years, he would need more than 47 surgeries, but he was no longer eligible to receive health insurance through the NBA once he retired.

Fortunately, Monroe did qualify for health insurance through the American Federation of Television and Radio Artists since he had appeared in a number of TV commercials during his playing days.

But after struggling with his health issues and watching other retired NBA players pass away at a young age (including Darryl Dawkins at 58 and Moses Malone at 60), Monroe became one of many former players speaking out about why retirees desperately needed healthcare.

Monroe told HoopsHype that he and other retired players started pushing for this in the 1990s, but it wasn’t until 2017 that this change was made.

Now, after three years of service in the NBA, players receive healthcare coverage for life. Players with 10-plus years of service in the NBA receive coverage for their spouse and children too.

“With the addition of healthcare for retired players, we were elevated to a very admirable position within the entire sports industry because this just simply doesn’t exist anywhere else or any other sport,” Rochelle said. “We were able to do it, which really helped our older players see that they’re not forgotten.”

Butler hopes that the NFL (and others) will follow in the NBA’s footsteps.

“I hope what we’re doing flows over to any union or other platform that needs this,” Butler said. “It’s important to take care of the folks who put so much into this and who moved the needle in the past. These platforms in the entertainment space have made so much money over the years, and I think it’s paramount that we take care of those people from the past and appreciate their impact and legacy. This goes for the NFL, hip hop and any other platform in the entertainment space. These people need to be taken care of and appreciated.”

Part of the reason why these changes finally happened is because some of the biggest names in the NBA got involved. Many retired players credit James, Paul, Kevin Durant, Stephen Curry and Dwyane Wade for making sure this got done (with behind-the-scenes assistance from players like Butler and James Jones too). It took more than 25 years of lobbying, but funding health insurance for retired players was finally approved in 2017 with unanimous support from the NBPA’s player representatives.

“I think that it’s very important to have the right people in position and have some of the biggest names involved to highlight the issues that haven’t been addressed for years,” Butler said. “They’re paving the way for the next wave of players. A lot of kids are watching and they’re seeing the initiatives that these stars are part of and the moves that they make, and they want to be like them in a way. This fraternity is small and you’re empowered and influenced by the people who come before you. Those are some of the biggest names in the game; I think the next wave of players will model themselves after those guys because they’re providing the new blueprint.”

“Now that we have superstars leading the union, it changes the complexion of the conversations that are had between the league and the union, and it gives the players a real leg up when it comes to credibility and getting some of the things that they’re looking for,” Rochelle added. “As [NBRPA Chairman] Spencer Haywood has built relationships with Chris Paul, Kevin Durant and LeBron James, it’s really helped us.”

Quite frankly, there were selfish reasons for active players to improve these benefits and programs too. After all, every single one of them will be a retiree at some point in the near future. After all, Father Time is undefeated. They will benefit from these changes in time, which is why it’s somewhat shocking that it took over 25 years for these changes to be made.

“LeBron James is going to retire one day and he may possibly be the greatest all-around basketball player that we’ll see in this lifetime,” Butler said. “Everybody is going to retire at some point! Unless you want to sit at home and do nothing – and I don’t think anyone wants to be in that position – you have to start preparing for what’s next. The game of life is so long. If you make sure you’re prepared for life after basketball while you’re still playing, you’ll hit the ground running once you retire rather than tripping over your own feet.”