Pension plans used to be the most common retirement plan.
Companies would pay its employers a salary with the promise of a pension once they retired.
But the pension plan is becoming less seen today.
The National Football League is one of the few employers that continues to include the pension benefit as a part of its retirement plan.
In this blog, I am going to break down all the things players in the National Football League need to understand about the NFL Pension Plan in 2024.
NFL Pension Plan
"A pension plan...what is that?"
Pension plans are becoming an afterthought.
But the NFL has made it a priority to include in the NFL Retirement Plan.
A pension plan is a retirement plan that provides income to employees after they retire.
In simple terms, an employee receives a specific payment amount when they retire.
So how does this work for NFL players?
It starts with earning a "Credited Season."
A Credited Season means you were on one of the following rosters for three or more regular or post-season games:
Active Roster
Inactive Roster
IR (Injured Reserve)
PUP (Physically Unable to Perform)
Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season.
From a Credited Season to Becoming Vested
Earning a Credited Season is Step 1.
Step 2 is becoming "vested."
In order to be entitled to the NFL Pension Plan, a player must earn three or more credited seasons.
Simply put, three or more Credited Seasons means you are now "vested."
Think of it like levels to a game.
First, you have to make the 53-man roster.
Second, you have to be on said roster for 3 or more games.
Third, you have to earn 3 or more Credited Seasons.
These Credited Seasons open the doors to the benefits negotiated under the NFL's Collective Bargaining Agreement (CBA).
NFL Pension Plan Specifics
As an eligible player, it is important to understand the NFL Pension Plan specifics.
Again, in order to be eligible for the NFL Pension plan, a player needs to have earned three or more credited seasons.
To start, the NFL Pension Plan generally begins when a player reaches between the ages of 55 and 65.
Once a player reaches retirement age, there are three factors impacting a player's pension benefits:
How many benefit credits a player has earned
When a player chooses to begin receiving retirement benefits
The form in which a player chooses to receive his retirement benefits
Benefit Credits
In the NFL, each season a player plays for three or more regular or post-season games, they earn a credit towards their pension amount.
Outlined below are the credits earned for each credited season a player is awarded:
*Remember, you need 3 or more Credited Seasons to be eligible
Credited Seasons Benefit Credit
1982-1992 255
1993-1994 265
1995-1996 315
1997 365
1998-2011 470
2012-2014 560
2015-2017 660
2018-2019 760
220-2030 836
These credits are then used to determine how much a player may receive for their pension.
The average NFL pension is ~$43,000 per year as of 2023.
When Is A Player Eligible For a Pension?
As mentioned above, the NFL Pension Plan typically begins when an eligible player turns 55.
However, these benefits can be paid at two different times:
Normal Retirement
Deferred Retirement
Normal Retirement begins on the first day of the month beginning after a player turns 55.
Deferred Retirement can begin on the first day of the month after a player reaches the age of 55. However, in deferring this benefit, the amount of a player's monthly benefit will be increased. This is because a player will be receiving a pension for a shorter amount of time.
Regardless of when an eligible player chooses to receive his pension, he must be at least 55 years of age.
How The Pension Benefit Is Paid
When it comes to receiving the pension, a player has multiple options.
These include:
Life Only Pension
Qualified Joint and Survivor Annuity Pension
Life and Contingent Annuitant Pension
Life and Ten-Year Certain Pension
Life Only Pension
The Life Only Pension is the most common pension plan chosen by NFL Players.
This pension will provide equal monthly payments to an NFL player for their lifetime.
Once a player passes away, this benefit ends regardless if a player has a family.
Qualified Joint and Survivor Annuity Pension
If a player is married, the Qualified Joint and Survivor Annuity Pension is most common.
This plan gives a player a reduced monthly pension during the player's lifetime.
However, when a player dies, the surviving spouse will receive 50% of the pension.
Life and Contingent Annuitant Pension
The Life and Contingent Annuitant Pension plan is similar to the Qualified Joint and Survivor Annuity.
It pays a reduced monthly pension during the lifetime of a player.
There is one difference. The amount depends on the beneficiary's expected lifespan. It also depends on the percentage the beneficiary will receive.
A player can choose the percentage of the pension paid to the beneficiary. That can be anywhere from 1% to 100%.
It is important to keep in mind if the beneficiary is not your spouse, parent, child, or dependent, the value of the benefits payable may change.
Life and Ten-Year Certain Pension
Similar to the other pensions, this option provides monthly payments for life.
The difference with this plan is that 10 years of payments are guaranteed.
If a player passes away young, the beneficiary will continue to receive the same monthly payments during the guaranteed time.
Pension Protection for Family
While it is never in the plan, it is important to understand what happens to a player's pension benefit if he passes away before reaching retirement age.
The NFL continues to emphasize the importance of taking care of the family.
With that, the NFL has created a Widow's and Surviving Children's Death Benefit.
While not a pension plan, it does provide a pre-retirement death benefit to the spouse.
The typical monthly death benefit for the widow and surviving children is $9,000. The $9,000 is paid to the family for the first 48 months following a player's death.
This amount decreases to 50% of the player's benefit credits after those 48 months. The minimum that would be paid is $4,000.
What Next?
As hard as it may be to walk away from the game, the NFL has made it a priority to help players into retirement.
This includes the NFL Pension Plan.
The NFL Pension plan provides players with specific payment amounts when they retire.
It is important to discuss the benefits with your financial team.
At Moment Private Wealth, we help you create a plan with this benefit in mind, including how to budget as a professional athlete.
I highly suggest checking out the NFL Retirement Plan (2024 Edition). The NFL Pension is just one of the many benefits afforded NFL players.
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If you are in the National Football League and want to better understand the NFL Pension Plan, schedule a call with a Moment Founder.
Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor.
Get in Touch With An Advisor
Frequently Asked Questions
Here are some answers to questions I received frequently about this topic.
How many credited seasons are needed to be eligible for the Pension Plan?
Each player must have earned 3 credited seasons to be eligible.
At what age am I eligible for the NFL Pension Plan?
Players can start receiving their pension at the age of 55.
Do I have to start taking my pension at 55 years of age?
No, a player has the option to defer payment. In doing so, the amount of the pension increases per year since a player will be receiving a pension for a shorter amount of time.
Are there different Pension Plans I can choose from?
Yes, there are multiple plans. Be sure to consult your financial team for the best option for you.
Will my family be taken care of if something happens to me?
Yes! The NFL has instituted a Widows and Surviving Children's Benefit. If the family is not included as beneficiaries in the Pension Plan, they will receive benefits via this plan.
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*Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.
