Is the NFL Pension Plan Ready for Retirees?

At the start of April 2015, the National Football League Players’ Pension Plan was 74% funded—up from 55% at April 2014, according to an analysis by the Society of Actuaries (SOA).

However, the SOA notes this is largely because benefit changes reduced liabilities by $0.5 billion, leaving $1.8 billion in assets against liabilities of $2.5 billion. In the context of the red-yellow-green zone system commonly used with this type of pension plan, the plan is in the yellow zone.

During 2015, NFL clubs collectively contributed $266 million, compared to $306 million for 2014. Of the $266 million contributed for 2015, $36 million covered the cost of benefits that active players earned during 2015, leaving $230 million to be applied toward the funding shortfall of $700 million.

According to the SOA, the average approximate annual pension benefit is $34,000, and $146 million in benefits was paid out in 2015. There are 2,169 active players, 6,017 inactive players and 4,403 retirees receiving benefits.

NFL players have been covered by this pension plan since 1962. The plan considers age 55 to be the standard retirement age. If a player waits until later to start his benefit, his benefit is actuarially increased accordingly. Players are fully vested after 3 credited seasons or 5 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.