O.J. Simpson’s pension could be anywhere between $29,892 and $101,400 a year – or less
For years now, I’ve heard rumors that that O.J. Simpson was getting $25,000 a month in NFL Pension benefits, which would amount to $300,000 annually.
When former players hear this, they must scratch their heads and say to themselves “what pension plan does he have, and how can I get into that one!”
The $25,000 a month figure is a myth; a fantasy; and a big fat lie.
It doesn’t help when the press and online media websites report the same thing over and over. For example, read the last paragraph of this online CBS story: O.J. Simpson's net worth as he approaches parole hearing
Pension's are pretty easy to calculate, but unless you know "when" a player has taken their pension, you will never know the exact amount they are receiving. You can guess. You can estimate. Or you can pull a figure out of thin air like some reporters are doing.
They need to do their homework and stop making it look like former players - especially the pre-1993 players - have a great pension plan that will have us living quite comfortably during our twilight years.
I was recently contacted by CNN Money and asked if I could assist them in setting the record straight on what O.J. could potentially be receiving. Here is a link to that article: Here's how much O.J. Simpson stands to make in retirement
Before I talk about O.J.’s pension, there are a couple things everyone needs to keep in mind when analyzing the NFL Pension Plan.
First and foremost, the Pension Plan is not based on a player’s salary, as it is with most pensions in the public and private sector. It’s based on three things: When you played; how many credited seasons you earned; when you decide to draw on your pension; and what “election,” or form of payment you decide to choose at the time of retirement, ie. Life Only, Qualified Joint and Survivor Annuity, Life and Contingent Annuitant Pension. These things are all spelled out in the NFL Retirement “Playbook” that I recently sent out to former players.
Bottom line: A player could be a superstar that set rushing records and jumped over luggage at the airport, or a perennial bench-warmer that never saw a down in an actual game……but, both players will get the same monthly pension payment if they earned the same number of "credited" seasons, during the same period of time, and took their pension at the same exact time, with the same election form.
There are a few other factors that can determine the amount of a player’s monthly payment.
Pre-1993 players were allowed to take a 25% lump sum early payment from their retirement account, which in turn reduced their final retirement benefit by 25%. They were also allowed to take a “Social Security Adjustment” which gave them more money in their monthly payment, but only until they started receiving their Social Security checks – and then their monthly pension payment was significantly reduced.
Additionally, pre-1993 players can take their retirement as early as age 45, or they can take it at the "normal" retirement age of 55. Players can also "defer" their retirement until age 65. That's what I'm doing (and that's what I recommend to all former players) because from age 55 to age 65 the Pension Plan monthly payment increases by exactly 261.9%. It's a defined benefit plan and as such, we know exactly how much we will get at any specific date in the future. You don’t see too many defined benefit plans in existence today, because they are just too expensive for most companies to maintain.
All vested NFL players (unless they are currently receiving their pension) recently received a letter from the NFL Retirement Board that shows them the amount they would receive now - and in the future. In the letter, they also give players an update on the funding of the Pension Plan, which is still about $500 million below what is needed to pay out all future benefits. I should note that they have significantly improved the funding of the plan, but it won’t be fully funded – in their estimation – until 2021.
Now, as far as OJ is concerned:
O.J. is eligible for both the regular NFL Pension and the Legacy benefit. If he took his Pension at age 55 (normal retirement) he would receive $250 per credited season under the regular Pension plan - aka "The Bert Bell / Pete Rozelle Retirement Plan."
The calculation is $250 x 11 = $2,750 per month, or $33,000 per year.
The 2011 CBA also created a special "Legacy" pension benefit for players that had credited seasons before 1993. The calculation is $124 x 6 = $744 + $108 x 5 = $540. Add those together to get $1,284 monthly and add that amount to the regular pension: $2,750 + $1,284 = $4,034 per month, or $48,408 annually.
If O.J. deferred his regular pension until age 65, it would be increased by a specific “retirement factor.” In this case, you would multiply $2,750 by 2.619 and you would get $7,202 per month, or $86,424 annually. Add that to his Legacy benefit and the calculation would be $7,202 + $1,248 = $8,450 per month, or $101,400 annually.
It is unlikely - but not out of the realm of possibility - that O.J. took his retirement early. If he took it at age 45, it would have been reduced by 45.2%. So, let’s do the math. $250 x 11 credited season = $2,750 a month. Multiply that by the retirement factor of .452 and you get $1,243 a month. Add that amount to his Legacy benefit of $1,248 a month and you get a monthly amount of $2,491, or an annual amount of $29,892.
So, in the final analysis, OJ could be getting an annual pension anywhere between $29,892 and $101,400 - and even those amounts are subject to further reductions.
As I mentioned earlier, those amounts can be adjusted – usually downward - based on a players “election” at the time they applied for their pension.
Additionally, O.J. could have opted for the 25% lump sum early retirement payment. That would have reduced his pension by 25%. It’s unlikely he took early retirement, but no one really knows for sure.
And lastly, he could have elected to take the Social Security adjustment – further reducing his payment at the time he started drawing on his Social Security.
There are two other things that can drastically effect the amount of a player’s pension. Although a Pension Plan is sheltered from most civil judgments, it may be vulnerable to other types of judgments or liens. For example, a court order known as a QDRO "qualified domestic relations order" divides retirement accounts in a divorce, and a players bank or retirement plan administrator must honor such an order.
Similarly, if you owe child support or alimony and you receive pension benefits under ERISA - a federal pension law that governs most pensions - your pension benefits can be garnished to pay your child support or alimony. Retirement accounts can also be seized to satisfy judgments for unpaid taxes and criminal fines.
I don’t know if O.J. had a QDRO in effect with either of his former wives, or if he had any outstanding liens or judgmenets, but my point is this: There are numerous things that can affect a former player’s monthly pension benefit.
The only one who knows how much O.J. is receiving, is Mr. Simpson, and a handful of people at the NFL Retirement Board.
I can tell you one thing for certain. O.J. is not receiving one penny more than he - or any other former player - is entitled to under the rules of the NFL Pension Plan!
____________________________________________________________________
The information provided in this article regarding the NFL Pension Plan and Legacy Benefit is my best understanding and interpretation of what I have read and what I have researched. It should not be considered official and that is why I urge all vested players to contact the Retirement Board for the exact amount of your benefits with respect to the Pension Plan and Legacy Fund. You can call the Retirement Board at 1-800-638-3186, email them at [email protected], or visit the NFL Player Benefits Website and look at your own account and even project what your benefits will be in the future.
