When should you take your NFL Pension and Legacy Benefit?

By Jeff Nixon

• NFL Retired Players United

Nov. 02, 2015

When planning for retirement, one of the most important questions you can ask is “How is my Pension and Legacy Benefit affected if I take it early, or if I defer it until after age 55?”

First, it is essential to know that you can only take the Legacy Benefit if you are currently receiving your regular Pension - known as the Bert Bell/Pete Rozelle NFL Retirement Plan.

Whether you are taking your Pension now or later, all vested players need to have good information in order to make good decisions.

When you decide to take your Legacy Benefit, it will be actuarially adjusted using the same “Retirement Factor” that the regular Pension Plan uses in determining what your annual payout will be. Keep in mind that the benefit payments are further adjusted depending on which “election” you decide to take. For example: Life Only Pension, Joint and Survivor Annuity etc. The total amount might also be adjusted if you took the “Early Payment Benefit.”

If you are not taking your Pension and Legacy benefit at this time, but would like to get a “projection” of what your Pension and Legacy benefit payment would be if you took it at a particular time in the future, you should contact the Plan Office at 1-800-638-3186.

The NFL retirement plan defines normal retirement age as 55 years old, but some players begin drawing their pensions early. Retired players who left the League on, or after March 1, 1977 and have at least one credited season before 1993 may elect to receive benefits as of their 45th birthday. Those players can also apply for and receive an “Early Payment Benefit” – a 25% Lump sum distribution from their pension.

Players who begin drawing their NFL pension and their Legacy benefit before age 55 receive a reduced benefit because benefits are paid over a longer period and begin up to 10 years earlier. This is referred to as “early retirement”. For example, a player who begins drawing his pension benefits at age 45 would only receive 45.2% of the monthly benefit that he would receive if he waited to draw his NFL pension at age 55.

If a player waits until later than his 55th birthday to begin drawing his NFL pension, his monthly benefit will increase. This is known as “deferred retirement”.

Here are the basics of how the “regular” NFL monthly pension benefit is calculated:

(Sum of benefit credits) x (Early or deferred Retirement Factor) = Monthly pension benefit

Find the sum of your benefit credits using the table below:

It is important to note that on September 1, 2014, the NFLPA increased pensions for 1,722 former players with credited seasons from 1993 to 1996. You can see the specifics of that increase at the NFLPA website here.  

If you played from 1982 to 1985 the sum of your “regular” pension benefit credits would be calculated as follows:

$250 + $255 + $255 + $255 = $1,015

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Now, here are the basics of how the Legacy Benefit is calculated:

The Legacy Benefit consists of two parts: a $600 floor and an increase in Benefit Credits.

$600 Floor: A player who is receiving a regular retirement benefit as of August 1, 2011 will have his benefit increased to $600 if it is less, regardless of when it began or the form that was selected.

The $600 floor for a player who was not receiving a retirement benefit as of August 1, 2011 will be adjusted if the player receives an Early Payment Benefit after August 1, 2011, and/or elects a Social Security form of benefit.

Legacy Credits Benefit: A player vested prior to 1993 will receive new Legacy Credits as follows:

$124 per Credited Season before 1975

$108 per Credited Season from 1975 through 1992

A player may elect to receive the Legacy Credit benefit increase at any time that he is receiving or elects to receive his regular retirement benefit.

If the Legacy Credit benefit begins at a later date, the benefit will be actuarially increased from the later of August 1, 2011 and age 55 to the date of payment.

The Legacy Credit benefit payment will be reduced if the player is younger than age 55 when the benefit begins.

The $600 floor and the increase – due to the Legacy Credits – are determined as if there are no Qualified Domestic Relations Orders or liens affecting the player’s benefits. The total increase is then allocated according to the terms of the order or lien, if any.

Find your early or deferred “Retirement Factor” using the following table:

Multiply the sum of your benefit credits by your early or deferred retirement factor.

Using the “Retirement Factor” - here are is an example of how much the regular monthly Pension benefit can vary depending on when you decide to take your pension. If you played from 1982 to 1985 and begin taking your pension at:

Age 45: $1,015 x 0.452 = $458.78 per month

Age 55: $1,015 x 1.000 = $1,015 per month

Age 60: $1,015 x 1.573 = $1,596.60 per month

Age 65: $1,015 x 2.619 = $2,658.29 per month

Using the “Retirement Factor” - here is an example of how much the Legacy benefit can vary depending on when you decide to take that benefit. If you played from 1982 to 1985 and begin drawing your pension at:

Age 45: $432 x 0.452 = $195.64 per month

Age 55: $432 x 1.000 = $432.00 per month

Age 60: $432 x 1.573 = $679.36 per month

Age 65: $432 x 2.619 = $1,131.40 per month

If you are currently older than age 55, the deferred retirement factor for the Legacy Credit increase cannot be calculated from the above table because the increase is calculated based on your age as of August 1, 2011, not from age 55.

Under this example, a player taking the Pension and Legacy Benefit at age 55 would receive a total monthly pension of $1,447.00, whereas a player taking the Pension and Legacy Benefit at age 65 would receive a total monthly pension of $3,789.69.

The monthly benefit amounts listed above are for a “Life only pension”, meaning that an NFL player will receive his monthly benefit until he dies. There are other elections that you can take for both the Pension and the Legacy Benefit. Those options will be provided to you when you notify the Retirement Board that you would like to begin taking your pension.

Many players with families elect to receive a form of NFL pension that has a survivor benefit. If a player elects to receive a pension with a survivor benefit then the amount of the monthly benefit will be reduced. If the player dies before his beneficiary, the beneficiary will continue to receive a benefit from the Bert Bell/Pete Rozelle NFL Player Retirement Plan for a certain period of time.

The information provided in this article is my best understanding and interpretation of what I have been told 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.

Only you can decide what is best for you and your family when it comes to the question of “When should I take my Pension and Legacy Benefits?” but if you can wait until age 55, or defer your retirement benefits to age 65 you will see a significant increase over the “early retirement” payments.

Please feel free to post a comment or ask a question and I will do my best to get an answer for you as soon as possible.

NFL

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Written by

Jeff Nixon

NFL Retired Players United

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