July 12 (Bloomberg) -- National Basketball Association players, who were paid an average of about $5 million last season, will be forced for the first time to save money for retirement.
Players in the league this past season will receive $34 million, or 1 percent of what the league and union call basketball-related income, to be invested in an annuity, union attorney Ron Klempner said.
Details of the plan, such as which annuity will be chosen or how the money will be distributed, need to be worked out, Klempner said.
“We know that it’ll deliver good, fair returns,” he said in a telephone interview.
The program is part of the 10-year collective bargaining agreement between the NBA and the players union that ended a lockout in November.
Former NBA players Scottie Pippen, Latrell Sprewell and Antoine Walker are among retired professional athletes who have experienced financial difficulty after careers in which they earned tens of millions of dollars. Walker filed for bankruptcy after being paid more than $100 million over 12 years in the NBA.
“It’s a start,” player agent Keith Glass said in a telephone interview. “It does force you to save something, and that’s a good idea.”
Retired players can access the money before their pensions begin at age 50. Players can take an early pension at 45, Klempner said.
Basketball-related income in the NBA will top $4 billion next season, meaning the amount of forced savings also will rise.
Beginning next season, players also will surrender 5 percent to 10 percent of their salary for retirement. They automatically will be enrolled in the program and would have to opt-out to keep from participating in the plan, Klempner said.
Investment details for that plan aren’t complete, Klempner said.
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