Class Action: NBA Retirement Pension Plan Discrepancies Cost Former Players Hundreds of Thousands

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A proposed class action lawsuit has been filed in New York on behalf of all former participants in the National Basketball Association Players’ Pension Plan who elected to receive a form of retirement pension that terminated prior to a player or his spouse’s death. The 27-page lawsuit seeks a declaration from the court that the Plan violates two sections of the Employee Retirement Income Security Act of 1974—ERISA.

The NBA’s retirement pension plan went into effect in 1969, the lawsuit explains, and was amended in 1970 to guarantee retired players a “Normal Retirement Pension,” i.e. benefits paid monthly up to and including the month in which a player dies.  In addition to its standard benefits, the case continues, the “1970 Plan” offered an “actuarial equivalent” that included several options that terminate prior to a player’s death, including a single lump sum payment, installments of fixed amounts, and installments offered for a fixed period. The complaint says the 1970 Plan defined actuarial equivalents as “a benefit of equivalent value to a Life Annuity” when calculated on the basis of actuarial assumptions, such as, the suit lists, percent interest and mortality tables defined by the Plan.

Retired NBA players, the case continues, have the choice of electing to receive a Normal Retirement Pension, payable as a Life Annuity, or an Actuarial Equivalent, supposedly payable as a benefit of equal value to the Life Annuity. The plaintiff, who played in the NBA from 1968 through 1978 and has eight years of credited service toward the retirement plan, claims the defendant Plan violates federal law, costing former players and their families hundreds of thousands of dollars in rightful benefits. Allegedly, the actuarial benefits offered to retired players do not provide them with a benefit of financially equivalent value when compared to a normal retirement pension.

From the lawsuit:

The full complaint can be read below.