NHL Pension (Before 2013)
In a recent blog post, The NHL Pension – What You Need to Know, we discussed the current NHL Pension that has been in effect since the 2012 lockout. But what about the players who competed before 2013? Let’s take a look.
Old vs. New
- Players will receive a fixed amount of retirement income once they turn 62, with the option to take it as early as 45 with a reduced benefit.
- The amount they receive is determined using an actuarial formula and provides players with up to $255,000 per year.
- Players will receive this benefit until they die.
- Players contribute to their retirement accounts throughout their careers and select an investment profile (conservative to aggressive).
- At retirement age, their retirement account will have grown to a lump sum of cash. The player will then have the option to do any of the following (note that there are tax implications with this decision):
- Take a lump-sum cash payment
- Transfer the funds into an RRSP or an IRA
- An annuity, maximum of 10 years
- Combination of (1), (2), and (3)
There are advantages and disadvantages to both plans. Generally, a Defined Benefit is favorable for the player because it provides a guaranteed income for life when they retire.
An important thing to note is that under the new plan, players cannot take a lump sum (i.e., they only have the option to receive monthly income). In contrast, under the old plans players have several options available. They’ll also have more flexibility to invest the money how they’d like to, whereas, under the defined benefit plan, the investments are handled by a third party.
What To Do with Your Defined Contribution Plan
If you played and retired before 2013, you will not have the defined benefit pension that the players today will receive. Instead, you’ll have either the NHL Players’ Pension plan (Canadian) or the NHL Players U.S. 401(k) Savings Plan, or both. The NHL Pension Society can provide you with the balances and options available to you and how you can access your pension funds.
If you have questions about your NHL pension, our team is happy to help.
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Adam Henry is a Winnipeg based Financial Advisor with Harbourfront Wealth Management. His practice is tailored towards working with Professional Hockey Players who are looking for investment, cash-flow management, & tax advice.
Disclaimer: The views expressed are those of Adam Henry, Investment Advisor and not necessarily those of Harbourfront Wealth Management Inc., member of the Canadian Investor Protection Fund