NBA Will Give Its Players A Pension They Can Live On

What do the northern spotted owl, the California condor, the Ferruginous hawk, the marbled murrelet and the penniless former NBA player have in common, other than a penchant for air time?

All are flirting with extinction.

Under the pre-pension benefit plan, which takes effect this year, even the most mediocre of players is guaranteed at least middle-class incomes each year after his playing career ends - no matter if he invested poorly, picked the most unscrupulous agent, or recklessly spent his way into financial ruin.

Unlike in baseball and the NFL, where early pension can be applied for at age 45, the NBA player is due significant annual benefits at age 30, or the first year he retires.

``Athletes don't retire at 60 or 62 or 65 like people do in other professions, so it's a little unrealistic not to have them receive payments before then,'' said Charles Grantham, executive director of the NBA Players' Association.

``The NBA player retires at maybe 30 or 35, at maximum 40 or so. We thought we'd gear a pension plan to those ages.''

The brainchild of Grantham, the pre-pension plan is designed as a mandatory savings program, where a portion of the 53 percent of gross league revenues due players each year is skimmed and invested conservatively for them.

Each player receives approximately eight percent of his salary as a contribution for each year he plays. That means a player such as Gary Payton, Seattle SuperSonic rookie who will average $2.25 million each of the next six years, should be due more than $80,000 each year after he retires.

A player such as Les Jepsen, the Golden State second-rounder who makes $500,000 (about half the current NBA average), can expect $20,000 annually even if he just plays through his four-year contract.

Asked whether the pre-pension plan all but eliminates the scenario of the destitute former player, Gary Bettman, NBA senior vice president, said, ``The answer is yes, we hope so.''

The NBA program, which is not retroactive, targets the needs of the ex-player when they are often the greatest - when he's trying to make the psychological and professional transition into the non-sports world, where the opponents don't wear uniforms and the winners aren't always obvious.

Baseball provides as rich a pension plan as the NBA, a retirement fund offering today's players the Internal Revenue Service maximum of $102,580 a year if they wait until age 62 for benefits. Baseball players also are vested after their first day in the major leagues.

But if the baseball player suffers a mid-life financial crisis and must apply for early pension at age 45, maximum payments drop to $28,152 a year.

Retirement benefits in the NFL have atrophied in the absence of a collective bargaining agreement. The owners' slim contribution to the pension fund has not changed since 1982 and severance payments have been eliminated. For a four-year veteran, severance was $70,000.

In the case of a career-ending injury, the vested NFL player gets a maximum of $65,000 and disability benefits of up to $750 a month if he fails a physical exam. But a non-vested NFL player who loses his roster spot because of injury but does not fail the exam receives no disability aid.

For NBA players without guaranteed contracts, $312,000 in disability pay could be gained after a career-ending injury.

The pre-pension plan was opposed by a group of sports agents, who get no cut of the pension monies that siphoned more than $1 million out of each team's salary cap this season. A federal court also had to approve.

But Grantham expects the program to at least reduce the number of penniless ex-players. Payments continue until age 50, when the regular pension kicks in.

``We're always going to have situations with individuals that are out of our control,'' Grantham said. ``But we hope this gives them a cushion on which to operate.''

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TAKE IT TO THE BANK

The frugal NFL player ($60,000 a year in spending) who invests conservatively has been able to retire well since federal income taxes were reduced from 50 percent in 1986. But only this year has the typical spencder ($100,000 a year) been set for life. How The Times and Price Waterhouse arrived at annual retirement estimates, using the example of the NFL player: $360,000 Average NFL salary, 1990.-$144,000 40% fir taxes (33 percent U.S., and generally 7 percent state).--------------------------------------------------

$216,000 Disposalble income.-$100,000 Living expenses (Gigure arrived at through discussions with financial planners familiar with athletes' spending habits).--------------------------------------------------

$116,000 Amount invested each year. x 4 Average lengths of career (4 years for NFL and NBA; 5 years for baseball). x .052 Rate of net interest (8 percent, minus tax) for a certificate of deposit.--------------------------------------------------

$24,128 Interest on savings each year, to be lived on after playing career.

RETIREMENT ESTIMATES:Annual interest on savings for average-paid athletes, dependingo spending habits during palying career: frugal (60,000 a year), moderates ($100,000 a year) and lavish ($150,000 a year). Spending levels adjusted yearly for inflation.

THE FRUGAL ATHLETE

NBA: $114,000.BASEBALL: $77,532.NFL: $32,448.THE MODERATE-SPENDING ATHLETE

NBA: $97,760.BASEBALL: 467,132.NFL: $24,128.THE LAVISH LIVING ATHLETE

NBA: 487,360.BASEBALL: $54,132.NFL: $13,728.

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TOMORROW IN THE TIMES

For every athlete who spends his money wisely, another athlete who has the chance to ensure his financial security squanders it through bad investments or reckless spending. Many players are living proof that better salaries do not always mean better decisions.

CREDITS

Project editor: Rick Lund

Editor: Cathy Henkel

Writing: Tom Farrey

Design: Celeste Ericsson

Graphics editor: Rob Kemp

Copy editing: Scott Barry, Don Shelton

Graphics: Rob Kemp, Lisa Remillard, Randee Fox

Paste-up: Ben Matsumoto, Ed Hubbell