Welcome to The Hockey Wealth Group’s guide on planning for the future with “NHL Pension and Retirement Accounts: Planning for Hockey Players & Families.” In this article, we will explore the unique financial challenges faced by professional hockey players and their loved ones. Understanding the NHL Players Pension and your options as a retired hockey player is a difficult task. The first question to ask yourself is: “Which plan am I invested in”? As a former NHL player who personally has participated in the two most recent NHL plans, we hope you find some of the following basics helpful. We’ll touch on the history and intricacies of the NHL pension plan, retirement account options, and other strategic methods to ensure that your financial security is well-guarded throughout your career and beyond. Whether you’re on the ice or supporting from the sidelines, our hope is you’ll find this educational content helpful.
Understanding the NHL Pension Plan: A Guide for Hockey Families
Securing a stable financial future is a critical concern for hockey players and their families. The NHL pension plan has changed multiple times over the years, and family members of professional hockey players often find themselves navigating a labyrinth of financial information. This guide hopes to simplify the complexities of NHL retirement plans, offering clarity to families in the hockey community. The NHL pension is a valuable asset for players, providing a meaningful source of income post-retirement for some hockey families.
If your benefits are in the “New” Plan (2012-present)
If you’ve played games under the “New” plan (2012-present), your benefits from that time forward are fairly easy to understand. One of the major adjustments that came out of the 2012-2013 lockout was that our retirement was changed from a defined contribution plan to a defined benefit plan. The new structure of the plan was negotiated to cater to the needs and realities of hockey players, acknowledging the relatively short duration of their professional lives. Recognizing that players’ peak earning years are condensed, the plan is crafted to maximize their post-career financial security.
Your future benefits are determined by your “Credited Service”, which is calculated based on a few pieces of information. The most important factor in determining your pension benefit is the number of games you were on an NHL roster. Interestingly, it doesn’t matter if you were playing, injured, or even a healthy scratch, just that you were on the roster. Credited games are accumulated in 20-game segments. If you accumulate 40 of these 20-game segments (800 games on an NHL roster), you are entitled to the maximum benefit allowed by the IRS, which is $275,000/year in 2024. Your benefit also includes a Cost-of-Living Adjustment (COLA). Therefore, annual benefits increase most years. Each year, participants receive a statement which clearly states the current value of your future pension, and the date you will reach “full retirement age” to claim full benefits. Having a clear understanding of NHL pension benefits, including when and how they can be accessed, can dramatically influence retirement planning for hockey players and their families.
If your benefits are in “Old” Plans (1986-2012)
If you played games under one of the “Old” NHL retirement plans (1986-2012), our benefits are unfortunately more difficult to understand, and each player’s benefit is dependent on a number of considerations. Some of these factors include: Where did you play (U.S. or Canada)? Where were you a tax resident at the time you were playing? Where are you currently a tax resident? When did you play for a team, or multiple teams in your career? To further complicate the matter, did you get traded mid-season, and was the trade cross border? If you feel this is clear as mud, you are not alone.
The “Old” pension benefits are difficult to understand for a number of reasons. Prior to 1986, players were allowed to negotiate for pension benefits in their contracts, and those benefits were paid in private annuity contracts. Then in 1986, the original NHL retirement plan was collectively bargained for, and a defined contribution plan was created. This original plan was entirely funded in Canadian dollars and was/is considered a Canadian Pension Plan. At that time, any player that owned pre-1986 annuity contracts were permitted to roll those funds into the new plan.
Up until the 2001-2002 season, all players in the league were participants in the aforementioned Canadian Plan. However, in 2001, the U.S./Canada Tax Treaty was revised and the result was a separately created U.S. Players’ Plan. Therefore, whether your contributions went to the Canadian or U.S. Plan was based on whether you were playing in Canada or in the States during any particular season. While the creation of the U.S. Plan provided more options to access funds for players retiring/living in the States, the existence of the two separate plans created additional complexities, especially for players who played both in the U.S. and Canada throughout their NHL career.
We are here to help
If you are an NHL alumnus and are having trouble understanding your pension benefit options, you are not alone, and our team of retired hockey players would love to be a resource to you.
Through our experience in educating multiple retired NHL players to navigate the process of evaluating and gaining access to their NHL pension benefits, we have recognized there is a serious lack of credible information available. Whether you have benefits in the “Old” or “New” NHL pension plan, our team would like to be a resource to you. Please do not hesitate to contact us for a free consultation of your pension and retirement benefits.
Considerations outside of the NHL Pension and Retirement Plans for Future Security
For professional hockey players, understanding and navigating the NHL pension plan and retirement options is essential for ensuring long-term financial security for themselves and their families. However, retirement planning goes beyond pension benefits. Today’s players can also participate in the NHL 401(k) plan. Participating in this plan can reduce taxable income during a time of your career when your marginal tax rate is likely the highest it will be in your life. Looking beyond the 401(k), hockey families should also be considering backdoor Roth contributions, as well as building non-qualified investment accounts that will help you bridge the income gap from when your playing days end, and retirement benefits begin.
Professional athletes have unique career trajectories, and this makes navigating your financial plan options a personalized process. Balancing the NHL pension with other retirement plan options and non-retirement assets often requires a strategic approach tailored to individual circumstances. The Hockey Wealth Group prides itself on offering specialized guidance to professional players at every step, ensuring that you’re well-prepared for the future. Whether you’re in the midst of an active NHL career or planning post-retirement life, we’ll work with you to navigate your options for a secure and well-planned future.
There’s a myriad of strategies that can be employed when creating your plan—from tax considerations to investment options, The Hockey Wealth Group offers guidance every step of the way. It’s about building a stable financial future that affords you peace of mind off the ice. We’re here to assist every player and retiree in navigating the complexities of retirement planning. Implementing the right savings plan today can make a remarkable difference tomorrow, setting the stage for financial success and allowing you to continue scoring goals long after the final buzzer. Let The Hockey Wealth Group help in creating a retirement plan that scores.
- NHL Pension Plan: A defined benefit plan providing monthly payments to players after retiring from professional hockey.
- Registered Retirement Savings Plan (RRSP): A Canadian retirement savings plan where contributions can grow tax-free until withdrawal.
- Individual Retirement Account (IRA): A personal savings plan available in the United States that offers tax advantages for retirement savings.
- 401(k) Plan: A tax-advantage retirement savings plan offered by many employers in the United States. Contributions are made by the employee, and often matched by the employer, pre-tax.
- Tax-Free Savings Account (TFSA): A Canadian account that allows earnings and withdrawals to be tax-free, with contributions made from after-tax dollars.
The Impact of an NHL Player’s Pension Plan on Retirement
In summary, as members of the exclusive fraternity of athletes who’ve played at the highest level, NHL players must thoughtfully consider the impact of their NHL benefits on their future retirement. At The Hockey Wealth Group, we understand the intricacies of NHL retirement plans can be as complex as the game itself. A player’s retirement benefits serve as a critical piece, providing long-term financial security and affecting the overall stability and comfort of a retiree’s life post-hockey. Hence, the importance of comprehensively planning cannot be overstated.
As devoted advisors at The Hockey Wealth Group, we understand the unique retirement planning needs of NHL players and their families. Retirement is a significant milestone, and strategizing for it requires a deep dive into the specifics of your NHL retirement. The NHL retirement plans can offer a robust cornerstone, designed to provide stability and security to your post-career life. It’s crucial that you grasp the intricacies of the benefits and recognize how it integrates with your broader retirement objectives.
Moreover, to maximize the impact of an NHL player’s pension plan on retirement, it’s important to consider variables such as taxes, cost of living, and personal goals. Given the unique dynamics of an NHL career, it’s especially pertinent to strategize early and adapt often. Your retirement plans should reflect the distinct path you’ve skated and the legacy you wish to build for your family. The Hockey Wealth Group is dedicated to aiding you in navigating this journey with personalized counsel and strategic insights. We are committed to guiding our clients through their pension options and optimizing retirement accounts to maximize long-term financial stability. Our focused approach aims to transform your earnings into lasting wealth, allowing you to face retirement with confidence and peace of mind. Remember, an effective retirement plan is your net for life after hockey.
Disclaimer: The information provided is intended to be for educational purposes only and does not constitute financial, tax or legal advice. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.