MANHATTAN (CN) — A federal class action against the NBA on Thursday claims its pension plan cheated retired players of hundreds of thousands of dollars by skimping on cost-of-living adjustments.
Lead plaintiff Zaid Abdul-Aziz, formerly known as Don Smith, was a power forward and center for six teams in an 11-year NBA career, after being a first-round pick in the 1968 draft. He retired from the Houston Rockets in 1978.
The 27-page lawsuit from his Baton Rouge attorney Jason Melancon, with Melancon & Rimes, claims there are steep disparities between NBA benefit plans.
He claims the sole defendant National Basketball Association Players’ Pension Plan violated ERISA and IRS rules because the financial difference between the normal retirement pension and the fixed period actuarial equivalent he chose in August 1991 cost his family hundreds of thousands of dollars in benefits.
Abdul-Aziz says ERISA and IRS regulations require that a pensioner receive the actuarial equivalent of pensioners who choose a life annuity payable until death.
“Even the most basic of mathematical calculations clearly establishes that the plan’s failure to pay plaintiff and the putative class a true and correct benefit of equivalent value equal to and commensurate with the COLA increases to the normal retirement pension has cost plaintiff and his family hundreds of thousands of dollars in loss of retirement benefits,” according to the lengthy complaint.
Abdul-Aziz seeks class certification, a jury trial and payments for all past and future benefits of equivalent value as actuarially determined.
Abdul-Aziz chose a fixed period actuarial equivalent in the form of monthly installments for 10 years, payable at $1,813.17 per month, on July 12, 1991.
From August 1991 through August 2001, he received 10 years of defined monthly installments totaling $273,098.72.
But he says neither the 1989 plan, retirement application, nor benefit calculation worksheet expressly advised him that he would forever forfeit his pension rights to future cost-of-living adjustment increases, which ERISA and IRS regulations prohibit anyway.
He says that from 1988 to today, the NBPA Pension Plan has increased the normal retirement pension from $200 per month for each year of credited service to $572.12 per month for each year of credited service; in other words, the plan has increased the normal retirement pension by more than 186 percent in the past 29 years.
Abdul-Aziz lives in the Seattle area and works as chemical dependency counselor.
The NBA Players Association made a splash last year when it announced that its player representatives had voted unanimously to fund health insurance for all retired NBA players with at least three years in the league.
Chris Paul, NBPA president and nine-time All-Star said at the time: “It’s important that we take care of our entire extended NBA family, and I’m proud of my fellow players for taking this unprecedented step to ensure the health and well-being of our predecessors.”
According to the NBPA website, the average NBA player’s career in the league lasts just over four years.
The NBPA did not immediately respond to requests for comment.