Here’s how much money the men playing in this year’s US Open will receive as a pension

The US Open, which starts on August 26, has increased its prize money a lot in recent years. This year it will pay out a total of $57 million, and the winners of the men’s and women’s singles titles will earn $3.85 million. All of these numbers are record highs in tennis. Also this year, the USTA, which runs the US Open, for the first time is giving $1 million to be split among the women’s and men’s tours in part to help fund their pensions for players.

This move comes a year after Roger Federer, considered one of the best players in the history of the game, told The Times, “I’d also like slams to take part in the player pension fund. Our pension on the ATP level is very small and a lot of players will rely on it in the future.”

Flip Galloway, Chief Operating Officer & Chief Financial Officer for the ATP, the governing body of the men’s tour, recently told MarketWatch that the ATP Tour has been working to increase the amount of money retired tennis players receive, and says “quotes like that are helpful. It’s been a desire of ours for many years that the Grand Slams contribute. The USTA stepped up. We’re very happy with them.”

When the contribution was announced, Patrick Galbraith, USTA Chairman of the Board and President, said, “We strive to be innovative, and feel that our new contribution of $500,000 to both the ATP’s pension plan and the WTA Tour’s transition programs for players will go a long way toward the long-term financial well-being of all of our sport’s athletes.”

“We are targeting a minimum payment of $50,000 annually for current players with five years of service. If a player gets 10 years of credit, the payment would be closer to $100,000.”

While top players like Federer, Novak Djokovic and Rafael Nadal will not likely need to rely on their pension checks when they turn 50 — they have made over $370 million combined in tournament winnings alone — players ranked lower may. For example, the current player ranked No. 125 in the world, Pedro Sousa, has made $129,099 so far in 2019.

Also see: This year’s US Open prize money is a record $57 million — the winner will make $3.85 million

Galloway says the current retirement program has been in place since 1990 following the formation of the ATP Tour.

For this story, MarketWatch reached out to both the ATP Tour and the WTA Tour, the organizing body for the women’s tour. The WTA Tour hasn’t gotten back to us yet, but we will add details of their retirement plan when it does.

How the ATP pension works

Every year, 165 players qualify (125 singles, 40 doubles) for one year of credit based on participation in ATP Tour level events. Players must qualify for five years to fully vest, and there’s no limit on the number of years beyond five that a player can accumulate. Starting in 2018, players who finish their careers with three and four years of credit vest in a portion of their accumulated annual benefit. The ATP sets the same dollar amount aside into the pension for all 165 players who qualify each year. Last year, that amount was $63,600 into the plan per player, for a total of roughly $10.5 million.

Table: Pension contributions invested by the ATP Tour

Table: Amount invested into the pension per player

When it comes to how much retired players receive in benefits, the numbers are based on many factors. Galloway gave an example of a player who qualified for 10 years of credit in the 1990s and has started to receive payments recently. He would receive about $30,000 a year.

“We are targeting a minimum payment of $50,000 annually for current players with five years of service,” Galloway says of future payments for current players. Similarly, he says, if a player gets 10 years of credit, the payment would be closer to $100,000, and if he plays 20 years, it would be around $200,000.

ATP Player Board members make up the committee that administers the program, Galloway says, and it regularly consults with the ATP Player Council on any significant pension-related matters.

There are currently over 800 participants in the plan and 273 participants received a benefit payment in 2018 — a total of $2.5 million was paid out to them. Athletes receive their benefits over a 20-year period, between ages 50 and 70.

The pension has $160 million in investment assets. The ATP has its own investment committee for the funds, which are in tiers similar to how target-date funds work. The money invested for players in their 40s is in the most aggressive investments, and they get less aggressive for each of the other tiers: 40-50, 50-70, and over 70, Galloway says.

Where does the money to fund the pension come from? Galloway says from various sources — some comes off the top of prize money at tour events, and the largest amount is usually from a share of the tour’s financial success from things like tournament revenue and TV deals.

He acknowledges that another reason the fund needs more money is that more players are playing longer. Federer is 38 years old and there are more players in their 30s that at any time in the history of the ATP Tour.

How it compares to retirement plans in other sports

He also admits that other major sports leagues currently have better-funded retirement plans for their athletes. “The NFL, NBA, MLB and NHL have built robust retirement programs with multiple plans over a long history. The PGA Tour also has arguably one of the richest retirement programs in sports. Our focus is on ensuring growth relative to where we have come from, and with the recent increased contributions, the ATP plan has become much more competitive with the benefits offered by other sports,” he says.

Funding the plan has been one of the ATP’s goals for many years because it wasn’t competitive with other sports, he adds, saying “we’re trying to attract the best athletes we can.”

MarketWatch recently profiled the retirement plan for golfers on the PGA Tour, which defers income from tournament earnings into retirement funds for players, and over 100 golfers currently have more than $3 million in their retirement accounts.

Also see: Here’s how much pro golfers earn in retirement money from the PGA Tour

Galloway says that the ATP is a U.S. tax exempt organization, so it’s only able to offer players a pension, whereas many other sports leagues offer 401(k) plans with generous matching in addition to pensions. He adds that, “This program covers participants from 70 countries who will live and work in countries with various currencies and income tax rules and regulations. So the structure we have in place we believe is the most efficient available to our players at this time and is unique among sports organizations and player representative bodies worldwide.”

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