October 3, 2007
WHEN SOCIAL SECURITY BENEFITS TRIGGER A REDUCTION IN A STATE DISABILITY PENSION
By: John Moran, Principal Analyst
You asked whether Social Security benefits can trigger a reduction in a state disability pension and whether these reductions are different for each of the three tiers of the State Employee Retirement System (SERS).
If the Social Security disability benefit plus the state disability pension exceed 80% of the employee's pay at the time of the disability, then the disability retirement pension would be reduced to the point where it combined with the Social Security income equals the 80% maximum. Other sources of income can contribute to reaching this 80% maximum (see below).
All three SERS tiers (Tier I, II and IIA) treat Social Security disability benefits this way.
The summary plan description for each retirement tier does not indicate whether the reduction would occur if Social Security old age benefits, instead of disability benefits, pushes the retiree's income over the 80% limit. We are seeking clarification from the Comptroller's Office Retirement Division on this and will update this report when the information becomes available.
DISABILITY RETIREMENT AND OTHER DISABILITY-RELATED INCOME
A former state employee receiving a disability retirement can receive other types of disability related benefits, besides Social Security disability, up to the 80% limit.
A disability retiree is allowed to receive:
1. Social Security disability payments to the retiree's spouse or children due to the disability,
2. temporary total or partial workers' compensation benefits, and
3. hazardous duty disability compensation.
When any combination of these benefits plus the state disability retirement exceeds 80% of the employee's pay at the time of the injury (or 80% of his or her highest salary, whichever is higher), the retirement benefit will be reduced enough to bring total benefits down to the 80% maximum.
Tier I members may also receive supplemental state police officers retirement system payments in combination with the other sources up to the 80% maximum before starting the offset of the state disability retirement.
MINIMUM DISABILITY BENEFIT
For all three tiers the minimum benefit, when combined with the other sources of disability benefits, cannot be less than 60% of the retiree's salary at the time the disability occurred.
If the person has income from a job the same rule is applied, but the total benefits plus employment income must not exceed 100% of his or her average salary or salary at time of disability.
It the state Retirement Commission designates a retiree's job as rehabilitative (i.e., helpful to the retiree's recovery), then the state retirement benefit will not be reduced based on that salary.
The Comptroller's Office provides more information for all three state employee tiers on its web page (click on the summary plan descriptions): http://www.osc.state.ct.us/empret/index.html.