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How does a disability pension impact Social Security benefits?

A disability pension typically comes from your employer and provides you with benefits when you cannot work due to a disability. If you would also like to collect Social Security benefits, you may end up with issues, depending on the type of pension you receive.

CNBC explains that if you paid into Social Security when working, then your pension will probably not cause you issues when you try to secure Social Security benefits.

The problem pensions

The pensions that will give you trouble are those from jobs where you did not pay into the Social Security system. Usually, this will include government employees and public employees. It also includes railroad workers.

The impact

You will need to consider two provisions that will come into play if you receive a pension from a company where you did not pay into Social Security. One of these two provisions will occur in your situation.

The first is the Government Pension Offset. With this provision, it will impact your spouse who receives benefits or survivor benefits. It reduces them by two-thirds the amount of your pension. It is possible that your spouse will not be eligible for any Social Security benefits under this provision. Of course, if your spouse is receiving benefits on your record, he or she could instead collect on his or her own record and avoid this issue.

The second provision is the Windfall Elimination Provision. The reduction in your benefits comes from a calculation of how many years you paid into Social Security from other jobs and the average earnings you made at other jobs. You could lose up to half of your Social Security benefits. However, if you worked 30 years at a job paying into Social Security, then this will not apply because you paid enough to collect your full benefits.