Disability payments and retirement payments often have a lot in common and affect each other in surprising ways. The effect Workers’ Comp settlements have on your pension may be surprising.
If you are receiving ongoing Workers’ Comp benefits, then you cannot retire or leave the workforce, meaning you cannot claim your pension without losing your benefits. If you settled your claim, then it can affect your pension in other ways. Social Security Disability and retirement benefits are also often offset if you receive Workers’ Comp at the same time.
For help understanding your benefits, call Cardamone Law’s Certified Pennsylvania Workers’ Compensation Lawyers at (267) 651-7945.
You Cannot Retire and Keep Workers’ Comp
Workers’ Comp is paid to workers who are unable to work but would if they could. This means that, even if you are totally disabled, you have to maintain that willingness to work.
Retiring or otherwise withdrawing yourself from the workforce means you are no longer eligible for Workers’ Comp, and benefits can be stopped. This often makes it impossible to claim your retirement pension while receiving ongoing Workers’ Comp Benefits from the same employer.
How Settlements Are Different
When you settle your case, you aren’t receiving ongoing benefits anymore. Instead, the total amount of your case was already decided and is paid to you in a lump sum or structured settlement.
This means they cannot shut off your benefits for retiring, and you have more freedom to return to work or retire after settlement, potentially without affecting your settlement money. Always work with a Pennsylvania Workers’ Compensation lawyer to understand how your settlement can affect your pension.
Pensions from Multiple Employers
“Retiring” is often treated as being particular to one job. If you were injured at one job, got Workers’ Comp benefits, and then retired, they might cut off your Workers’ Comp benefits and potentially start paying your pension.
However, you can “retire” from other jobs so you can start drawing on those pensions; just be careful that nothing you do is perceived as withdrawing from the workforce entirely.
Pension Offsets for Workers’ Compensation
No matter how you arrive at this situation, a company paying your pension and Workers’ Comp benefits at the same time does not have to pay for both. Instead, they get an “offset” or credit at a 1:1 ratio.
Offset Amount
That means that for any money your employer pays into your pension, they do not have to pay you in Workers’ Comp.
For example, if they pay you $1,000 a week in Workers’ Comp but $700 per week in pension payments, they only have to pay $300 a week for Workers’ Comp because the $700 pension is credited against their Workers’ Comp wage-loss payment.
Calculating Employer’s Contribution
Pension funds are often complex. Employers might pay one amount into the pension for multiple employees, and sometimes multiple employers contribute to one pension fund. Moreover, the money is often invested and grows, meaning that the money being paid out isn’t all originally from your employer’s actual contribution.
The employer paying your Workers’ Comp only gets a credit for the portion they actually paid into your pension, not the pension payout amount. This often requires an expert actuary to parse out.
Social Security “Old Age Benefits” Offset for Workers’ Comp
Social Security benefits can be paid under Social Security Disability Insurance (SSDI) or through retirement benefits under SSI (Supplemental Security Income). In either case, the amount paid is often the same (assuming you retired at full retirement age).
This offset has special rules.
“Old Age Benefits” Only
Offsets/credits only apply to the “old age” benefits you get from retirement SSI, not from Social Security Disability.
Rate
Only 50% of your retirement benefits are credited against Workers’ Comp. This means that your employer reduces Workers’ Comp benefits by half of whatever you receive in Social Security retirement benefits.
Pre-Injury Social Security
Many people drawing on Social Security still work. If your work injury and Workers’ Comp benefits happened after you were already drawing on Social Security retirement benefits, there is no effect on your Workers’ Comp benefits.
Other Effects of Settling a Workers’ Comp Case on Your Pension
A settlement’s terms and effects can be quite expansive, and it may affect your ultimate pension amount:
Getting a Different Job
After you return to work from your injury, you might need to work somewhere else. This could be because your injury prevents you from taking up your old job or because your settlement agreement said you cannot work for your old employer anymore.
If your old job had a pension plan, it’s possible your new job might not have a pension at all, or it might be worse than your old job’s pension.
Forfeiting Unvested Pension
Sometimes pension benefits do not vest until you work for an employer for a certain amount of time or hit a certain rank at your job. Your settlement, or the fact that you no longer work for that employer, might stop you from ever getting to that point of vesting your benefits.
If you cannot keep working, you might never hit the point of vesting your benefits, losing your employer-paid portion of the pension.
Termination
Depending on the terms of your benefits, being fired could mean losing your pension – even potentially the vested portions.
While your employer cannot fire you for making a Workers’ Comp claim, they can fire you for things like…
- Causing the underlying accident that injured you
- Putting other workers in danger
- Having no work to offer you while you are injured.
FAQs for Workers’ Comp Settlements and Pensions
Can I Lose My Pension if I Take a Workers’ Comp Settlement?
If you have not met the requirements for achieving a pension at your job, and your injury or settlement stops you from working for that employer, you might never get your pension.
However, this is usually because of the underlying injury, not your settlement. Always check with a lawyer about whether your specific settlement affects any rights.
Can I Get a Pension and Workers’ Comp at the Same Time?
You typically can’t get a retirement pension until you actually retire, but voluntarily retiring can mean losing your Workers’ Comp benefits. You may be able to retire from other jobs and start drawing on those pensions, but you cannot keep your Workers’ Comp benefits if you retire from the employer paying your benefits.
What About Disability Pensions?
Sometimes pensions are paid not for retirement, but for disability. These benefits are treated the same way for most rules about pensions and offsets.
What is a Pension Offset?
If you are receiving a pension and Workers’ Comp at the same time, anything your employer paid into your pension fund is credited against their Workers’ Comp payments, reducing what they pay.
What is a Social Security Offset?
Similar rules apply if you get Social Security retirement benefits after being on Workers’ Comp, but only 50% of your SSI is credited against the employer’s Workers’ Comp payment. If you were already on Social Security before your injury, that doesn’t allow an offset.
Call Our Workers’ Comp Lawyers in Pennsylvania Today
Call Cardamone Law for a free case review with our Philadelphia workers’ comp lawyers at (267) 651-7945.
