Integration with respect to retirement plan in US :
Integrated pension plan is connected with social security payments. In that, the company arrives the total benefit a retiree will get after the service with some adjustments or reductions.
When combining pension benefits with social security benefits, some adjustments have been made downwards so that the retired person gets a specific designed amount as decided by the company and not more than that. In normal situations, when combining pension fund with social security benefits, the overall retirement benefits will be more than the total designed benefits by the company. To curtail the excess benefits for retired employee, beyond what company has finalized (total designed benefits), retiree monthly pension benefits will be reduced from social security benefits partially or fully to balance final designed benefit. Non integrated plan will not have any reductions but then, retiree enjoy both benefits . According to US law, the reduction cannot be made more than 50%.
If a monthly pension benefit of retiree is $2000 and social security is $1000, and when the company decides to reduce 50% of social security benefits, then employee pension payment is reduced to $1500.
PENSION OFFSET PROVISIONS ( law that affects spouses or widows or widowers)
When you receive a retirement benefit or disability pension, from federal, state or local govt, and you have not paid the security taxes, your social security spouses’, widows’ or widowers’ benefits will be reduced by two thirds of your govt pension.
Example : If your monthly service pension is $ 900, then the two third of the pension is $600, this will be reduced from social security benefits ( if you are eligible for social security benefits $800 as spouses, widows or widowers benefit, then you will get only $ 200. ie ($800-&600=$200).
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