Social Security - Coordination of Benefits

To reduce the rising cost of providing employee benefits, many employers have set-off agreements that relate to the benefits they provide. When this is the case, Social Security benefits must be "coordinated" with those benefits. This often results in the worker receiving a reduced monthly sum from the Social Security Administration (SSA). In addition, the pensions of federal employees and railroad workers must be coordinated with Social Security benefits.

Public Pensions

Whether federal employees are allowed to participate in the Social Security system depends on their date of hire. Those hired before January 1, 1984 are not eligible for Social Security benefits. However, those hired on January 1, 1984 or later are eligible for Social Security benefits.

Private Pensions

The Employee Retirement Income Security Act of 1974 (ERISA) set uniform pension rights for retirees with private pensions. However, private pension payments are integrated with Social Security retirement benefits. This usually results in the employer paying a reduced benefit. The manner in which the two are integrated varies depending upon the type of the employer's benefit plan.

Railroad Retirement Benefits

Whether railroad workers are allowed to participate in Social Security depends on when they became fully vested in their railroad retirements. Workers who became vested before 1975 may receive benefits under both the Railroad Retirement Act and Social Security. However, those vesting in 1975 or later may not participate in Social Security retirement benefits.