In computing a tier 1 benefit, an employee's creditable earnings are adjusted to take into account the changes in wage levels over a worker's lifetime. Instead, the reduction is built into the tier 1 benefit computation.Īs explained earlier, a tier 1 benefit is calculated in the same way as a social security benefit. The reduction in the employee tier 1 benefit for receipt of a noncovered service pension is not based on deducting the pension from tier 1. It does not include military service pensions, payments by the Department of Veterans Affairs, or certain benefits payable by a foreign government as a result of a totalization agreement between that government and the United States.
It includes both periodic payments, as well as lump-sum payments made in lieu of periodic payments. This may also apply to certain other payments not covered by railroad retirement or social security, such as from a non-profit organization or from a foreign government or a foreign employer. For employees first eligible for a railroad retirement annuity and a Federal, State or local government pension after 1985, there may be a reduction in their tier 1 benefits for receipt of a public pension based, in part or in whole, on employment not covered by social security or railroad retirement after 1956.
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