If I Have Not Contributed to Social Security, How Will the Evaluation of My Plan be Affected?
Posted on Jun 16, 2014 6:31am PDT
James C. of Pennsylvania asks: "I Am a Member of the CSRS Plan through My Employment with US Postal
Service for the Past 30 years. Under the CSRS Plan, I Have Not Contributed
to Social Security During My Employment. How Does This Affect the Evaluation
of My CSRS Plan, Pursuant to My Divorce?"
Brad, in the Pension Department, of Pension Evaluators & QDROS Of Troyan, Inc Associates Groupanswers:"In the State of Pennsylvania, the use of hypothetical Social Security
Offset is used to facilitate a process of equating present value. It will
be applied in order to compute the present value of a future hypothetical
Social Security benefit, had the participant been contributing to the
Social Security system. This present value should be deducted from the
present value of the pension. This process should result in equating,
as near as possible, the offset of the classes of pensions.
In practice, a hypothetical offset is calculated by running the individual's
earnings history under the pension through Social Security software to
determine the accrued benefit they would have had under Social Security.
This step is followed by a typical present value computation to determine
the amount of the offset against their government pension."
Brad Wesley
Lead Pension Analyst
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