[Code of Federal Regulations]
[Title 20, Volume 1]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR227.4]

[Page 448]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
                  CHAPTER II--RAILROAD RETIREMENT BOARD
 
PART 227_COMPUTING SUPPLEMENTAL ANNUITIES--Table of Contents
 
Sec. 227.4  Reduction for employer pension.

    (a) General. The supplemental annuity for each month is reduced by 
the amount of any private pension the employee is receiving for that 
month based on the contributions of a railroad employer. This reduction 
is applied to the supplemental annuity amount after any reduction for 
railroad retirement family maximum. Private pension is explained in 
Sec. 216.14 of this chapter.
    (b) Private pension reduced for supplemental annuity. If the 
employer reduces the private pension for the employee's entitlement to 
the supplemental annuity, the reduced pension amount is subtracted from 
the supplemental annuity. However, the reduction in the supplemental 
annuity can be no greater than the difference between the supplemental 
annuity amount, after any reduction for railroad retirement family 
maximum, and the amount the private pension is reduced for the 
supplemental annuity. This guarantees that the sum of the reduced 
supplemental annuity and the reduced employer pension is not less than 
the amount of the full employer pension.

    Example: The full employer pension is $80. This is reduced by $35 
because of the employee's entitlement to a supplemental annuity. The 
initial supplemental annuity rate is $43.

Full employer pension...........................................     $80
Reduction for supplemental annuity..............................     -35
                                                                 -------
Reduced pension amount..........................................      45
Supplemental annuity............................................      43
Reduced pension amount..........................................     -45
                                                                 -------
                                                                       0
Guarantee amount:
    Supplemental annuity........................................      43
    Reduction in private pension................................     -35
                                                                 -------
                                                                       8
    Supplemental annuity........................................      43
    Reduction in private pension................................      -8
                                                                 -------
    Reduced supplemental annuity................................      35


    The reduced supplemental annuity amount is $35. This amount plus the 
reduced employer pension of $45 equals $80, the full amount of the 
employer pension.

    (c) Part of private pension based on employee contributions. If the 
employer pension is based on both employer and employee contributions, a 
special formula is used to determine the amount to be subtracted from 
the supplemental annuity. The Board first computes the pension amount 
the employee's contributions could have purchased from a private 
insurance company. That amount is subtracted from the total employer 
pension. The result is the pension amount used to reduce the 
supplemental annuity.

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