[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 467]

 

                      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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