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Weird Pensions


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July 19, 2005

Weird Pensions

Michael Mandel

In today's WSJ, there was an article which said in part

Motorola subtracts from a monthly pension payment half the amount of a retiree's monthly Social Security check. This is legal, and about half of companies that pay pensions do it.

????? You know, this is the first I've ever heard of this. Truly weird.

10:58 AM

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The 'theory' behind this is, get this, the 'employer' actually paid for half the Social Security tax contribution and is entitled to credit it towards their pension. If the pension is actually designed to provide for full replacement of earned income, it is not bad, and a whole lot better than those companies that provide nothing, but it does alter the common assumption of economists that the employee pays all the tax, regardless of who gets the credit.

Posted by: Lord at July 19, 2005 03:03 PM

That's very interesting.

Posted by: Michael Mandel at July 19, 2005 03:21 PM


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