Weird Pensions

Posted by: Michael Mandel on July 19

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.

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Reader Comments

Lord

July 19, 2005 03:03 PM

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.

Michael Mandel

July 19, 2005 03:21 PM

That's very interesting.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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