My workplace re-published our retirement package and options. Basically, it has three tiers with Social Security (SS), 401(k), and Pensions. The pension part brought up questions that I really don’t want to broadcast until I get some more information.
Our base pension monthly benefit is calculated like this:
Pension Benefit = A - B where
A = 1.75% * Avg Monthly Compensation * #yrs of Service
B = 0.75% * Est SS Monthly Benefit * #yrs of Service
Thus, the more SS I am eligible for, the less pension I recieve. Therefore, if I work a second job which makes my Social Security basis higher, the less my pension benefit.
I realize that company is the sole contributor to my pension fund and they can probably make any rules that they want to. They also have a right a to get a return on investment on the Company match of FICA. They contribute 7.65% just like I do. But they also get a benefit of me working a second job which doesn’t seem right.
Do other companies pension plans have a similar formula?
Is this ethical?
Anyone have a website that compares Pension Plans?