Pension Benefits & Workers’ Compensation
If an injured worker involuntarily retires due to a work injury, and he or she has participated in his time of injury employer’s pension program and receives pension payments, in some situations, the employer will be able to take an offset or credit for those pension payments against the workers’ compensation benefits due and owing to the worker.
The Pennsylvania Workers Compensation Act currently permits an employer to take a credit for “…the payment of pension benefits to the extent funded by the employer directly liable for the payment of compensation which are received by an employee.” This means that an employer who directly pays workers’ compensation benefits to his injured employees (self-insureds) rather than contracting with an insurance company for workers’ compensation insurance will be able to take a credit or offset for any pension payments against the workers’ compensation benefits. Accordingly, if you were injured while working for a self-insured employer, and you retire because of the work injury and begin to receive pension benefits, your workers’ compensation benefits will be reduced by that portion of the pension payments funded by the employer. For example, if the employer funded the pension plan entirely with no contributions from the employee, the employer will be entitled to a full credit. If the plan was funded by contributions from both the employee and employer, the employer would be entitled to a credit or offset of only that portion funded by the employer. Therefore, not only will the receipt of these pension payments and the resulting offset have a bearing on your wage loss benefits, but they will also have an impact on any lump sum settlement of your claim. Any long term credits for pension payments available to self-insured employers would have to be factored in when valuing your case for settlement purposes. Even if no pension benefits are currently being received but the injured worker has expressed an interest in retiring, the employer will likely factor in the offset when calculating a settlement.
However, before taking these credits or offsets, the employer must follow the procedure outlined in the Pennsylvania Workers’ Compensation Act and the Bureau’s Regulations. Twenty (20) days notice must be given to the employee before taking the credit, and the employer must not only document his entitlement to the credit, but also show how the credit was calculated. It is important for employees who receive a notice of offset, or discover that an offset has been taken against their workers’ compensation benefits, to notify their attorneys.
Contact Our Workers’ Comp Lawyers Today
For more answers to your questions about workers’ compensation benefits or to receive a free case evaluation, call the attorneys at Calhoon and Kaminsky P.C., today at (717) 695-4722!