Modification of Allowance
- Will my allowance be affected if PERAC finds I am engaged in, or able to engage in, a gainful occupation while I am in receipt of a disability retirement allowance?
Your retirement allowance may be modified if PERAC finds that you are engaged in or able to engage in a gainful occupation.
- What will be considered in making determinations about potential earnings?
PERAC will consider all pertinent facts and circumstances, including the retired member's functional capacity, age, education, and experience.
What formula is used to calculate a reduction in a disability retirement allowance based on actual or potential earnings?
If your annual rate of actual or potential earnings is less than the regular compensation which would have been payable (including any increases in salary) during the preceding year (had you continued in service in the grade you held when you retired), but more than the difference between your regular compensation and your retirement allowance, the pension portion of your allowance will be reduced.
The amount of any reduced or modified pension will be the lesser of:
- The amount by which the regular compensation exceeds the sum of the annuity portion of the retirement allowance and current actual or potential earnings;
- The amount of the pension including any cost-of-living adjustments.
The following example illustrates the calculation:
- The regular compensation currently paid for the position from which you retired is $25,000, and
- Your actual or potential earnings are $15,000, and
- Your retirement allowance is $19,000:
- Annuity of $4,500
- Pension of $14,500
- Your pension will be reduced because your actual or potential earnings ($15,000) are less than the regular compensation ($25,000) and more than the difference between the regular compensation and your retirement allowance ($25,000 - $19,000 = $6,000) The amount of your reduced pension will be the lesser of:
- Regular compensation less the sum of your annuity and your actual or potential earnings:
Regular Compensation: $25,000
Annuity: - $4,500
Actual or Potential Earnings: - $15,000
- Your Current Pension: $14,500
After modification, the amount of your retirement allowance will be $10,000: your annuity remains $4,500, and your newly reduced pension is $5,500. If the result of the calculation under (A) is zero or negative, you will receive no pension, and your retirement allowance will be limited to payment of your annuity.
- What if my disability pension has been reduced or suspended and my actual or potential earnings later change?
Your pension will be further modified by increasing, reducing, or suspending it as the facts at that time may warrant.
|Date published:||July 1, 2015|