Section 354 of the Michigan Workers’ Disability Compensation Act allows for employers to offset workers’ compensation wage loss benefits for all sorts of reasons. These reasons include the receipt of Social Security Retirement benefits, Short-Term and Long-Term Disability, Unemployment Insurance, etc. Included in the types of benefits that can serve as an offset are Pension Benefits.

Not many of us get pensions these days. 401k’s became the more popular option for employers years ago. However, for those employees lucky enough to have a pension, drawing benefits from it can impact workers’ compensation benefits.

There are two different ways the offsetting can work. First, if the employee paid into the pension fund over the course of her carrier, then the employer can reduce her workers’ compensation wage loss benefits by an amount proportional to what it contributed to the pension plan. In other words, you take the total amount of contributions made to the pension plan over the course of the employee’s career with the company, divide that into the amount the employer contributed, and that percentage is the percentage by which the employee’s workers’ compensation benefits an be reduced. Figuring out the math in these scenarios can be complicated, and the plan administrator or even actuaries might need to be involved to determine contributions.

The second way a pension can serve to offset would be in a scenario where the employee didn’t contribute anything to the pension fund. Under this set of facts, the employer gets to use the entire after-tax amount of monthly pension benefits received by the employee and reduce her workers’ compensation wage loss benefits by that dollar figure. Essentially, it is a dollar-for-dollar offset.

So, if you have a pension available to you, and if you have the opportunity to contribute to it, do so. It is always a good idea to pay into your own retirement, and if you ever get hurt on the job and you need both workers’ compensation and pension benefits to make ends meet, you’ll be happy you did.

Do you think you have a case? Click here to learn more.