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Obtaining SSDI benefits if you receive a pension

Social Security Disability Insurance is an entitlement program that uses funds from payroll taxes. It is not, however, a needs-based program. Rather, if you have a qualifying disability and a sufficient number of work credits, you may be eligible for SSDI benefits. 

Many employers use pension plans to attract and retain workers. If you receive a pension, you should understand how it may affect the SSDI benefits you receive. This likely depends on whether you have paid Social Security taxes for the pension. 

Untaxed pensions 

If your pension comes from a nonprofit or civil service job, you may not have paid Social Security taxes. For untaxed pensions, you may receive fewer SSDI benefits. That is, your pension payments may count as income, causing a reduction in the amount of SSDI you receive. 

Taxed pensions 

With most private pensions, individuals have already paid payroll taxes. These previously taxed pensions usually have no effect on SSDI benefits. Therefore, you can likely accept pension payments without worrying about jeopardizing the SSDI you receive. 

Social Security retirement 

Many Americans over the age of 62 are eligible for Social Security retirement benefits. While this is not technically a pension, accepting regular Social Security benefits makes you ineligible for SSDI payments. Said differently, you cannot receive assistance from both programs at the same time. 

Reporting requirements 

For many private pensions, you can typically receive SSDI benefits without notifying the Social Security Administration of income changes. That is not the case with untaxed pensions, though. If you receive a pension for which you have not paid Social Security taxes, you should notify the SSA of any changes. If you fail to do so and receive more SSDI benefits than you should, you may have to repay the excess. This, of course, can add up quickly. Nevertheless, by understanding how your pension is apt to affect your disability payments, you can ensure you receive the benefits you deserve.