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Is Tier 2 Indexed?
(Posted March 24, 2003)
Question 229: I know that Tier 1 and Social Security earnings are wage indexed to convert them into "today's dollars"; what about Tier 2?
Answer: Tier 2 earnings are not indexed to bring them up to date with today's dollar value. This is similar to how most private industry pension plans treat worker's earnings. But once you are retired, your Tier 2 benefits are adjusted annually like Tier 1 and Social Security for increases in the Consummer Price Index (CPI).
Most private pensions are not automatically adjusted for the CPI.
(My father worked for a major steel company and received pension payments for more than 20 years. His benefits were only adjusted four times after he retired.)
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