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Stop, Look & Listen: Railroad Retirement Benefits Q&A

Answers are provided by Robert S. Kaufman

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.)

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.

Copyright 1997-2017 Robert S. Kaufman
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