Question 680: Is a divorced spouse entitled to payements when her ex-husband passes away, if the divorce decree states that either party will have no interest in the other's pension?
I am also having a hard time understanding Tier 1 and Tier 2.
Answer: First, here's a simple explanation of what Tier 1 & Tier 2 are. A Railroad Retirement Annuity is divided into two seperate components. Tier 1 is the portion that is similar to a Social Security benefit. It is based on the worker's lifetime earnings, as those earnings are calculated for purposes of both the Railroad Retirement and Social Security systems.
Tier 2 is similar to a private pension. It is based only on the worker's rail service. Generally the 5 highest years of earnings are used to determine the amount of the benefit.
As a divorced spouse you could be entitled to a Railroad Retirement benefit as early as 60 if you are not married. That benefit is computed under a special formula; it is not based on Tier 1 or Tier 2. It is reduced by the amount of any Social Security benefit you are receiving.
Note: This benefit is provided by law. You are entitled to it even if your divorce decree states differently.