Can You Collect Pension While on Disability?

Yes, you can collect both your pension and disability benefits at the same time. There’s no law stopping you from doing so unless your pension policy specifically says otherwise. However, depending on the type of disability benefits you’re receiving, your pension may reduce the amount of your disability payments.

Let’s break this down in simpler terms and help you understand how this works.

What Are Pension and Disability Benefits?

Pension

A pension is a plan offered by some workplaces to help employees financially after they retire or become disabled. Your employer usually funds it, and when it’s time to claim it, you can either get a monthly payment (called an annuity) or a lump sum.

Although we usually think of pensions as something for retirement, some plans also provide payments to employees who stop working because of a disability.

Disability Benefits

Disability benefits are payments given to people who can’t work because of a serious illness or injury. The Social Security Administration (SSA) offers two main types of disability benefits:

1. Social Security Disability Insurance (SSDI): For people who have worked and paid Social Security taxes. You need enough work credits to qualify.
2. Supplemental Security Income (SSI): For people with very low income and limited resources. This benefit is based on financial need.

Now, if you receive a pension, it could affect the type and amount of disability benefits you get.

Types of Disability Benefits and How Pensions Affect Them

Pension and SSDI

Good news! Pensions usually don’t reduce your SSDI payments. The SSA doesn’t count pension income when deciding the SSDI amount unless your pension comes from a government job where you didn’t pay Social Security taxes. For example, this could apply to workers covered under the Federal Employees Retirement System (FERS).

Pension and SSI

SSI is different because it’s a needs-based program. That means every dollar you get from your pension is counted as income. The more income you get, the less SSI you’ll receive.

For example:

• If the maximum SSI payment in 2025 is $967 a month, and you receive a $500 pension, your SSI payment will drop to $467.
• If your pension increases in a certain month, your SSI payment will decrease by the same amount.

Pension and Long-Term Disability (LTD)

Private insurance companies usually offer long-term disability policies. Whether your pension affects your LTD benefits depends on your specific plan. Some plans allow reductions in LTD payments if you receive a pension. Check your insurance policy or speak with your provider to get accurate information.

Can You Receive Retirement and Disability Benefits at the Same Time?

It depends.

If you’re on SSDI, your benefits automatically switch to regular retirement benefits when you reach your full retirement age. There’s no change in the payment amount, just a change in how the SSA classifies it.

For SSI recipients, applying for retirement benefits could reduce your SSI payment since retirement income is also counted as income. However, the total amount you receive will stay about the same.

Will my Social Security disability payments stop if I start receiving a pension?

No, not for SSDI. But if your pension comes from a government agency where you didn’t pay Social Security taxes, it might lower your SSDI.