Can I Collect New York State Unemployment and Receive Company Pension Payments?

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The New York State Department of Labor (NYSDOL) manages the state's unemployment insurance benefits. Only workers who are unemployed through no fault of their own and who are actively looking for work are eligible and they must meet certain income requirements. Retirees collecting a pension may be eligible for unemployment compensation if they meet these conditions.

TL;DR (Too Long; Didn't Read)

If a New York worker has retired and is not seeking employment, they are not eligible for unemployment insurance benefits. But if the worker is retired and is actively seeking a new job, they may be eligible for unemployment benefits if they meet other eligibility requirements, but their weekly benefit payments may be reduced.

New York Unemployment Insurance

The New York State Department of Labor (NYSDOL) is the agency that manages the unemployment benefit insurance program for the state. They determine whether a claimant is eligible and calculate the amount of weekly benefits they will receive. This process is started when an out-of-work employee files a claim with the NYSDOL, and the agency reviews it. The DOL website provides an online claims process and instructions for filing.

To be eligible for unemployment insurance benefits, a person must have worked in New York and:

  • Be unemployed through no fault of their own.
  • Be available to work and actively seeking work.
  • Have met certain financial requirements in the base period.

Minimum Wage Requirements

The state sets a base period of the earliest four of the five calendar quarters prior to the claim being filed. There is an alternative base period of the latest four of the prior five quarters. A calendar quarter is a three-month period like January through March.

To be eligible for benefits, a worker must have earned wages in at least two of the four calendar quarters in the base period and earned at least $2,700 in the highest paid quarter. Total earnings in the base period must be 150 percent or more of wages in the highest paid quarter.

Benefit Calculation in New York

New York calculates a worker's UI benefit by looking to the wages in the calendar quarter of the claimant's base year in which they earned the most money. The NYSDOL determines the weekly unemployment benefit amount by dividing the wages for the highest paid quarter of the base period by 26. The maximum possible weekly amount in New York is $504 per week.

Note that a different formula is used for employees who earned less than $3,575 in their highest paid quarter. In this situation, the earnings are divided by 25 to determine the weekly benefit amount.

UI Benefits and Pension Plans

New York does not impose different eligibility requirements for UI benefits on those workers receiving pensions. That means that the person must have lost work due to no fault of their own, they must be actively looking for work and they must have met the wage requirements in the base year. A person who is retired and doesn't want to work is not eligible, whether or not they receive a pension. Likewise, a person who is retired and has not earned wages in the past 18 months is not eligible for UI benefits whether or not they receive a retirement pension.

The existence of a pension must be revealed by a worker when filing an unemployment claim. The NYSDOL determines if the person is eligible for unemployment compensation and if they will receive any reduction in benefits.

Retirement Benefits Considerations

Assuming a worker meets all eligibility requirements for UI in New York, they may be able to collect a weekly benefit. A governmental or other pension benefit may be reduced in some cases. Under Section 600 of the New York Labor Code, UI benefits will be reduced only if employment during the unemployment base period resulted in an increased amount of pension benefits.

Here's how it works:

  • If the worker's pension was funded by an employer they worked for during their base period, and the base period earnings affected the amount of the pension, the UI benefits may be reduced. The reduction will be 100 percent of the weekly equivalent of the prorated amount of the pension the worker is receiving from a base period employer.

What About a 401(k) Plan?

What happens to UI benefits if a worker received a 401(k) lump sum payment or periodic payments? Again, that depends on who contributed to the fund. If an employee funded the 401(k) themselves, there is no reduction. If a former employer funded the 401(k) years before the UI claim, there is no reduction.

If, however, the 401(k) was funded in part by a former employer who is also a base period employer, the UI benefit may be reduced. If the worker rolls the 401(k) into a qualified Individual Retirement Account (IRA), there would be no reduction in the UI benefit amount.

What About Social Security Payments?

Not that long ago, some states counted Social Security benefits as income when it came to determining unemployment insurance benefits. That is, someone who has started collecting Social Security benefits would have to declare them as income, very likely making themselves ineligible for unemployment benefits.

The Social Security "offset" could have reduced UI benefits by 50 percent or more. But that is no longer the case in any state, including New York. Social Security and other income a person receives without working, like annuities and investment income, do not count when receiving unemployment insurance. Only earned income affects unemployment benefits.