Employment Law Questions? Ask an Employment Lawyer.
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Unfortunately, yes, they have a right to audit your earnings based on the terms of the pension plan description and any recipient under that plan has to cooperate or benefits can be delayed. It is legal because the plan description is your contract with the pension plan and you need to comply with their plan requirements. It is legal though and it is not about them putting anything into your Social Security (although they did if you were an employee as every employer pays an employer's share of SS by taxes they pay).