Residual payment
| Residual payment |
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Residual payments are payments or a stream of payments received after the provision of services or delivery of a product / good. For example, an artist may receive residual payment for a song created a long time ago because other payments are very often involved in the production of entertainment. Movies and music goods can generate profits long after they were created[1].
Residual pension
The residual payment is to ensure that an employee and his family receive at least as much in regular retirement and survivor benefits as the employee paid in retirement taxes. The residual payment is the only type of benefit that may be paid on the basis of less than 10 years. It is paid when it appears that no further benefits, based in whole or in part, will be payable under either the Retirement Social Security Act. However, a widow or parent who will be eligible for monthly survivor benefits at some time in the future may waive rights to these future benefits in order to make the residual payment available immediately.
The residual payment is made to a beneficiary designer by the employee or if none has been designated to his widow (or widower ) if she was living with him at the time of his death, children, grandchildren, parents, brothers, and sisters, or estate, in that order. The amount paid is equal to the railroad retirement taxes paid by the employee, plus an allowance in lieu of interest and minus the total of:
- regular retirement benefits paid employee and huswife under the Retirement Act,
- The portion of retirement benefits paid to the employee and his family under the Social Security Act that was attributable to his earnings, and
- survivor benefits paid on the employee's death under either the Retirement or the Social Security Act.
Most residual payments are made to survivors of non retired employees. This is because annuities to a retired employee and his wife usually amount ti much more than the employee paid in taxes so that no residual payment is due after his death. Also, a large proportion of widows of retired employees receive survivor annuities, and these payments are also deducted from the gross residual amount.
Attribution of residual payment
The residual payment is attributed to the passive income obtained from previous divestiture. For example, insurance representatives usually receive an initial percentage for the sale and current residual payments, as long as the customer still meets the monthly premium requirements. In the same way, book authors usually receive up-front remuneration as well as residual payments, as long as consumers buy their books[2].
Principle of operation of the residual payment
The forms of payment differ, which depends on whether the consumer pays for the service and for the customers they still pay for the service, or if they buy a supplementary product. The sum, usually expressed as a percentage of monthly, six-month or twelve-month sales revenue, must meet the previously mentioned or indicated requirements. For the author of the book, it often means a sale that exceeds the predetermined basic / base amount. In the case of an actor, residual payments apply if the previously recorded performance is reused or in a different way than originally intended[3].
References
- Alavi R. (e.) (2019), The copyright reward system and content owners in the creative industry: A study of the Malaysian film and TV industry, "The Journal of World Intellectual Property", Volume 22, Issue 3-4
- Rutledge A. (e.) (2010), Elements of Structured Finance, Oxford University Press, New York
- United States Railroad Retirement Board (1967), The Monthly Review - Railroad Retirement Board, Tomy 28-29, Railroad Retirement Board, United States of America
Footnotes
Author: Andżelika Kędzior
