TN 4 (11-06)
RM 01310.005 General Description of Form SSA-7005-SM, the Social Security Statement
The Social Security Statement is a 4-page, 8 1/2-inch x 11-inch document that contains both personal and general information. Each recipient receives information based on his/her individual Social Security record. Section 1143 of the Act and our supporting regulations (20 CFR 404.812) state specifically what personal data SSA must include in the Statement. We also provide general explanations and background information to help recipients understand their personal data, and we tell them how to contact us if they have questions.
We used extensive public and employee input to design the format and simplify the language in it. We tested the Statement with focus groups and a national mail survey. We also sought comments from outside agencies and organizations that serve diverse sections of the public.
There are two versions of the SSA-7005-SM (10/06):
The SSA-7005-SM-SI, which is highlighted in green, is the version SSA sends out automatically.
The SSA-7005-SM-OR, with blue highlights, is sent in response to an SSN holder's specific request.
Language on the form varies slightly between the two versions. The major difference is how we use not-yet-posted current and future earnings to calculate insured status credits and benefit estimates. The explanations in the following subsections point out these differences when they occur.
In addition, beginning in FY 2007, as required by §419 of the Social Security Protection Act, there are two versions of a one-page letter form of the Statement, the SSA-L7005. This is sent to persons who have no earnings which were covered for Social Security or Medicare, but do have un-posted, non-covered earnings. Prior to FY 2007, we sent no Statements to these persons.
The SSA-L7005-SM-SI, which is highlighted in green, is sent automatically to individuals with only non-covered earnings.
The SSA-L7005-SM-OR, with blue highlights, is sent in response to a request from an SSN holder who has only non-covered earnings. The only difference between the forms is that the OR version states this is in response to your request for a Statement.
1. The PEBES Processing System
To produce the large volume of Statements that we must issue under the expanded Social Security Statement program, in 1999 we revised and enhanced our processing system. This system extracts data from the Master Earnings File (MEF) and combines it with information supplied by the requester for on-request Statements or by the front-end selection process for automatic issuances. It produces a display of year-by-year earnings and uses the common utilities from the Modernized Claims System (MCS) to calculate the SSN holder's credits, insured status and benefit estimates. SSA provides output from the system to a commercial printing vendor to produce and mail the Statements. The Personal Earnings and Benefit Estimate System retains the “PEBES” acronym.
In the past when earnings were reported four times a year, we called credits “quarters of coverage” (QC). See RS 00301.000 for a description of how credits were previously earned on a quarterly basis and how they are now earned annually. Some records contain “questionable” credits, or would need to have pre-1955 credits resolved. If the SSN holder is over 57 and if those credits might provide insured status, the case is automatically referred to the Office of Earnings Operations, and PEBES processing completed afterward. SSN holders who are not insured will be told they have “at least XX” credits.
Information provided in the Form SSA-7005-SM will answer most inquiries from the public. Pages 1 and 4 contain general program information; pages 2 and 3 show the SSN holder's personal data. The form is divided into four basic sections:
We enclose a special insert with the Statements going to recipients who are age 55 or older. These inserts contain explanations of the recipient's options for retirement benefits, how the annual earnings test may effect the benefits, when and how to apply, and what supporting documents may be needed. See RM 01310.012 for an exhibit of the insert.
2. Assumptions Regarding Age At Which SSN Holder Will Stop Working
When we calculate benefit estimates for the Social Security Statement, we include projected future earnings for the SSN holder (see RM 01310.005C.3.). The age at which the SSN holder plans to stop working may affect those projections.
a. On-Request Statements
Persons who request a Social Security Statement tell us the age at which they plan to stop working. We project earnings only up to that age when we calculate their estimated benefits at age 62, the earliest age at which retirement benefits are payable. For reduced retirement benefits between age 62 and full retirement, the full retirement age and age 70 estimates, however, we assume the SSN holder will continue to work up to each of those ages. This is done to show the effect that the additional years of earnings could have on future benefits. Estimates for age 70 (and for any other stop-work age above full retirement age that the requester provides) will also include delayed retirement credits.
Mary Carter, age 48, requests a Statement and says she will stop working at age 55. Her Statement will give her a reduced benefit estimate for age 62 that is calculated with projected earnings stopping at age 55. Her full retirement estimate will project the earnings up to age 66; the age 70 estimate will project the earnings to age 70.
Harry Jackson, age 61 when his Statement is prepared, says on his request that he plans to stop working at age 67. His Statement will show benefit estimates at age 62, his full retirement age (65 years and 10 months), and at the age he gave us, 67. Because of the stop-work age he provided, Harry's Statement will not include an estimate at age 70.
b. Automatic Statements
When we issue Statements automatically, we have no similar information about the SSN holder's plans to stop working. Instead, we base each retirement benefit estimate on the assumption that the SSN holder will stop working at the age corresponding to the estimate; that is, at:
age 62 (or at his/her current age, if the SSN holder is between ages 62 and full retirement age) for reduced retirement benefits; and,
full retirement age (or at his/her current age, if the SSN holder is between full retirement age and age 70) for full retirement benefits; and,
age 70 (or at his/her current age, if the SSN holder is over age 70 for delayed retirement benefits).
John Wilson, who is age 42 when his SSA Initiated Statement is prepared, will receive the full range of benefit estimates (reduced benefits at age 62, full retirement benefits at 66 years and 6 months, and benefits with delayed retirement credits at age 70).
Lois Jones is 64 when her Statement is prepared. She will receive a reduced benefit estimate for her current age, a full retirement age estimate, and an age 70 estimate.
3. Projected Earnings
a. On-Request Statements
Persons who request Statements give us information about earnings that may not be on their records yet; that is, they tell us how much they earned last year, how much they expect to earn this year, and what they expect their annual future earnings to be. We include these projected earnings when we determine credits for insured status and calculate retirement, disability and survivor benefit estimates.
b. Automatic Statements
Because we do not have similar information for people who are sent automatic Statements, the system uses the SSN holder's most recent earnings posted in the last 2 closed tax years at the time the Statement is prepared. If there are:
earnings posted in the year before the automatic Statement is prepared, then the system projects the same amount for the current year and all future years up to the SSN holder's year of retirement.
no earnings posted in the year before the Statement is prepared, but there are earnings posted in the year immediately before that (e.g., 2 years back), then the system projects that same amount in the year before the Statement was prepared, the current year, and all future years up to the SSN holder's year of retirement.
no earnings posted in either of the last 2 closed tax years at the time the Statement is prepared, the system will not project any earnings in the current or future years.
Mr. Jones is selected to receive a Statement in 04/07. His date of birth is 03/02/45. Earnings of $40,000 are posted for 2005, but 2006 is not yet posted. The system will project $40,000 as his earnings for the lag period (2006 and 2007) and $40,000 as his earnings for all future years up to his year of retirement.
Same as Example 1, but no earnings are posted for 2005 or 2006. The system will not project any earnings for the lag period (2006 and 2007) or for any future years up to his year of retirement. Instead, we will use $0 for these years.
NOTE: Projected earnings do not appear in the year-by-year earnings display on the Statement. Also, although the amount of covered earnings increases each year, the Statement system only projects earnings at the current year's maximum rate.
4. Projected Credits
If the SSN holder is not already insured for benefits based on electronically available credits, the Statement system may use projected credits to calculate insured status.
a. Projecting Credits for Retirement Insured Status
The system uses the projected earnings described in RM 01310.005C.3. to project up to 8 additional credits (e.g., up to 4 for the current year, and up to 4 for the year before the Statement is prepared). The system determines the number of projected credits by dividing the projected earnings (if any) for the:
Miss Smith requests a Statement in 04/2007. She needs 40 credits to be fully insured for retirement benefits, but she has only 37 credits based on her earnings posted through 2005 (her 2006 earnings are not yet posted). On her request, she says she earned $25,000 last year and expects to make the same this year and in future years. It took $970 to earn a credit in 2006, so the system projects an additional 4 credits. This brings her total above the 40 needed for fully insured status. Her Statement will show that she meets the requirements for benefits and she will be given retirement benefit estimates.
Jane Powell is selected in 04/07 for an automatic Statement. She needs 40 credits for retirement benefits, but she has only 24 based on her posted record through 2005, when she earned $35,000. The system uses that amount as her projected current and future earnings and projects 8 additional credits (4 for 2006 at $970 per credit; 4 for 2007 at the 2007 amount per credit). Her Statement tells her she has a total of 32 credits.
NOTE: The amount of earnings it takes to earn a credit changes each year. Last year and the current year are the only not-yet-posted years for which we know the amount needed to earn a credit. There is no way to predict how much it will take to earn a credit in future years. Therefore, the system does not project credits beyond the current year.
b. Projecting Credits for Disability and Survivor Insured Status
When calculating the current year's credits for disability and survivor insured status, the system may not project the same number of credits as it does for retirement insured status. That is, the projected credits for the current year may be less than the maximum of 4. The difference in credit projections is because the system counts the credits up to different points during the year:
The utility that calculates insured status projects credits for the entire current year for retirement benefit estimates.
For disability and survivor benefits estimates, the utility only counts credits up to the quarter of disability onset or death. For the Social Security Statement , the Statement system assumes the disability onset to have occurred in the quarter the Statement was prepared and death to have occurred in the month the Statement was prepared.
In 2007, Mr. Jones needs 40 credits for fully insured status, but only has 28 credits based on his earnings posted through 2005 (his 2006 earnings are not yet posted). The system prepares his automatic Statement in 03/07 and projects the 2005 earnings amount as the amount for 2006 and 2007. The system then uses the projected 2006 and 2007 earnings to calculate 36 total credits for retirement insured status (adding 4 credits for 2006 and 4 credits for 2007). However, it only projects 33 total credits for disability and survivor insured status (adding 4 credits for 2006 and 1 credit for 2007 because March is in the first quarter of the year).
Same as Example 2, except the system prepares the automatic Statement in 10/07. In this case, the system uses the projected earnings to calculate 36 total credits both for retirement insured status (adding 4 credits for 2006 and 4 credits for 2007) because October is in the fourth quarter of the year).
5. Benefit Estimates
We calculate the insured status and benefit estimates shown on the Social Security Statement using the SSN holder's actual and projected earnings and credits (as explained). We use the same current benefit computation formulas used in the claims process to calculate these estimates.
The Statement provides retirement benefit estimates for insured individuals at age 62, full-retirement age, and age 70 (or estimates appropriate to the SSN holder's age at the time the Statement is prepared, if the SSN holder is over age 62). The Statement provides disability and survivors estimates that are calculated as if the SSN holder became disabled or died as of the date the Statement is prepared.
NOTE: In 1999, we began providing survivors benefit estimates for spouses and children if the SSN holder is currently, although not fully, insured.
We will not provide benefit estimates in the following situations:
If the SSN holder is not insured based on actual and projected credits, an explanation replaces the benefit estimates. It states how many credits the SSN holder currently has and how many are needed for insured status. It explains that the SSN holder is not now insured for this benefit, but if he/she becomes insured later, we will give a benefit estimate at that time.
If the SSN holder is over full retirement age when the Statement is prepared, we will not show a disability benefit estimate. An explanatory paragraph will be substituted.
In the on-request process, SSN holders who have already established entitlement to retirement or disability benefits or Medicare coverage will get a full display of their earnings records, but they will not receive any benefit estimates. Instead, the Statement will state that our records show they are already in benefit status and have been notified of their payment amounts.
NOTE: On Statements issued prior to 09/93, SSA increased the calculated retirement benefit estimate by 1 percent for each remaining year up to age 62. This reflected expected economic growth over that period. However, SSA stopped doing this to make the estimate more consistent with estimates prepared in other pension planning programs. People who got Statements prior to 09/93 may notice lower retirement benefit estimates on currently issued Statements.
6. Different Language Statements
Requesters may ask for their Social Security Statement in either English or Spanish. Automatic Statements are printed in Spanish for persons whose address was obtained from the Commonwealth of Puerto Rico, those who have made a request for a Statement indicating that they wanted it in Spanish, and those whose language has been set to Spanish by SSA using the PEBES History Update (PBHU) screen. Both the English and Spanish versions tell recipients to contact the SSA 800 telephone number or their local office if they want to replace their Statement with one in the other language.
If an SSN holder contacts SSA to request a replacement Statement in the other language, the FO or TSC will send the person the appropriate Spanish or English version of Form SSA-7004-SM-OP1, Request for Earnings and Benefit Estimate Statement. The individual will then receive an on-request Statement in the desired language. Subsequent SSA Initiated Statements (at least 12 months later) will also be in the requested language.
NOTE: The replacement on-request Statement may not provide exactly the same benefit estimates as were provided in the original automatic Statement. For the replacement Statement, the system will use the information the requester provides on the SSA-7004-SM rather than the assumptions SSA used for the automatic Statement.
See RM 01310.035 for instructions regarding use of the Statement History File Query process to update our record of the SSN holder's language preferences so that future automatic Statements will be issued in the language of choice.
7. Undelivered Statements
We will not re-mail Social Security Statements that are returned as undeliverable. These items are destroyed without being reviewed or processed in any way. See RM 01301.017A. when an SSN holder reports nonreceipt of an on-request Statement and RM 01305.005C.7. for nonreceipt of an automatic Statement.
8. WEP and GPO paragraphs
These paragraphs were expanded in FY 2007 and provide an explanation of how an individual’s benefits may be affected by WEP and GPO if they receive a pension based on non-covered earnings. The paragraph sent to persons having any MQGE or non-covered earnings includes the maximum monthly WEP reduction amount for the current year. This amount is not provided for those individuals having only covered earnings. Instead, the WEP paragraph explains how a pension from any future non-covered earnings might affect benefits.
NOTE: To assist you in responding to inquiries, “Earnings Types Codes” have been added to the bottom of page 2 of the Statement, directly under the GPO paragraph. Ask the individual to tell you the alpha code that appears in square brackets ( e.g.: [ CM ] ) at the bottom of page 2 of their Statement. The possible codes are C or M, or the combinations: CM, CX, CMX or MX.
The code(s) will allow you to determine if the individual received a WEP paragraph based on fully covered earnings only, or if their earnings include non-covered earnings, as follows:
C – RSDI covered earnings are on their record. These earnings are covered for Medicare as well.
M – Medicare Qualified Government Employment, covered only for Medicare, is present on the person’s record. (Medicare earnings details for earnings in excess of the Social Security taxable limit (Employment Type H) will not generate a code “M”.)
X – Non-covered wages are present. Non-covered wages are not displayed on a Statement. (Some non-covered details seen on the DEQY are not a potential basis for a pension subject to WEP, such as pension and plan distribution, household, health savings account, deferred compensation, and railroad details, and will not generate a code “X”.)
If the M or X is present, there are some earnings of a type which might lead to a pension from non-covered earnings. 43% of persons have such earnings, however, only 1.8% of primary beneficiaries are affected by WEP. 4.7% of Spousal and Widow(er) beneficiaries are affected by GPO, but, without knowing who is married to whom, we cannot provide anything specific on a Statement.
9. One-Page Statement From Social Security (SSA-L7005-SM-SI and OR)
SSN holders having only non-covered earnings will be sent an SSA-L7005-SM-SI automatically. This one-page Statement explains that the SSN holder’s earnings do not qualify for Social Security benefits. However, the SSN holder may become eligible in the future should he or she earn wages covered by Social Security. A similar letter (SSA-L7005-SM-OR) is also sent out to persons who request a Statement but only have non-covered earnings. The only difference is in the first sentence which, in the On Request version states, “This is in response to your Social Security Statement request,” and in the SSA Initiated version states, “We are writing to explain how certain provisions of the Social Security Act may affect you.”
To respond to questions about individual Social Security Statements, see: