TN 27 (05-99)

RS 00605.377 WEP Benefit Estimates Under Personal Earnings and Benefit Estimate Statement (PEBES)

A. Introduction

Benefit estimates under PEBES do not consider reductions for WEP. This section explains how to manually apply WEP to an estimated PIA. However, the interactive computation facility (ICF) which is explained in MSOM ICFT2 026.001, provides a benefit estimate and does consider WEP.

B. Background

  1. Prior to 1993, PEBES estimates included a wage growth of 1 percent for each year beginning with the year of the estimate up to the year the requester attains age 62; e.g., with date of birth of 1946, a 1992 estimate will include 16 percent wage growth (1992-2007).

  2. As of 9/93, the wage growth factor was eliminated from the retirement estimate. The retirement estimates began and continue to be stated in current dollar values.

  3. The figures in this chart are used for the PEBES estimated PIAs and in determining the reduction amounts in RS 00605.377C.1. and RS 00605.377C.2.a.

Percentage of 1st Bend-point

YearBend-point90% of Bend-point50% of Bend-point

1992

$387

$348

$193

1993

 

401

 

360

 

200

1994

 

422

 

379

 

211

1995

 

426

 

383

 

213

1996

 

437

 

393

 

218

1997

 

455

 

409

 

227

1998

 

477

 

429

 

238

1999

      

2000

      

C. Procedure

1. Benefit Estimates With Full WEP Reduction

Compute the reduction amount based on the PEBES estimated PIA as follows:

  1. If PIA is greater than or equal to 90 percent of the first bend-point for the year the PEBES is issued, subtract one-half of the first bend-point from the PEBES PIA.

  2. If the PIA is less than 90 percent of the first bend point:

    • Divide the PIA by .9, dropping any remainder, to determine the AIME,

    • Divide the AIME by 2, dropping any remainder, to determine the WEP reduction amount, and

    • Subtract the reduction amount from the PEBES PIA. The result is the PEBES WEP PIA.

2. Estimates with Partial WEP Reduction Estimates Considering YOCs

  1. When it is evident from posted earnings that a partial exemption based on years of coverage applies, figure the benefit estimate using the years of coverage.

  2. To compute the reduction amount, apply the same principles but consider the effect of the years of coverage on the amount of the reduction. For estimates prepared after 8/93:

    • Determine the percentage of the first bend-point that corresponds to the inquirer's years of coverage by using the chart in RS 00605.362, then

    • Subtract the percentage from 90 percent.

NOTE: This is the adjusted reduction percentage.

  1. If the PEBES PIA is greater than 90 percent of the first bend-point, multiply the first bend-point by the adjusted reduction percentage. Subtract the result from the PEBES PIA.

  2. If the PEBES PIA is less than 90 percent of the first bend-point, apply the following:

    • Divide the PIA by .9, dropping any remainder, to determine the AIME,

    • Multiply the AIME by the adjusted reduction percentage, dropping any remainder,

    • Subtract the result from the PEBES PIA. The result is the PEBES WEP PIA.

3. Interactive Computation Facility (ICF)

ICF program 26 (MSOM ICFT2 026.001) may also be used to provide an estimate and consider WEP.

D. Example - PEBES 9/93 and Later

1. Full WEP Reduction

FACTS:NH DOB 3/20/49
 PEBES PIA      $620
 Date of PEBES 12/21/97
 1997 Bend-points used
  1. PIA is Greater than $409

    • Compute reduction amount $455 divided by 2 = $227

    • Subtract from PEBES PIA $620 - $227 = $393, PEBES PIA estimate considering WEP.

  2. PIA is less than $409

    Same facts, except PEBES PIA is $315. Since the PIA is less than $409, one-half of AIME is the reduction amount. To find the reduction amount:

    • Divide $315 by .9 = $350 (AIME),

    • Divide AIME by 2 = $175, and

    • Subtract reduction from PEBES PIA $315 - $175 = $140, the PEBES WEP PIA.

2. Partial Exemption Due to Years of Coverage

FACTS:NH DOB 5/5/41
 PEBES PIA: $500
 Date of PEBES: 9/30/97
 No. of YOCs: 24
 24 YOCs = 60 % of 1st bend-point
Adjusted Reduction Percentage = .30 (90 % - 60 %)
 1997 bend-points used
  1. PIA is Greater Than $409

    To compute the PEBES WEP PIA:

    • Multiply first bend-point by adjusted reduction percentage $455 x .3 = $136.50

    • Subtract from PEBES PIA $500 - $136 = $364, the PEBES WEP PIA

  2. PIA is less than $409

    Same facts, except PEBES PIA is $325.

    • Determine the AIME       ($325 divided by .9 = $361)

    • Multiply the AIME by the adjusted reduction percentage ($361 x .3 = $108)

    • Subtract the reduction amount from PEBES PIA $325 - $108 = $217, The PEBES WEP PIA.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0300605377
RS 00605.377 - WEP Benefit Estimates Under Personal Earnings and Benefit Estimate Statement (PEBES) - 09/04/2012
Batch run: 09/04/2012
Rev:09/04/2012