The MBA is equal to the PIA reduced by 5/9 of 1% for each of the first 36 months prior to FRA. The total reduction for 36 months is 20%.

When there are more than 36 reduction months (RF), the MBA is equal to the PIA reduced by 20% (for the first 36 months) plus 5/12 of 1% for each month in excess of 36.

Reduced retirement benefits are computed as follows:

(ARM = Number of RF in excess of 36.)

Round the result down to the next dime for benefits after 5/82 and up to the next dime for benefits prior to 6/82.

The reduction for each of the first 36 RF is 5/9 of 1%. The reduction for each month greater than 36 is 5/12 of 1%. The reduction amount is based solely on the number of months involved.

EXAMPLE: Benefits for a person with a FRA of 67 who retires at age 62 will be reduced for 60 months of early retirement. At age 67 we give them an ARF that is applicable for 25 months. It is not material when those months actually occurred. After the ARF, a reduction for 35 months applies. The reduction is calculated using 5/9 of 1% for 35 months regardless of when those 35 months occurred.