TN 24 (09-02)

RS 00615.101 Reduced RIB

POLICY - REDUCED RETIREMENT BENEFITS

1. Amount of RIB Reduction

a. First 36 Months

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

b. Months in Excess of 36

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

c. Reduction Formula

Reduced retirement benefits are computed as follows:

If the total RF is 1 thru 36:

PIA multiplied by (180 minus RF)
then divided by 180 equals the MBA

If the total RF is 37 thru 60:

PIA multiplied by (192 minus ARM)
then divided by 240 equals the MBA

(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.

NOTE: The basic reduction for RIB is 5/9 of one percent per month. 5/9 of one percent is equal to 1/180. So, by multiplying the PIA by 179/180 we are in effect reducing the PIA by 1/180. Using 178/180 for 2 RF we are reducing the PIA by 2 x 5/9 x .01%. The fraction provides both a simplified method of computing reduced benefits and a more accurate method. The basic reduction for RIB after the first 36 months is 5/12 of one percent. 5/12 of one percent is equal 1/240. When we multiply the PIA by 192/240 we start with a benefit already reduced by 20%. By subtracting 1/240 for each RF after 36 we are therefore reducing the PIA by 20% plus 5/12 of one percent for each of those months.

d. Reduction Percentage is Based Only on Number of RF

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 then that an ARF 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.

2. Chart - Retirement Benefit Reduction Factors

This chart shows the factors to be used when determining a reduced RIB rate. Multiply the PIA by the fraction shown for the applicable number of RFs. 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. This chart can be used whether a person's FRA is 65 or greater.

RFFraction

1

179/180

2

178/180

3

177/180

4

176/180

5

175/180

6

174/180

7

173/180

8

172/180

9

171/180

10

170/180

11

169/180

12

168/180

13

167/180

14

166/180

15

165/180

16

164/180

17

163/180

18

162/180

19

161/180

20

160/180

21

159/180

22

158/180

23

157/180

24

156/180

25

155/180

26

154/180

27

153/180

28

152/180

29

151/180

30

150/180

31

149/180

32

148/180

33

147/180

34

146/180

35

145/180

36

144/180

37

191/240

38

190/240

39

189/240

40

188/240

41

187/240

42

186/240

43

185/240

44

184/240

45

183/240

46

182/240

47

181/240

48

180/240

49

179/240

50

178/240

51

177/240

52

176/240

53

175/240

54

174/240

55

173/240

56

172/240

57

171/240

58

170/240

59

169/240

60

168/240


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0300615101
RS 00615.101 - Reduced RIB - 05/21/2004
Batch run: 01/27/2009
Rev:05/21/2004