TN 25 (11-96)

A. Introduction

To compute a PIA, the AIME is split into portions using bend points. Each portion is multiplied by a constant percentage. The bend points are adjusted yearly as average wages rise or decline.

B. Procedure

1. Determining the AIME

To determine the AIME:

1. Determine base years (RS 00605.017).

2. Select years of highest earnings from the indexed earnings record to be used as computation years (RS 00605.018). These years may contain both indexed and non-indexed earnings. An unindexed year, (one that occurs after the indexing year), can be a high year and, therefore, a computation year.

3. Add the highest earnings in the computation years for the dividend.

4. Divide the dividend by the divisor month to determine the AIME.

5. Round the AIME down to the whole dollar.

2. Determining the AIME PIA

To determine the AIME PIA:

1. Take the sum of:

   • 90 percent of the AIME through the first bend point (see chart in RS 00605.900 for yearly bend points).

   • 32 percent of the AIME through the second bend point.

   • 15 percent of the AIME in excess of the second bend point.

2. Round the result to the lower dime. (For benchmark years before 1983, round to the higher dime.) This is the RAW PIA as of January of the eligibility year.

3. Add applicable COLA's to the RAW PIA beginning with the year of eligibility through the month of entitlement. See RS 00601.120.

C. Example

RIB with Entitlement After Benchmark Year

Lorraine Staley, dob 9/24/17, filed for and became entitled to RIB in 9/82. Her benchmark year is 1979, the year she attained age 62. There were COL increases each June beginning in 1979. Her 9/82 PIA was computed as follows:

Step 1:

• Index earnings for 1951 through 1977

Step 2:

• Compute an AIME

  Her computation years are 23 (276 divisor months)

  A review of her ER after indexing shows that earnings in the 23 highest base years total $188,134.80 so the AIME is:

Step 3:

• Compute the AIME PIA

  The benchmark year was 1979. The AIME of $682 is between $180 and $1,085, so the basic AIME PIA is:

Step 4:

• add COL increases

  since COL increases were due for 1979-1982, the basic PIA must be increased: