Replacement of the windfall elimination provision with a formula equalizing benefits for certain individuals with non-covered employment

(a)

Substitution of proportional formula for formula based on covered portion of periodic benefit

(1)

In general

Section 215(a) of the Social Security Act (as amended by section 2 of this Act) is amended further by inserting after paragraph (6) the following new paragraph:

(7) (A)In the case of an individual whose primary insurance amount would be computed under paragraph (1) of this subsection, who— (i) attains age 62 after 1985 (except where he or she became entitled to a disability insurance benefit before 1986 and remained so entitled in any of the 12 months immediately preceding his or her attainment of age 62), or (ii) would attain age 62 after 1985 and becomes eligible for a disability insurance benefit after 1985,

and who first becomes eligible after 1985 for a monthly periodic payment (including a payment determined under subparagraph (E), but excluding (I) a payment under the Railroad Retirement Act of 1974 or 1937, (II) a payment by a social security system of a foreign country based on an agreement concluded between the United States and such foreign country pursuant to section 233, and (III) a payment based wholly on service as a member of a uniformed service (as defined in section 210(m)) which is based in whole or in part upon his or her earnings for service which did not constitute employment as defined in section 210 for purposes of this title (hereafter in this paragraph and in subsection (d)(3) referred to as noncovered service), the primary insurance amount of that individual during his or her concurrent entitlement to such monthly periodic payment and to old-age or disability insurance benefits shall be computed or recomputed under this paragraph.

(B)The primary insurance amount of an individual described in subparagraph (A), as computed or recomputed under this paragraph, shall be— (i)in the case of an individual who first performs noncovered service after the 12th calendar month following the date of the enactment of the Public Servant Retirement Protection Act of 2005, the primary insurance amount determined under subparagraph (C), or (ii)in the case of an individual who has performed noncovered service during or before the 12th calendar month following the date of the enactment of the Public Servant Retirement Protection Act of 2005, the larger of— (I)the primary insurance amount determined under subparagraph (C), or (II)the primary insurance amount determined under subparagraph (E). (C)An individual’s primary insurance amount determined under this subparagraph shall be the product derived by multiplying— (i)the individual’s primary insurance amount, as determined under paragraph (1) of this subsection and subparagraph (D)(i) of this paragraph, by (ii)a fraction— (I)the numerator of which is the individual’s average indexed monthly earnings (determined without regard to subparagraph (D)(i)), and (II)the denominator of which is an amount equal to the individual’s average indexed monthly earnings (as determined under subparagraph (D)(i)),

rounded, if not a multiple of $0.10, to the next lower multiple of $0.10.

(D) (i)For purposes of determining an individual’s primary insurance amount pursuant to subparagraph (C)(i), the individual’s average indexed monthly earnings shall be determined by treating all service performed after 1950 on which the individual’s monthly periodic payment referred to in subparagraph (A) is based (other than noncovered service as a member of a uniformed service (as defined in section 210(m))) as employment as defined in section 210 for purposes of this title (together with all other service performed by such individual consisting of employment as so defined). (ii)For purposes of determining average indexed monthly earnings as described in clause (i), the Commissioner of Social Security shall provide by regulation for a method for determining the amount of wages derived from service performed after 1950 on which the individual’s periodic benefit is based and which is to be treated as employment solely for purposes of clause (i). Such method shall provide for reliance on employment records which are provided to the Commissioner and which, as determined by the Commissioner, constitute a reasonable basis for treatment of service as employment for such purposes, together with such other information received by the Commissioner (including such documentary evidence of earnings derived from noncovered service as may be provided to the Commissioner by the individual) as the Commissioner may consider appropriate as a reasonable basis for treatment of service as employment for such purposes. The Commissioner shall enter into such arrangements as are necessary and appropriate with the Department of the Treasury, the Department of Labor, other Federal agencies, and agencies of States and political subdivisions thereof so as to secure satisfactory evidence of earnings for noncovered service described in subparagraph (A) for purposes of this clause and clauses (iii) and (iv). The Secretary of the Treasury, the Secretary of Labor, and the heads of all other Federal agencies are authorized and directed to cooperate with the Commissioner and, to the extent permitted by law, to provide such employment records and other information as the Commissioner may request for their assistance in the performance of the Commissioner’s functions under this clause and clauses (iii) and (iv). (iii)In any case in which satisfactory evidence of earnings for noncovered service which was performed by an individual during any year or portion of a year after 1977 is not otherwise available, the Commissioner may, for purposes of clause (ii), accept as satisfactory evidence of such individual’s earnings for such noncovered service during such year or portion of a year reasonable extrapolations from available information with respect to earnings for noncovered service of such individual for periods immediately preceding and following such year or portion of a year. (iv)In any case in which satisfactory evidence of earnings for noncovered service which was performed by an individual during any period before 1978 is not otherwise available, the Commissioner may, for purposes of clause (ii), accept as satisfactory evidence of such individual’s earnings for such noncovered service during such period — (I)the individual’s written attestation of such earnings, if such attestation is corroborated by at least 1 other individual who is knowledgeable of the relevant facts, or (II)available information regarding the average earnings for noncovered service for the same period for individuals in similar positions in the same profession in the same State or political subdivision thereof, or, in any case in which such information is not available for such period, reasonable extrapolations of average earnings for noncovered service for such individuals from periods immediately preceding and following such period. (v)In any case described in subparagraph (B)(i), if the requirements of clause (ii) of this subparagraph are not met (after applying clauses (iii) and (iv)), the primary insurance amount of the individual shall be, notwithstanding subparagraph (B)(i), the primary insurance amount computed under subparagraph (E). (E) (i)For purposes of determining the primary insurance amount under this subparagraph— (I)there shall first be computed an amount equal to the individual's primary insurance amount under paragraph (1) of this subsection, except that for purposes of such computation the percentage of the individual's average indexed monthly earnings established by subparagraph (A)(i) of paragraph (1) shall be the percent specified in clause (ii), and (II)there shall then be computed (without regard to this paragraph) a second amount, which shall be equal to the individual's primary insurance amount under paragraph (1) of this subsection, except that such second amount shall be reduced by an amount equal to one-half of the portion of the monthly periodic payment which is attributable to noncovered service performed after 1956 (with such attribution being based on the proportionate number of years of such noncovered service) and to which the individual is entitled (or is deemed to be entitled) for the initial month of his or her concurrent entitlement to such monthly periodic payment and old-age or disability insurance benefits.

An individual's primary insurance amount determined under this subparagraph shall be the larger of the two amounts computed under this clause (before the application of subsection (i)).

(ii)For purposes of clause (i), the percent specified in this clause is— (I)80.0 percent with respect to individuals who become eligible (as defined in paragraph (3)(B)) for old-age insurance benefits (or became eligible as so defined for disability insurance benefits before attaining age 62) in 1986; (II)70.0 percent with respect to individuals who so become eligible in 1987; (III)60.0 percent with respect to individuals who so become eligible in 1988; (IV)50.0 percent with respect to individuals who so become eligible in 1989; and (V)40.0 percent with respect to individuals who so become eligible in 1990 or thereafter. (F) (i)Any periodic payment which otherwise meets the requirements of subparagraph (A), but which is paid on other than a monthly basis, shall be allocated on a basis equivalent to a monthly payment (as determined by the Commissioner of Social Security), and such equivalent monthly payment shall constitute a monthly periodic payment for purposes of this paragraph. (ii)In the case of an individual who has elected to receive a periodic payment that has been reduced so as to provide a survivor's benefit to any other individual, the payment shall be deemed to be increased (for purposes of any computation under this paragraph or subsection (d)(3) by the amount of such reduction. (iii)For purposes of this paragraph, the term periodic payment includes a payment payable in a lump sum if it is a commutation of, or a substitute for, periodic payments. (G) (i)This paragraph shall not apply in the case of an individual who has 30 years or more of coverage. In the case of an individual who has more than 20 years of coverage but less than 30 years of coverage (as so defined), the percent specified in the applicable subdivision of subparagraph (E)(ii) shall (if such percent is smaller than the applicable percent specified in the following table) be deemed to be the applicable percent specified in the following table: If the number of such individual’s years of coverage (as so defined) is:The applicable percent is:298528802775267025652460235522502145

(ii)For purposes of clause (i), the term year of coverage shall have the meaning provided in paragraph (1)(C)(ii), except that the reference to 15 percent therein shall be deemed to be a reference to 25 percent. (H)An individual’s primary insurance amount determined under this paragraph shall be deemed to be computed under paragraph (1) of this subsection for the purpose of applying other provisions of this title. (I)This paragraph shall not apply in the case of an individual whose eligibility for old-age or disability insurance benefits is based on an agreement concluded pursuant to section 233 or an individual who on January 1, 1984— (i)is an employee performing service to which social security coverage is extended on that date solely by reason of the amendments made by section 101 of the Social Security Amendments of 1983; or (ii)is an employee of a nonprofit organization which (on December 31, 1983) did not have in effect a waiver certificate under section 3121(k) of the Internal Revenue Code of 1954 and to the employees of which social security coverage is extended on that date solely by reason of the amendments made by section 102 of that Act, unless social security coverage had previously extended to service performed by such individual as an employee of that organization under a waiver certificate which was subsequently (prior to December 31, 1983) terminated.

(2)

Conforming amendments

(A)Section 215(d)(3) of such Act (42 U.S.C. 415(d)(3)) is amended— (i)by striking subsection (a)(7)(C) each place it appears and inserting subsection (a)(7)(F); (ii)by striking subparagraph (E) and inserting subparagraph (I); and (iii)by striking subparagraph (D) and inserting subparagraph (G)(i). (B)Section 215(f)(9)(A) of such Act (42 U.S.C. 415(f)(9)(A)) is amended by striking (a)(7)(C) and inserting (a)(7)(F).