SSR 79-26


PURPOSE: To state policy regarding eligibility for and amount of delayed retirement credits, as required by the Social Security Amendments of 1977.

CITATIONS (AUTHORITY): Sections 203, 204, 205, 206 and 336 of Public Law 95-216; Sections 202(e)(2)(A), 202(f)(3)(A), 202(w), 203(a), 215(a), and 215(f) of the Social Security Act; Regulations No. 4, sections 404.203, 404.282, 404.305(a), 404.330, 404.333 and 404.405.

PERTINENT HISTORY: Prior to the 1977 amendments, the law provided "delayed retirement credits" for individuals who would become entitled to a retirement insurance benefit (RIB) no earlier than the month of attainment of age 65 (or, if entitled earlier, where no payments were made for such earlier months). Where an insured worked became entitled to an RIB in or after the month he or she attained age 65, or after becoming entitled at age 65 failed to receive any benefit for 1 or more months after that age because of work deductions, the worker would receive credits. These delayed retirement credits would increase the worker's primary insurance amount (PIA) by 1/12 of 1 percent per month (1 percent per year) for each such month of nonpayment of benefits prior to attainment of age 72. This "credit," however, was only used to increase RIB payments. After the worker's death, the amount of benefits payable to widows and widowers was always based on the wage earner's PIA without including any retirement credits to which the worker was entitled.

In enacting the 1977 amendments, Congress intended to avoid weakening incentives for workers to remain in or return to the labor force by increasing the delayed retirement credits available. With wage indexing of earnings records, earnings after 65 do not increase benefits as much as they did before indexing and therefore an increase in the delayed retirement credit was warranted to accomplish the desired result. In addition, the Congress wished to have the widow's or widower's benefit include the delayed retirement credits that the worker had earned before his death.

POLICY STATEMENT: The following policies apply to eligibility for, and the use and amount of, delayed retirement credits:

1. Beneficiaries Who Attain Age 62 Before 1979
In addition to individuals entitled to delayed retirement credits under preamendment law, beneficiaries who become eligible for a reduced retirement benefit before January 1979 can be eligible for delayed retirement credits in the amount of 1/12 of 1 percent per month for any month in which they ware age 65 and did not receive a monthly benefit. The former bar to the payment of delayed retirement credits to those workers claiming reduced benefits has now been removed. Delayed retirement credits for months before 1979, which ware not payable under prior law, are payable effective January 1979.
2. Beneficiaries Who Attain Age 62 After 1978
Wage earners who attain age 62 after 1978 (i.e., in 1979 or later) can receive increased delayed retirement credits of 1/4 percent per month (up to 3 percent per year). Since these individuals will attain age 65 after 1981, the first year in which they can earn delayed retirement credits at the higher rate is 1982, with the increase in benefits payable in 1983.
3. Two Rates of Delayed Retirement Credits Payable After 1982
a. Wage earners who attain age 62 after 1978 (born after January 1, 1917), and whose benefits are computed under the wage indexed system (or the 5-year transitional guarantee), will earn delayed retirement credits of ¬ percent per month (up to 3 percent per year).
b. Wage earners who attain age 62 before 1979 (born before January 2, 1917), and whose benefits were computed under pre-1977 amendment methods, will earn delayed retirement credits of 1/12 percent per month (up to 1 percent per year).
4. Use of Delayed Retirement Credits in Computing Widows' and Widowers' Benefits
The worker's PIA, increased by any delayed retirement credits accrued prior to the death of the insured individual, is deemed to be the PIA on which the widow's or widower's benefit is based. Payments based on PIA's increased by these credits are effective for all widows' and widowers' benefits for months after May 1978. For example: A wage earner died in January 1978, the month he attained age 66. He had been in work deductions since age 65. For January 1978, the widow's benefit rate, before reduction for age, is equal to the deceased worker's PIA (without including delayed retirement credits). Effective June 1978, the widow's benefit, before reduction for age, will be increased to equal the PIA plus the 12 monthly delayed retirement credits which the worker had earned before his death.

FURTHER INFORMATION: Final regulations covering these policies were published in the Federal Register on July 7, 1978, at 43 FR 29275.

CROSS-REFERENCES: Claims Manual sections 4232.2, 4370-4375, A4331-A4334.2, A4340-A4341 and A4715.

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