social security calc

[Gary]

a plan froze benefits at 12/31/82. the formula at that time was a ss offset.

they determine the ss ben based on the law in 1982.

the plan discounts at 5% per year and uses level pay after 1982 until age 65.

say person is age 50 at 12/31/82.

my question is should the PIA be multiplied (or increased) by the 7.4% COLA of june 1982?

my feeling is that a participant's PIA is not increased by COLAs until and after he reaches age 62 and not prior to that point in time. so in this case the COLA would not be applied.

[MGB]

I agree with you. There is no COLA adjustment for this person in the PIA calculation.

[Guest windwalker]

Excuse me for breaking into your discussion but I have a question you all may be able to answer. MGB, you spoke to this before, but some additional disclosures have surfaced.

Corporate effort to terminate defined benefit plan with SS offset as of 12/31/84. Statement provided to employee, Calculation of Basic Monthly Benefit shows PSSB/PIA? of $728.23. Feds finally permit plan termination 12/31/88, PSSB shown as $838.60. Plan documents are silent on how to treat earnings post '88. Current owner's actuaries wrote " in their experience, they have never seen this methodology for calculation PSSB/PIA for benefit calculation purposes." Net result is they calculate PIA impacted by post '88 factors, icreasing PIA to $975 and reducing my monthly benefit.

Could the PSSB determined in 1984 and later 1988 be fixed? That is, is there a scenario where that number would stand as is, eg. zero future earnings. Strangely, the $838.60 does crop up for 1988 on Table 6B - Social Security Wage Index and Maximum PIA in Statistics for Employee Benefits Actuaries.

[david rigby]

The offset should be determined based on factors, definitions, and administrative practices in effect at date of plan freeze.