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shall instead be entitled to only the smaller of such annuities for such month.

"COMPUTATION OF EMPLOYEE ANSUITIES

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“Sec. 3. (a) (1) The annuity of an individual under section 2 (a) (1) of this Act shall be in an amount equal to

6 the amount (before any reduction on account of age and

7 before any deductions on account of work) of the old-age 8 insurance benefit or disability insurance benefit to which such

9 individual would have been entitled under the Social Security 10 Act if all of his or her service as an employee after Decem11 ber 31, 1936, had been included in the term 'employment' as 12 defined in that Act. 13 “(2) For purposes of this subsection, individuals en

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titled to an annuity under paragraph (ii) of section 2 (a)

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(1) of this Act shall, except for purposes of recomputations

16 in accordance with the provisions of section 215 (1) of the 17 Social Security Act, be deemed to have attained age 65, and 18 individuals entitled to an annuity under paragraph (iv) or 19 (v) of such section 2 (a) (1) shall be deemed to be entitled 20 to a disability insurance benefit under section 223 of the 21 Social Security Act. 22 “(b) (1) The amount of the annuity of an individual 23 provided under subsection (a) of this section shall be in24 creased by an amount equal to (A) the amount of the 25 annuity to which such individual would have been entitled

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(without regard to the requirement that an individual's years

ears

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of service be ten or more) under section 2 (a) (1) of the Rail

3 road Retirement Act of 1937 as in effect on December 31,

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1974, on the basis of his compensation and years of service

5 prior to January 1, 1975, deeming such individual (i) to be 6 eligible for such an annuity and (ii) to be entitled to no other

7 benefit under either that Act or the Social Security Act ex

8 cept a benefit under the Social Security Act in the amount

9 computed in accordance with the provisions of subclause (ii)

10 of clause (C) of subsection (h) (1) or (h) (2) of this sec11 tion, minus (B) the amount of the old-age insurance benefit 12 to which such individual would have been entitled (before 13 any deductions on account of work and subject to the last

14 sentence of this subdivision) under the Social Security Act

15 as in effect on December 31, 1974, if all his service as an

16 employee after December 31, 1936, and before January 1, 17 1975, were included in the term 'employment' as defined in

18 that Act, and if such individual (i) were age 65 and other

19 wise eligible for such a benefit and (ii) had no wages or self

20 employment income under that Act other than wages derived

21 from service as an employee after December 31, 1936, and

22 before January 1, 1975. For purposes of computing amounts 23 under clause (A) of this subdivision, the Board shall have

24 25

the authority to approximate the effect of the reductions prescribed by sections 3 (a) (2) and 3 (a) (3) of the Railroad

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1 Retirement Act of 1937 in cases where the individual is en2 titled to a benefit under subsection (b) (1) or (b) (2) of 3 this section. For purposes of this subdivision, 18 benefit 4 computation years' shall be used in calculating an individual's 5 average monthly wage', except in computing increases in 6 amounts determined under clause (A) of this subdivisiva 7 pursuant to section 3 (a) (6) of the Railroad Retirement Act 8 of 1937. 9 “(2) The amount computed under subdivision (1) of 10 this subsection shall be increased by 65 per centum of the 11 percentage increase obtained by comparing the unadjusted 12 Consumer Price Index for the month of September 1976 13 with the unadjusted Consumer Price Index for the September 14 immediately preceding the earlier of (A) the calendar year 15 in which the individual's annuity under section 2 (a) (1) of 16 this Act begins to accrue or (B) the calendar year 1981. 17. “(c) If an individual entitled to an annuity under sec18 tion 2 (a) (1) of this Act will have rendered service as an

19 employee to an employer, or as an employee representative, 20 subsequent to December 31, 1974, the amount of the an

21 nuity of such individual provided under the preceding sub22 sections of this section shall be increased by $1.50 for each

23 of the first ten years of service that the individual has prior 24 to January 1, 1975, and by $1.00 for each year of service

1 prior to January 1, 1975, that the individual has in excess

2 of ten years. 3 “(d) (1) The amount of the annuity of an individual

4 provided under the preceding subsections of this section shall

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I=Y (.005A+4) “(2) The amount computed under subdivision (1) of 8 this subsection shall be increased according to the following 9 formula:

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“(3) The amount computed under subdivisions (1) and

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(2) of this subsection shall be further increased according

13 to the following formula:

I=.005Y[.65BC— (B-D)] 15 In no event shall this subdivision result in a decrease in the

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amounts computed under subdivisions (1) and (2).

“(4) For purposes of the formulae set forth in this subsection:

T' represents the amount of increase in dollars;

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"'A' represents the employee's average monthly

compensation for service after 1974;

“Y' represents the number of years of service of the

employee after 1974;

“Crepresents the percentage increase (converted

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to a decimal fraction) obtained by comparing the unadjusted Consumer Price Index for the month of Sepiember 1976 with the unadjusted Con-umer Price Il.dos for the September iminediately preceding the earlier

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of the calendar year in which the individual's annuity

under section 2 (a) (1) of this Act begins to actue, or

the calendar year 1981;

“'B' represents the employee's average monthly compensation for his years of service after 1974 (disregarding, for this purpose, compensation for any month after 1980 in excess of one-twelfth of the maximum tasable 'wages' as defined in section 3121 of the Internal Revenue Code of 1954 for the calendar year 1980);

'D' represents the employee's average monthly

compensation for his years of service after 1974 (dis

regarding, for this purpose, compensation for any month

after 1976 in excess of one-twelfth of the maximum tax

able 'wages' as defined in section 3121 of the Internal

Revenue Code for the calendar year 1976).

“(e) The supplemental annuity of an individual under

21 section 2 (b) of this Act shall be $23 plus an additional

22 amount of $4 for each year of service that the individual has 23 in excess of 25 years, but in no case shall the supplemental 24 annuity exceed $43. 25 “(1) (1) If the total amount of an individual's annuity

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