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1 annuity and such annuity amount computed under subsections 2 (b), (c), and (d) of this section are reduced to zero, which3 ever occurs first: Provided, however, That the provisions of 4 this subdivision shall not operate to reduce the total amount 5 of an individual's annuity and supplemental annuity com6 puted under the preceding subsections of this section below 7 $1,200. For purposes of this subdivision, the final average 8 monthly compensation' of an individual shall be determined 9 by dividing the total compensation received by such indi10 vidual in the two calendar years, consecutive or otherwise, in 11 which he was credited with the highest total compensation 12 during the ten-year period ending with December 31 of the 13 year in which such individual's annuity under section 2 (a) 14 (1) of this Act begins to accrue by 24. For purposes of this 15 subdivision, the term 'compensation' shall include 'compen16 sation' as defined in section 1 (h) of this Act, 'wages' as 17 defined in section 209 of the Social Security Act, 'self18 employment income' as defined in section 211 (b) of the 19 Social Security Act, and wages deemed to have been paid 20 under section 217 or 229 of the Social Security Act on 21 account of military service: Provided, however, That in no case shall the compensation with respect to any calendar 23 month exceed the limitation on the compensation for such 24 month prescribed in subsection (j) of this section. Wages 25 and self-employment income included as compensation for

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1 purposes of this subdivision shall, in the absence of evidence 2 to the contrary, be presumed to have been paid in equal pro3 portions with respect to all months in the calendar quarter in 4 which credited, in the case of wages, or in equal proportions 5 with respect to all months in the calendar year in which 6 credited, in the case of self-employment income.

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"(2) If, in the case of an individual whose annuity 8 under section 2 (a) (1) of this Act began to accrue prior

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to January 1, 1983, the annuity (before any reduction due to such individual's entitlement to a monthly insurance bene11 fit under the Social Security Act and disregarding any 12 amount provided by subsection (h) of this section) plus 13 the supplemental annuity to which such individual is entitled 14 for any month under this Act, together with the annuity, if 15 any, of the spouse of such individual (before any reduction. 16 due to such spouse's entitlement to a wife's or husband's 17 insurance benefit under the Social Security Act and disre18 garding any amount provided by section 4 (e) of this Act), 19 before any reductions under the provisions of section 2(f) of 20 this Act, is less than the total amount which would have been 21 payable to such individual and his spouse for such month, on 22 the basis of the individual's compensation and years of serv23 ice, under the provisions of the Railroad Retirement Act of 24 1937 as in effect on December 31, 1974, disregarding, for 25 purposes of the computations under such Railroad Retirement

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1 Act of 1937, compensation for any month after December 31. 2 1974, in excess of one-twelfth of the maximum annual tax3 able 'wages' (as defined in section 3121 of the Internal Rev4 enue Code of 1954) for the calendar year 1974, the annuity 5 of such individual and the annuity of such spouse, if any, 6 shall be increased, without regard to the provisions of sub7 division (1) of this subsection, proportionately so as to s equal such total amount. For the purpose of computing 9 amounts under this subdivision, the Board shall have the 10 authority to approximate the effect of the reductions pre11 scribed by sections 3 (a) (2) and 3 (a) (3) of the Railroad 12 Retirement Act of 1937. For purposes of computing amounts 13 payable under the Railroad Retirement Act of 1937, any 14 increases in the amounts determined under the first proviso 15 of section 3 (e) of such Act which would have become 16 effective after December 31, 1974, shall be disregarded. 17 "(3) If for any month in which an annuity accrues 18 and is payable under this Act the annuity to which an in19 dividual is entitled under this Act (or would have been 20 entitled except for a reduction pursuant to a joint and sur21 vivor election), together with the annuity, if any, of the 22 spouse of such individual, is less than the total amount, or 23 the additional amount, which would have been payable to 24 all persons for such month under the Social Security Act 25 if such individual's service as an employee after December 31,

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1 1936, were included in the term 'employment' as defined in

that Act, such annuity or annuities shall be increased pro3 portionately to such total amount, or such additional amount: 4 Provided, however, That if an annuity accrues to an individ5 ual or a spouse for a part of a month, the amount payable 6 for such part of a month under this subdivision shall be 7 one-thirtieth of the amount payable under this subdivision. 8 for an entire month multiplied by the number of days in 9 such part of a month. For purposes of this subdivision, (i) 10 persons not entitled to an annuity under section 2 of this Act shall not be included in the computation under this sub12 division except a spouse who could qualify for an annuity

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under section 2 (c) of this Act if the individual from whom 14 the spouse's annuity under this Act would derive had at

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15 tained age 60 or 62, as the case may be, and such individual's children who meet the definition as such contained in sec17 tion 216 (e) of the Social Security Act; (ii) after an annuity 18 has been certified for payment and this subdivision was in19 applicable after allowing for any waiting period under 20 section 223 (c) (2) of the Social Security Act, and after 21 having considered the inclusion of all persons who were then 22 eligible for inclusion in the computation under this subdivi23 sion, or was then applicable but later became inapplicable, 24 any recertification in such annuity under this subdivision. 25 shall not take into account persons not entitled to an annuity

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1 under section 2 of this Act except a spouse who could qualify 2 for an annuity under section 2 (c) of this Act when she 3 attains age 60 or 62, as the case may be, if the individual 4 from whom the spouse's annuity would derive had attained 5 age 60 or 62, as the case may be, and who was married to 6 such individual at the time he applied for his annuity; and 7 (ii) in computing the amount to be paid under this sub8 division the only benefits under title II of the Social Se9 curity Act which shall be considered shall be those to which 10 the persons included in the computation are entitled.

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"(g) Those portions of the annuity of an individual as 12 are computed under subsections (b) and (d) of this section 13 shall, if such individual's annuity under section 2 (a) (1) of 14 this Act began to accrue on or before the date on which the 15 applicable increase under his subsection becomes effective, 16 be increased by 32.5 per centum of the percentage increase, 17 if any (rounded to the nearest one-tenth of 1 percent), ob18 tained by comparing (A) the unadjusted Consumer Price 19 Index for the calendar quarter ending March 31, 1977, with 20 such index for the calendar quarter ending March 31, 1976, 21 (B) the unadjusted Consumer Price Index for the calendar 22 quarter ending March 31, 1978, with the higher of (i) such 23 index for the calendar quarter ending March 31, 1977, or (ii) such index for the calendar quarter ending March 31, 25 1976, (C) the unadjusted Consumer Price Index for the

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