SEC. 3. 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 ben-
efit before 1986 and remained so entitled in any of 
the 12 months immediately preceding his or her at-
tainment of age 62), or 
‘‘(ii) would attain age 62 after 1985 and be-
comes 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 uni-
formed 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 ‘non-
covered 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 in-
surance benefits shall be computed or recomputed under 
subparagraph (B) or subparagraph (D) (as applicable). 
‘‘(B) In the case of an individual who first performs 
service described in subparagraph (A) after the 12th cal-
endar month following the date of the enactment of the 
Public Servant Retirement Protection Act, if paragraph 
(1) of this subsection would apply to such individual (ex-
cept for subparagraph (A) of this paragraph), the individ-
ual’s primary insurance amount shall be the product de-
rived by multiplying—
‘‘(i) the individual’s primary insurance amount, 
as determined under paragraph (1) of this sub-
section and subparagraph (C)(i) of this paragraph, 
by 
‘‘(ii) a fraction—
‘‘(I) the numerator of which is the individ-
ual’s average indexed monthly earnings (deter-
mined without regard to subparagraph (C)(i)), 
and 
‘‘(II) the denominator of which is an 
amount equal to the individual’s average in-
dexed monthly earnings (as determined under 
subparagraph (C)(i)), 
rounded, if not a multiple of $0.10, to the next lower mul-
tiple of $0.10. 
‘‘(C)(i) For purposes of determining an individual’s 
primary insurance amount pursuant to subparagraph 
(B)(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 non-
covered 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 Commis-
sioner 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 individ-
ual’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 con-
stitute a reasonable basis for treatment of service as ‘em-
ployment’ for such purposes, together with such other in-
formation received by the Commissioner as the Commis-
sioner may consider appropriate as a reasonable basis for 
treatment of service as ‘employment’ for such purposes. 
‘‘(D)(i) In the case of an individual who has per-
formed service described in subparagraph (A) during or 
before the 12th calendar month following the date of the 
enactment of the Public Servant Retirement Protection 
Act, if paragraph (1) of this subsection would apply to 
such individual (except for subparagraph (A) of this para-
graph), there shall first be computed an amount equal to 
the individual’s primary insurance amount under para-
graph (1) of this subsection, except that for purposes of 
such computation the percentage of the individual’s aver-
age indexed monthly earnings established by subpara-
graph (A)(i) of paragraph (1) shall be the percent speci-
fied in clause (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 propor-
tionate number of years of such noncovered service) and 
to which the individual is entitled (or is deemed to be enti-
tled) for the initial month of his or her concurrent entitle-
ment to such monthly periodic payment and old-age or dis-
ability insurance benefits. There shall then be computed 
(without regard to this paragraph) a third amount, which 
shall be equal to the individual’s primary insurance 
amount determined under subparagraph (B) as if sub-
paragraph (B) applied in the case of such individual. The 
individual’s primary insurance amount shall be the largest 
of the three amounts computed under this subparagraph 
(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 at-
taining 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. 
‘‘(E)(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 pay-
ment 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.
puted under paragraph (1) of this subsection for the pur-
pose of applying other provisions of this title. 
‘‘(H) This paragraph shall not apply in the case of 
an individual whose eligibility for old-age or disability in-
surance benefits is based on an agreement concluded pur-
suant 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 In-
ternal 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 cov-
erage had previously extended to service performed 
by such individual as an employee of that organiza-
tion under a waiver certificate which was subse-
quently (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 ‘‘sub-
section (a)(7)(E)’’; 
(ii) by striking ‘‘subparagraph (E)’’ 
and inserting ‘‘subparagraph (H)’’; and 
(iii) by striking ‘‘subparagraph (D)’’ 
and inserting ‘‘subparagraph (F)(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)(E)’’. 
SEC. 4. EFFECTIVE DATE. 
The amendments made by this Act shall apply with 
respect to monthly insurance benefits for months com-
mencing with or after the 12th calendar month following 
the date of the enactment of this Act. Notwithstanding 
section 215(f) of the Social Security Act, the Commis-
sioner of Social Security shall recompute primary insur-
ance amounts to the extent necessary to carry out the 
amendments made by this Act.
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