The spouse annuity formula is based on certain percentages of the employee's tier I and tier II amounts.
The tier I portion of a spouse annuity, before any applicable reductions, is 50 percent of the railroad employee's unreduced tier I amount.
Spouse age reductions
Age reductions required for those spouses (between age 62 and full retirement age) of employees retiring with less than 30 years of service are applied separately to each annuity component. Full retirement age for a spouse is gradually rising, just as for an employee. Actuarially reduced benefits continue to be available but at greater reductions. The tier I reduction is 1/144 for each of the first 36 months the spouse is under full retirement age when her or his annuity begins and will decrease to 1/240 for each month (if any) over 36. This will result in a gradual increase in the reduction at age 62 from 25 percent to 35 percent for a spouse once the age 67 retirement age is in effect. If an employee has less than 10 years of railroad service and the spouse is already entitled to an age-reduced social security benefit, the age reduction in her or his tier I will be based on the age reduction applicable on the beginning date of the spouse's social security benefit, even if the spouse is already of full retirement age on the beginning date of her or his railroad retirement annuity.
December 2001 legislation eliminated the tier I age reduction for employees ages 60 or 61 with 30 or more years of service whose railroad retirement annuities begin January 1, 2002, or later. The spouses of these employees are also eligible for full annuities at age 60.
Age reductions required for spouses of employees with 30 years of service who attained 60/30 eligibility after June 1984 but whose annuities began before January 2002 are applied only to the tier I portion of the spouse annuity. If the employee attained 60/30 eligibility before July 1984, retired at age 62 with 30 years of service or begins receiving an annuity at ages 60 or 61 after 2001 with 30 years of service, the spouse tier I portion is not subject to these reductions.
If the employee's annuity is subject to 60/30 age reductions, the spouse of such an employee may receive a reduced tier I benefit, unless the spouse is already of full retirement age.
In reduced 60/30 spouse cases, the tier I benefit is equal to 1/2 of the employee's reduced tier I on the employee's annuity beginning date and is also frozen until the first full month throughout which both the employee and spouse are age 62. Then it is recomputed based on 1/2 of the employee's age 62 gross tier I amount and reduced for each month the spouse is under full retirement age at that time. If at the time of recomputation the spouse is already at full retirement age, or the spouse has a minor or disabled child in care, no age reduction would apply.
The spouse of a disability annuitant who is otherwise eligible for a 60/30 age annuity receives an age reduction if the spouse's annuity beginning date was before 2002. If the spouse's annuity beginning date is January 1, 2002, or later, the spouse can receive an unreduced annuity as early as age 60. If the spouse is entitled based on having a minor or disabled child in care, there is no age reduction.
Reductions for other benefits
After any applicable age reduction required for the spouse's early retirement, the spouse tier I amount is reduced by the amount of any social security benefit to which the spouse is entitled.
The tier I amount may also be reduced for certain Federal, State, or local government pension payments based on the spouse's own earnings. For spouses subject to the public pension reduction, the tier I reduction is equal to 2/3 of the public pension.
The spouse tier I amount may also be reduced if the employee under full retirement age is receiving a disability annuity and a workers' compensation or public disability benefit.
While these offsets can reduce or even erase the tier I benefit amount otherwise payable to a spouse, they do not affect the tier II benefit potentially payable to that spouse.
The annuity of a divorced spouse is limited to the tier I amount and thus equal to what social security would pay.
The spouse tier II amount, before any applicable reductions, is 45 percent of the employee's unreduced tier II amount. If the employee is awarded a vested dual benefit, the employee tier II amount used in computing the spouse benefit is the amount after the 25 percent reduction for the employee's vested dual benefit entitlement.
As mentioned earlier, age reductions are gradually increasing. The tier II age reduction for spouses of employees retiring with less than 30 years of service is 1/144 for each of the first 36 months the spouse is under full retirement age when her or his annuity begins and decreases to 1/240 for each month (if any) over 36. However, if a railroad employee had any creditable railroad service before August 12, 1983, the employee and spouse retirement age for tier II purposes remains age 65. Age reductions are not applied to spouse annuities based on the spouse's caring for a child.
If both the employee and spouse are railroad employees and either one had some railroad service before 1975, the spouse tier I amount is reduced by the amount of the railroad employee tier I to which the spouse is entitled and that initial reduction is restored in the spouse tier II amount. The spouse tier I amount cannot be reduced below zero.
If a spouse is also a railroad employee annuitant and both the employee and spouse started railroad employment after 1974, the amount of any spouse or divorced spouse annuity is reduced by the amount of the employee annuity to which the spouse is also entitled.
A spouse who is also entitled to a survivor annuity on a different earnings record will receive only the higher benefit.