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National Average Wage Index |
Latest index Indexed earnings used to compute initial benefits When indexing an individual's earnings for benefit computation purposes, we must first determine the year of first eligibility for benefits. For retirement, eligibility is at age 62. If a person reaches age 62 in 2012, for example, then 2012 is the person's year of eligibility. We always index an individual's earnings to the average wage level two years prior to the year of first eligibility. Thus, for a person retiring at age 62 in 2012, we would index the person's earnings to the average wage index for 2010, or 41,673.83. We would multiply earnings in a year before 2010 by the ratio of 41,673.83 to the average wage index for that year; we would take earnings in 2010 or later at face value. (See two examples of indexed earnings.)
Indexed program amounts
In addition, the Pension Benefit Guaranty Corporation uses the national average wage index to compute flat-rate premiums for PBGC-insured single-employer and multiemployer plans, as required by the Deficit Reduction Act of 2005. Determination of the National Average Wage Index for 2010 The average amounts of wages calculated directly from our data were $39,036.67 and $39,959.30 for 2009 and 2010, respectively. To determine the national average wage index for 2010 at a level that is consistent with the national average wage indexing series for prior years, we multiply the 2009 national average wage index of 40,711.61 by the percentage change in average wages from 2009 to 2010 (based on our tabulated wage data). In other words, the national average wage index for 2010 is 40,711.61 times 39,959.30 divided by 39,036.67, which equals 41,673.83. The complete average wage indexing series is shown below. |
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