CRPC PRACTICE EXAM 2 QUESTIONS
AND ANSWERS
Whichjcofjcthejcfollowingjcarejccorrectjcstatementsjcaboutjcthejccapitaljcutilizationjcstrategy?
jc-jcanswer--
I.jcItjcproducesjcanjcannualjcretirementjcincomejcoverjcajcfinitejcnumberjcofjcyears.
II.jcAssumingjcthejcyieldjcremainsjcthejcsame,jcthejclargerjcthejcretirementjcincomejcthatjcisjcp
aid,jcthejcshorterjcthejcnumberjcofjcyearsjcoverjcwhichjcitjcwilljcbejcpaid.
III.jcWhenjcthejccapitaljcutilizationjcapproachjcisjcused,jcthejcplannerjcmustjcbejccarefuljcinjcm
akingjcassumptionsjcaboutjcthejclifejcexpectancyjcofjcthejcclient.
IV.jcThejceffectjcofjctaxesjconjcretirementjcsavingsjcandjcdistributionsjcshouldjcbejcconsidere
djcwhenjcthejcbefore-
taxjcapproachjcisjcusedjctojccalculatejcthejcfuturejcvaluejcofjcretirementjcassets.
Whichjconejcofjcthejcfollowingjcisjcnotjcajckeyjcelementjcofjcanjcinvestmentjcpolicy?jc-
jcanswer--A)jcajcprovisionjcforjcperiodicjcreview
B)jcthejcacceptablejcriskjctolerancejclevel
C)jcajctargetjcassetjcallocation
D)jcnamesjcofjcspecificjcstocksjctojcbejcinjcthejcportfolio
--D
Thejckeyjcelementsjcinjcanjcinvestmentjcpolicyjcarejcajcclearjcstatementjcofjcthejcclient'sjcgoal
,jcsuitablejcinvestmentjcvehiclesjcandjcstrategies,jcthejcacceptablejcriskjctolerancejcleveljcfor
jcthejcclient,jcassetjcallocationjcguidelines,jcandjcajcprovisionjcforjcperiodicjcreview.jcOnejcwa
yjctojcrememberjcthejcessentialjcelementsjcofjcanjcinvestmentjcpolicyjcisjcthejcacronymjc"GR
ASP"jc(Goals,jcRisk,jcAssetjcAllocation,jcStrategies/SuitablejcInvestment-
meaningjcthejcinvestmentjccategoriesjcthatjcmayjcorjcmayjcnotjcbejcused-
andjcPeriodicjcReview).jcSpecificjcinvestmentsjcwouldjcbejcdeterminedjcafterjcthejcinvestm
entjcpolicyjcisjccreated.
WhichjconejcofjcthejcfollowingjcisjcajccharacteristicjcofjcTreasuryjcinflation-
protectedjcsecuritiesjc(TIPS)?jc-jcanswer--A)jcTheyjcarejcsoldjcatjcajcdiscount.
B)jcThejcincreasejcinjcprincipaljcisjctaxablejceachjcyear.
C)jcTheirjcreturnsjcarejctiedjctojcthejcproducerjcpricejcindex.
D)jcTheyjcarejcissuedjcwithjcmaturitiesjcupjctojc40jcyears.
Yourjcclientjcownsjcajcbondjcfundjcwithjcajcdurationjcofjc6.5.jcIfjcinterestjcratesjcincreasejc1.5%
,jcwhatjcisjcthejcexpectedjcchangejcinjcpricejcforjcthisjcfund?jc-jcanswer--A)jc6.5%jcdecrease
B)jc9.75%jcincrease
C)jc9.75%jcdecrease
D)jc6.5%jcincrease
--C
1.5%jc-6.5jc=jc-
9.75%.jcRecalljcthatjcdurationjcneedsjctojchavejcajcnegativejcsignjcinjcorderjctojcrepresentjcth
ejcinversejcrelationshipjcbetweenjcbondjcpricesjcandjcinterestjcrates.jcInjcthisjccase,jcanjcincr
easejcinjcratesjcmeansjcthejcbondsjcorjcbondjcfundsjcwilljcfalljcinjcprice.jcTherefore,jcthisjcfundj
cwilljcdecreasejcinjcpricejcaboutjc9.75%.jcAlso,jcyoujccanjcrememberjcthatjcbondjcpricesjcmov
,ejcoppositejctojcinterestjcrates.jcAnjcincreasejcinjcinterestjcratesjcmeansjcthejcpricejcofjcbondsj
cwilljcgojcdown.
Thejcprocessjcofjcrebalancingjcisjcajckeyjcfactorjcinjc-jcanswer--Strategicjcassetjcallocation.
Strategicjcassetjcallocationjcinvolvesjcobtainingjcthejcbestjcassetjcmixjcforjcajcclientjcoverjcajcl
ongjcperiod.jcForjcexample,jcthisjcmightjcbejc60%jcstocksjcandjc40%jcbonds.jcWhenjcthesejcp
ercentagesjcchangejcduejctojcmarketjcmovements,jcthisjcstrategicjcassetjcallocationjcrequir
esjcthejcportfoliojctojcbejcrebalancedjcbackjctojcthejctargetjcmix,jcinjcthisjccasejc60/40jcstocks/
bonds.
WhatjcdoesjcJensen'sjcalphajctelljcyou?jc-jcanswer--thejcpercentagejcajcmanagerjcover-
jcorjcunderperformedjcbasedjconjcthejcamountjcofjcriskjctaken
Thejcpercentagejcofjcreturnjcthatjccanjcbejcattributedjctojcsystematicjcriskjcisjcreferredjctojcasjc
thejc-jcanswer--coefficientjcofjcdeterminationjc(R2).
Whichjcofjcthejcfollowingjcarejcnotjcusedjcinjctechnicaljcanalysis?jc-jcanswer--A)jcgraphs
B)jcfinancialjcstatementjcratios
C)jcmovingjcaverages
D)jcsupplyjcandjcdemandjcofjcstocks
--B
Movingjcaverages,jcgraphs,jcandjcstatisticsjcregardingjcthejcsupplyjcandjcdemandjcofjcstock
sjcarejcusedjcbyjctechnicians.jc
Financialjcstatementjcratiosjcarejcpartjcofjcfundamentaljcanalysis.
Whenjcperformingjcbondjccalculations,jcwhichjcofjcthejcfollowingjcgeneraljcassumptionsjcsh
ouldjcbejcmadejcunlessjcstatedjcotherwise?jc-jcanswer--
A)jcThejccouponjcratejcisjcannualizedjcbutjcpaidjcsemiannuallyjcforjcU.S.jcbonds.
B)jcOnjcajcfinancialjccalculator,jcbondsjcarejccalculatedjcinjcthejcBeginjcmode.
C)jcThejccouponjcpaymentjcusedjcinjcbondjccalculationsjcisjcthejcannualjcamount.
D)jcThejcfacejcvaluejcofjcthejcbondjcisjc$10,000.
--A
Thejcfacejcvaluejcofjcthejcbondjcshouldjcbejcassumedjctojcbejc$1,000,jcnotjc$10,000.jcThejcco
uponjcratejcisjcstatedjconjcanjcannualjcbasisjcbutjcisjcassumedjctojcbejcpaidjcsemiannuallyjcforj
cU.S.jcbondsjcandjcthejccouponjcpaymentjcisjcalwaysjcmadejcatjcthejcendjcofjcthejcperiod,jcnotj
cthejcbeginning.jcAlljcbonds,jcevenjczerojccouponjcbonds,jcarejccompoundedjcsemiannuallyj
cinjcthejcEndjcmode.jcThisjcmakesjcalljcbondjcYTMjcquotesjcstandardizedjcforjceasyjccompari
son.
Assumejcyourjcclientjchasjcajc5%jcbond,jcparjcvaluejcofjc$1,000,jcandjc15jcyearsjctojcmaturity.j
cComparablejcbondsjcarejcyieldingjc6%.jcWhatjcisjcthejcvaluejcofjcthisjcbond?jc-jcanswer--
A)jc$1,010
B)jc$902
C)jc$925
D)jc$875
, --B
Ifjcthejccalculatorjcisjcsetjcforjc1jcP/
YR,jcthenjcalljcfactors,jcotherjcthanjcFV,jcneedjctojcbejcadjustedjcforjcsemiannualjcpayments.jc
Thejckeystrokesjcwouldjcbe:jc1,000jc[FV],jc25jc[PMT],jc3jc[I/
YR],jc30jc[N],jcthenjcsolvejcforjc[PV]jc=jc-902.jcIfjcthejccalculatorjcisjcsetjcatjc2jcP/YR,jcthenjc[I/
YR]jcisjc6jcandjc[N]jcisjcenteredjcasjc15jc[SHIFT]jc[N].
Whichjcofjcthejcfollowingjcisjccorrectjcregardingjcthejcadditionaljcpayrolljctaxjcforjchighjcwagejc
earnersjcthatjcwasjcbroughtjcaboutjcbyjcthejcAffordablejcCarejcAct?jc-jcanswer--
A)jcThejctaxjcappliesjctojcthosejcwithjcanjcAGIjcinjcexcessjcofjc$500,000.
B)jcThejctaxjcisjc1.9%.
C)jcThejctaxjcisjcsplitjcbetweenjcthejcemployerjcandjcemployee.
D)jcThejctaxjcwasjcdesignedjctojcprovidejcadditionaljcfundingjcforjcMedicare.
--D
ThisjctaxjcisjcanjcadditionaljcMedicarejctax.jcThejc0.9%jctaxjcisjcemployeejcpaidjcandjcappliesj
ctojchighjcearnersjconlyjc(AGIjcinjcexcessjcofjc$250,000jcforjcjointjcfilersjcandjc$200,000jcforjcsi
nglejcfilers,jcnotjcindexed).
Mark,jcajcfinancialjcadviser,jchasjcajcclientjcwhojchasjcworkedjcinjctwojcpositionsjcduringjchisjcl
ifetime.jcThejcclient'sjcfirstjcpositionjcwasjcajcstatejcorjclocaljcgovernmentjcpositionjcthatjcwasj
cnotjccoveredjcbyjcSocialjcSecurity.jcThejcclientjcisjcreceivingjcajcpensionjcfromjcthatjcemploy
ment.jcHisjcsecondjcpositionjcwasjccoveredjcbyjcSocialjcSecurityjcandjchejcisjceligiblejcforjcSo
cialjcSecurityjcretirementjcbenefits.jcMarkjcshouldjcadvisejchisjcclientjcthatjc-jcanswer--
hisjceligibilityjcforjcSocialjcSecurityjcretirementjcbenefitsjcmayjcbejcreducedjcduejctojcthejcwin
dfalljceliminationjcprovisionjc(WEP).
WorkedjcinjcajcpositionjcthatjcwasjcnotjccoveredjcbyjcSocialjcSecurity,jcandjcthejcclientjcisjcrec
eivingjcajcpensionjcfromjcthatjcemployment,jc-jcanswer--
IfjcyoujchavejcajcclientjcwhojchasjcworkedjcinjcajcpositionjcthatjcwasjcnotjccoveredjcbyjcSocialjc
Security,jcandjcthejcclientjcisjcreceivingjcajcpensionjcfromjcthatjcemployment,jchisjceligibilityjcf
orjcSocialjcSecurityjcbenefitsjcbasedjconjchisjcownjcworkjchistoryjccoveredjcbyjcSocialjcSecur
ityjcmayjcbejcreducedjcduejctojcthejcwindfalljceliminationjcprovisionjc(WEP).jcThejcgovernme
ntjcpensionjcoffsetjcprovisionjc(GPO)jcimpactsjcSocialjcSecurityjcbenefitsjcowedjctojcspouse
s,jcex-
spouses,jcorjctojcsurvivorjcbenefits.jcIfjchejchasjconejcorjcmorejcsurvivorsjcentitledjctojcajcbene
fit,jcthejcSocialjcSecurityjcAdministrationjcrecalculatesjcthejcbenefitjctojcomitjcthejcWEP,jcwhi
chjcresultsjcinjcajchigherjcsurvivorjcbenefit.jcReductionsjcduejctojcthejcWEPjcarejcNOTjcreflect
edjcinjcSocialjcSecurityjcbenefitjcestimates.jcOnejcwayjctojcdifferentiatejcbetweenjcthejctwojci
sjcfocusingjconjcthejc"W"jcinjcWEP.jcThejc"W"jccanjcremindjcyoujcofjc"worker."jcThus,jcthejcWE
PjcreducesjcSocialjcSecurityjcretirementjcbenefitsjcbasedjconjcyourjcownjcworkjchistory.jcTha
tjcleavesjcthejcGPOjcasjcthejconejcthatjcreducesjcajcspousaljcSocialjcSecurityjcbenefitjcbasedj
conjcwhatjcthejcspousejcisjcgettingjcfromjcajcretirementjcplanjcbasedjconjcemploymentjcthatjcdi
djcnotjcpayjcintojcSocialjcSecurityjc(suchjcasjcpublicjcschooljcteachersjcinjcseveraljcstates).
SuzyjcbeginsjcherjcSocialjcSecurityjcretirementjcbenefitjcatjcfulljcretirementjcagejc(FRA).jcWh
atjcisjcthejcamountjcthatjcshejcwilljcreceive?jc-jcanswer--primaryjcinsurancejcamountjc(PIA)
WorkersjcwhojcbeginjctheirjcSocialjcSecurityjcretirementjcbenefitsjcatjcfulljcretirementjcagejc
willjcreceivejctheirjcprimaryjcinsurancejcamountjc(PIA).jcThisjcamountjcisjcbasedjctheirjclifeti
mejcaveragejcearnings,jcorjcAIME.jcIfjctheyjcdelayjctheirjcbenefitsjcuntiljcafterjcattainingjcFRAj
AND ANSWERS
Whichjcofjcthejcfollowingjcarejccorrectjcstatementsjcaboutjcthejccapitaljcutilizationjcstrategy?
jc-jcanswer--
I.jcItjcproducesjcanjcannualjcretirementjcincomejcoverjcajcfinitejcnumberjcofjcyears.
II.jcAssumingjcthejcyieldjcremainsjcthejcsame,jcthejclargerjcthejcretirementjcincomejcthatjcisjcp
aid,jcthejcshorterjcthejcnumberjcofjcyearsjcoverjcwhichjcitjcwilljcbejcpaid.
III.jcWhenjcthejccapitaljcutilizationjcapproachjcisjcused,jcthejcplannerjcmustjcbejccarefuljcinjcm
akingjcassumptionsjcaboutjcthejclifejcexpectancyjcofjcthejcclient.
IV.jcThejceffectjcofjctaxesjconjcretirementjcsavingsjcandjcdistributionsjcshouldjcbejcconsidere
djcwhenjcthejcbefore-
taxjcapproachjcisjcusedjctojccalculatejcthejcfuturejcvaluejcofjcretirementjcassets.
Whichjconejcofjcthejcfollowingjcisjcnotjcajckeyjcelementjcofjcanjcinvestmentjcpolicy?jc-
jcanswer--A)jcajcprovisionjcforjcperiodicjcreview
B)jcthejcacceptablejcriskjctolerancejclevel
C)jcajctargetjcassetjcallocation
D)jcnamesjcofjcspecificjcstocksjctojcbejcinjcthejcportfolio
--D
Thejckeyjcelementsjcinjcanjcinvestmentjcpolicyjcarejcajcclearjcstatementjcofjcthejcclient'sjcgoal
,jcsuitablejcinvestmentjcvehiclesjcandjcstrategies,jcthejcacceptablejcriskjctolerancejcleveljcfor
jcthejcclient,jcassetjcallocationjcguidelines,jcandjcajcprovisionjcforjcperiodicjcreview.jcOnejcwa
yjctojcrememberjcthejcessentialjcelementsjcofjcanjcinvestmentjcpolicyjcisjcthejcacronymjc"GR
ASP"jc(Goals,jcRisk,jcAssetjcAllocation,jcStrategies/SuitablejcInvestment-
meaningjcthejcinvestmentjccategoriesjcthatjcmayjcorjcmayjcnotjcbejcused-
andjcPeriodicjcReview).jcSpecificjcinvestmentsjcwouldjcbejcdeterminedjcafterjcthejcinvestm
entjcpolicyjcisjccreated.
WhichjconejcofjcthejcfollowingjcisjcajccharacteristicjcofjcTreasuryjcinflation-
protectedjcsecuritiesjc(TIPS)?jc-jcanswer--A)jcTheyjcarejcsoldjcatjcajcdiscount.
B)jcThejcincreasejcinjcprincipaljcisjctaxablejceachjcyear.
C)jcTheirjcreturnsjcarejctiedjctojcthejcproducerjcpricejcindex.
D)jcTheyjcarejcissuedjcwithjcmaturitiesjcupjctojc40jcyears.
Yourjcclientjcownsjcajcbondjcfundjcwithjcajcdurationjcofjc6.5.jcIfjcinterestjcratesjcincreasejc1.5%
,jcwhatjcisjcthejcexpectedjcchangejcinjcpricejcforjcthisjcfund?jc-jcanswer--A)jc6.5%jcdecrease
B)jc9.75%jcincrease
C)jc9.75%jcdecrease
D)jc6.5%jcincrease
--C
1.5%jc-6.5jc=jc-
9.75%.jcRecalljcthatjcdurationjcneedsjctojchavejcajcnegativejcsignjcinjcorderjctojcrepresentjcth
ejcinversejcrelationshipjcbetweenjcbondjcpricesjcandjcinterestjcrates.jcInjcthisjccase,jcanjcincr
easejcinjcratesjcmeansjcthejcbondsjcorjcbondjcfundsjcwilljcfalljcinjcprice.jcTherefore,jcthisjcfundj
cwilljcdecreasejcinjcpricejcaboutjc9.75%.jcAlso,jcyoujccanjcrememberjcthatjcbondjcpricesjcmov
,ejcoppositejctojcinterestjcrates.jcAnjcincreasejcinjcinterestjcratesjcmeansjcthejcpricejcofjcbondsj
cwilljcgojcdown.
Thejcprocessjcofjcrebalancingjcisjcajckeyjcfactorjcinjc-jcanswer--Strategicjcassetjcallocation.
Strategicjcassetjcallocationjcinvolvesjcobtainingjcthejcbestjcassetjcmixjcforjcajcclientjcoverjcajcl
ongjcperiod.jcForjcexample,jcthisjcmightjcbejc60%jcstocksjcandjc40%jcbonds.jcWhenjcthesejcp
ercentagesjcchangejcduejctojcmarketjcmovements,jcthisjcstrategicjcassetjcallocationjcrequir
esjcthejcportfoliojctojcbejcrebalancedjcbackjctojcthejctargetjcmix,jcinjcthisjccasejc60/40jcstocks/
bonds.
WhatjcdoesjcJensen'sjcalphajctelljcyou?jc-jcanswer--thejcpercentagejcajcmanagerjcover-
jcorjcunderperformedjcbasedjconjcthejcamountjcofjcriskjctaken
Thejcpercentagejcofjcreturnjcthatjccanjcbejcattributedjctojcsystematicjcriskjcisjcreferredjctojcasjc
thejc-jcanswer--coefficientjcofjcdeterminationjc(R2).
Whichjcofjcthejcfollowingjcarejcnotjcusedjcinjctechnicaljcanalysis?jc-jcanswer--A)jcgraphs
B)jcfinancialjcstatementjcratios
C)jcmovingjcaverages
D)jcsupplyjcandjcdemandjcofjcstocks
--B
Movingjcaverages,jcgraphs,jcandjcstatisticsjcregardingjcthejcsupplyjcandjcdemandjcofjcstock
sjcarejcusedjcbyjctechnicians.jc
Financialjcstatementjcratiosjcarejcpartjcofjcfundamentaljcanalysis.
Whenjcperformingjcbondjccalculations,jcwhichjcofjcthejcfollowingjcgeneraljcassumptionsjcsh
ouldjcbejcmadejcunlessjcstatedjcotherwise?jc-jcanswer--
A)jcThejccouponjcratejcisjcannualizedjcbutjcpaidjcsemiannuallyjcforjcU.S.jcbonds.
B)jcOnjcajcfinancialjccalculator,jcbondsjcarejccalculatedjcinjcthejcBeginjcmode.
C)jcThejccouponjcpaymentjcusedjcinjcbondjccalculationsjcisjcthejcannualjcamount.
D)jcThejcfacejcvaluejcofjcthejcbondjcisjc$10,000.
--A
Thejcfacejcvaluejcofjcthejcbondjcshouldjcbejcassumedjctojcbejc$1,000,jcnotjc$10,000.jcThejcco
uponjcratejcisjcstatedjconjcanjcannualjcbasisjcbutjcisjcassumedjctojcbejcpaidjcsemiannuallyjcforj
cU.S.jcbondsjcandjcthejccouponjcpaymentjcisjcalwaysjcmadejcatjcthejcendjcofjcthejcperiod,jcnotj
cthejcbeginning.jcAlljcbonds,jcevenjczerojccouponjcbonds,jcarejccompoundedjcsemiannuallyj
cinjcthejcEndjcmode.jcThisjcmakesjcalljcbondjcYTMjcquotesjcstandardizedjcforjceasyjccompari
son.
Assumejcyourjcclientjchasjcajc5%jcbond,jcparjcvaluejcofjc$1,000,jcandjc15jcyearsjctojcmaturity.j
cComparablejcbondsjcarejcyieldingjc6%.jcWhatjcisjcthejcvaluejcofjcthisjcbond?jc-jcanswer--
A)jc$1,010
B)jc$902
C)jc$925
D)jc$875
, --B
Ifjcthejccalculatorjcisjcsetjcforjc1jcP/
YR,jcthenjcalljcfactors,jcotherjcthanjcFV,jcneedjctojcbejcadjustedjcforjcsemiannualjcpayments.jc
Thejckeystrokesjcwouldjcbe:jc1,000jc[FV],jc25jc[PMT],jc3jc[I/
YR],jc30jc[N],jcthenjcsolvejcforjc[PV]jc=jc-902.jcIfjcthejccalculatorjcisjcsetjcatjc2jcP/YR,jcthenjc[I/
YR]jcisjc6jcandjc[N]jcisjcenteredjcasjc15jc[SHIFT]jc[N].
Whichjcofjcthejcfollowingjcisjccorrectjcregardingjcthejcadditionaljcpayrolljctaxjcforjchighjcwagejc
earnersjcthatjcwasjcbroughtjcaboutjcbyjcthejcAffordablejcCarejcAct?jc-jcanswer--
A)jcThejctaxjcappliesjctojcthosejcwithjcanjcAGIjcinjcexcessjcofjc$500,000.
B)jcThejctaxjcisjc1.9%.
C)jcThejctaxjcisjcsplitjcbetweenjcthejcemployerjcandjcemployee.
D)jcThejctaxjcwasjcdesignedjctojcprovidejcadditionaljcfundingjcforjcMedicare.
--D
ThisjctaxjcisjcanjcadditionaljcMedicarejctax.jcThejc0.9%jctaxjcisjcemployeejcpaidjcandjcappliesj
ctojchighjcearnersjconlyjc(AGIjcinjcexcessjcofjc$250,000jcforjcjointjcfilersjcandjc$200,000jcforjcsi
nglejcfilers,jcnotjcindexed).
Mark,jcajcfinancialjcadviser,jchasjcajcclientjcwhojchasjcworkedjcinjctwojcpositionsjcduringjchisjcl
ifetime.jcThejcclient'sjcfirstjcpositionjcwasjcajcstatejcorjclocaljcgovernmentjcpositionjcthatjcwasj
cnotjccoveredjcbyjcSocialjcSecurity.jcThejcclientjcisjcreceivingjcajcpensionjcfromjcthatjcemploy
ment.jcHisjcsecondjcpositionjcwasjccoveredjcbyjcSocialjcSecurityjcandjchejcisjceligiblejcforjcSo
cialjcSecurityjcretirementjcbenefits.jcMarkjcshouldjcadvisejchisjcclientjcthatjc-jcanswer--
hisjceligibilityjcforjcSocialjcSecurityjcretirementjcbenefitsjcmayjcbejcreducedjcduejctojcthejcwin
dfalljceliminationjcprovisionjc(WEP).
WorkedjcinjcajcpositionjcthatjcwasjcnotjccoveredjcbyjcSocialjcSecurity,jcandjcthejcclientjcisjcrec
eivingjcajcpensionjcfromjcthatjcemployment,jc-jcanswer--
IfjcyoujchavejcajcclientjcwhojchasjcworkedjcinjcajcpositionjcthatjcwasjcnotjccoveredjcbyjcSocialjc
Security,jcandjcthejcclientjcisjcreceivingjcajcpensionjcfromjcthatjcemployment,jchisjceligibilityjcf
orjcSocialjcSecurityjcbenefitsjcbasedjconjchisjcownjcworkjchistoryjccoveredjcbyjcSocialjcSecur
ityjcmayjcbejcreducedjcduejctojcthejcwindfalljceliminationjcprovisionjc(WEP).jcThejcgovernme
ntjcpensionjcoffsetjcprovisionjc(GPO)jcimpactsjcSocialjcSecurityjcbenefitsjcowedjctojcspouse
s,jcex-
spouses,jcorjctojcsurvivorjcbenefits.jcIfjchejchasjconejcorjcmorejcsurvivorsjcentitledjctojcajcbene
fit,jcthejcSocialjcSecurityjcAdministrationjcrecalculatesjcthejcbenefitjctojcomitjcthejcWEP,jcwhi
chjcresultsjcinjcajchigherjcsurvivorjcbenefit.jcReductionsjcduejctojcthejcWEPjcarejcNOTjcreflect
edjcinjcSocialjcSecurityjcbenefitjcestimates.jcOnejcwayjctojcdifferentiatejcbetweenjcthejctwojci
sjcfocusingjconjcthejc"W"jcinjcWEP.jcThejc"W"jccanjcremindjcyoujcofjc"worker."jcThus,jcthejcWE
PjcreducesjcSocialjcSecurityjcretirementjcbenefitsjcbasedjconjcyourjcownjcworkjchistory.jcTha
tjcleavesjcthejcGPOjcasjcthejconejcthatjcreducesjcajcspousaljcSocialjcSecurityjcbenefitjcbasedj
conjcwhatjcthejcspousejcisjcgettingjcfromjcajcretirementjcplanjcbasedjconjcemploymentjcthatjcdi
djcnotjcpayjcintojcSocialjcSecurityjc(suchjcasjcpublicjcschooljcteachersjcinjcseveraljcstates).
SuzyjcbeginsjcherjcSocialjcSecurityjcretirementjcbenefitjcatjcfulljcretirementjcagejc(FRA).jcWh
atjcisjcthejcamountjcthatjcshejcwilljcreceive?jc-jcanswer--primaryjcinsurancejcamountjc(PIA)
WorkersjcwhojcbeginjctheirjcSocialjcSecurityjcretirementjcbenefitsjcatjcfulljcretirementjcagejc
willjcreceivejctheirjcprimaryjcinsurancejcamountjc(PIA).jcThisjcamountjcisjcbasedjctheirjclifeti
mejcaveragejcearnings,jcorjcAIME.jcIfjctheyjcdelayjctheirjcbenefitsjcuntiljcafterjcattainingjcFRAj
