§8343. Reduction of annuities on account of social security old-age insurance benefits.

(a) General rule.--A joint coverage member who is eligible to receive an annuity under section 8307(a) or (b) (relating to eligibility for annuities) shall be entitled to receive the annuity provided for in section 8342 (relating to maximum single life annuity) and section 8348 (relating to supplemental annuities) which shall be reduced at the time at which the member would be entitled to receive full social security old-age insurance benefits whether or not he has applied for such benefits. The reduction shall be an amount equal to 40% of the primary insurance amount paid or payable to him and subject to the following provisions:

(1) The eligibility of such member for the old-age insurance benefit and the amount of such benefit upon which the reduction in his annuity shall be based shall be determined by the board in accordance with the provisions of the Federal Social Security Act, 42 U.S.C.A. § 301 et seq., in effect on the effective date of retirement, except that in determining such eligibility and such amount only wages or compensation for services covered by the system shall be included.

(2) The reduction shall not be more than one-half of the standard single life annuity multiplied by the ratio of the sum of the three years of highest taxable wages to an amount equal to three times the final average salary and by the ratio of the years of credited service after December 31, 1955 to total years of credited service.

(3) Whenever the amount of the reduction from the annuity shall have been once determined, it shall remain fixed for the duration of the annuity except that any decrease in the old-age insurance benefit under the Federal Social Security Act, 42 U.S.C.A. § 301 et seq., shall result in a corresponding decrease in the amount of the reduction from the annuity.

(b) Exception.--The reduction provided for in subsection (a) shall not apply to disability annuities.