Employers and employees covered by the Railroad Retirement Act pay higher retirement taxes than those covered by the Social Security Act, so that Railroad Retirement benefits remain higher than Social Security benefits, especially for “career” employees who have 30 or more years of service.
The following questions and answers show the differences in Railroad Retirement and Social Security benefits payable at the close of the fiscal year ending Sept. 30, 2018. They also show the differences in age requirements and payroll taxes under the two systems.
1. How do the average monthly Railroad Retirement and Social Security benefits paid to retired employees and spouses compare?
The average age annuity being paid by the Railroad Retirement Board (RRB) at the end of fiscal year 2018 to career rail employees was $3,525 a month, and for all retired rail employees, the average was $2,815. The average age retirement benefit being paid under Social Security was approximately $1,415 a month. Spouse benefits averaged $1,035 a month under Railroad Retirement compared to $720 under Social Security.
The Railroad Retirement Act also provides supplemental Railroad Retirement annuities of between $23 and $43 a month, which are payable to employees who retire directly from the rail industry with 25 or more years of service.
2. Are the benefits awarded to recent retirees generally greater than the benefits payable to those who retired years ago?
Yes, because recent awards are based on higher average earnings. Age annuities awarded to career railroad employees retiring in fiscal year 2018 averaged about $4,175 a month, while monthly benefits awarded to workers retiring at full retirement age under Social Security averaged nearly $1,915. If spouse benefits are added, the combined benefits for the employee and spouse would total $5,815 under Railroad Retirement coverage, compared to $2,875 under Social Security. Adding a supplemental annuity to the railroad family’s benefit increases average total benefits for current career rail retirees to about $5,850 a month.
3. How much are the disability benefits currently awarded?
Disabled railroad workers retiring directly from the railroad industry in fiscal year 2018 were awarded $3,050 a month on average, while awards for disabled workers under Social Security averaged $1,340.
While both the Railroad Retirement and Social Security Acts provide benefits to workers who are totally disabled for any regular work, the Railroad Retirement Act also provides disability benefits specifically for employees who are disabled for work in their regular railroad occupation. Employees may be eligible for such an occupational disability annuity at age 60 with 10 years of service, or at any age with 20 years of service.
4. Can railroaders receive benefits at earlier ages than workers under Social Security?
Railroad employees with 30 or more years of creditable service are eligible for regular annuities based on age and service the first full month they are age 60, and rail employees with less than 30 years of creditable service are eligible for regular annuities based on age and service the first full month they are age 62.
No early retirement reduction applies if a rail employee retires at age 60 or older with 30 years of service and his or her retirement is after 2001, or if the employee retired before 2002 at age 62 or older with 30 years of service.
Early retirement reductions are otherwise applied to annuities awarded before full retirement age, the age at which an employee can receive full benefits with no reduction for early retirement. This ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the same as under Social Security.
Under Social Security, a worker cannot begin receiving retirement benefits based on age until age 62, regardless of how long he or she worked, and Social Security retirement benefits are reduced for retirement prior to full retirement age regardless of years of coverage.
5. Can the spouse of a railroader receive a benefit at an earlier age than the spouse of a worker under Social Security?
If a retired railroad employee with 30 or more years of service is age 60, the employee’s spouse is also eligible for an annuity the first full month the spouse is age 60.
Certain early retirement reductions are applied if the employee first became eligible for a 60/30 annuity July 1, 1984, or later, and retired at ages 60 or 61 before 2002. If the employee was awarded a disability annuity, has attained age 60 and has 30 years of service, the spouse can receive an unreduced annuity the first full month she or he is age 60, regardless of whether the employee annuity began before or after 2002, as long as the spouse’s annuity beginning date is after 2001.
To qualify for a spouse’s benefit under Social Security, an applicant must be at least age 62, or any age if caring for a child who is entitled to receive benefits based on the applicant’s spouse’s record.
6. Does Social Security offer any benefits that are not available under Railroad Retirement?
Social Security does pay certain types of benefits that are not available under Railroad Retirement. For example, Social Security provides children’s benefits when an employee is disabled, retired or deceased. Under current law, the Railroad Retirement Act only provides children’s benefits if the employee is deceased.
However, the Railroad Retirement Act includes a special minimum guaranty provision which ensures that railroad families will not receive less in monthly benefits than they would have if railroad earnings were covered by Social Security rather than Railroad Retirement laws. This guaranty is intended to cover situations in which one or more members of a family would otherwise be eligible for a type of Social Security benefit that is not provided under the Railroad Retirement Act. Therefore, if a retired rail employee has children who would otherwise be eligible for a benefit under Social Security, the employee’s annuity can be increased to reflect what Social Security would pay the family.
7. How much are monthly benefits for survivors under Railroad Retirement and Social Security?
Survivor benefits are generally higher if payable by the RRB rather than Social Security. At the end of fiscal year 2018, the average annuity being paid to all aged and disabled widow(er)s was $1,705 a month, compared to $1,305 under Social Security.
Benefits awarded by the RRB in fiscal year 2018 to aged and disabled widow(er)s of railroaders averaged nearly $2,185 a month, compared to approximately $1,265 under Social Security.
The annuities being paid at the end of fiscal year 2018 to widowed mothers/fathers averaged $1,900 a month and children’s annuities averaged $1,110, compared to $985 and $860 a month for widowed mothers/fathers and children, respectively, under Social Security.
Those awarded in fiscal year 2018 averaged $2,200 a month for widowed mothers/fathers and $1,350 a month for children under Railroad Retirement, compared to $960 and $855 for widowed mothers/fathers and children, respectively, under Social Security.
8. How do Railroad Retirement and Social Security lump-sum death benefit provisions differ?
Both the Railroad Retirement and Social Security systems provide a lump-sum death benefit. The Railroad Retirement lump-sum benefit is generally payable only if survivor annuities are not immediately due upon an employee’s death. The Social Security lump-sum benefit may be payable regardless of whether monthly benefits are also due. Both Railroad Retirement and Social Security provide a lump-sum benefit of $255. However, if a railroad employee completed 10 years of creditable railroad service before 1975, the average Railroad Retirement lump-sum benefit payable is $1,020. Also, if an employee had less than 10 years of service, but had at least 5 years of such service after 1995, he or she would have to have had an insured status under Social Security law (counting both Railroad Retirement and Social Security credits) in order for the $255 lump-sum benefit to be payable.
The Social Security lump sum is generally only payable to the widow(er) living with the employee at the time of death. Under Railroad Retirement, if the employee had 10 years of service before 1975, and was not survived by a living-with widow(er), the lump sum may be paid to the funeral home or the payer of the funeral expenses.
9. How do Railroad Retirement and Social Security payroll taxes compare?
Railroad Retirement payroll taxes, like Railroad Retirement benefits, are calculated on a two-tier basis. Rail employees and employers pay Tier I taxes at the same rate as Social Security taxes, 7.65 percent, consisting of 6.20 percent for retirement on earnings up to $132,900 in 2019, and 1.45 percent for Medicare hospital insurance on all earnings. An additional 0.9 percent in Medicare taxes (2.35 percent in total) will be withheld from employees on earnings above $200,000.
In addition, rail employees and employers both pay Tier II taxes which are used to finance Railroad Retirement benefit payments over and above Social Security levels.
In 2019, the Tier II tax rate on earnings up to $98,700 is 4.9 percent for employees and 13.1 percent for employers.
10. How much are regular Railroad Retirement taxes for an employee earning $132,900 in 2019 compared to Social Security taxes?
The maximum amount of regular Railroad Retirement taxes that an employee earning $132,900 can pay in 2019 is $15,003.15, compared to $10,166.85 under Social Security. For railroad employers, the maximum annual regular retirement taxes on an employee earning $132,900 are $23,096.55, compared to $10,166.85 under Social Security. Employees earning over $132,900, and their employers, will pay more in retirement taxes than the above amounts because the Medicare hospital insurance tax is applied to all earnings.
In light of the recent furloughs by Union Pacific and BNSF railroads, below is a Q&A offered by the Railroad Retirement Board (RRB) addressing common questions about unemployment benefits.
To be eligible for unemployment benefits from the RRB, furloughed members must have had railroad earnings of at least $3,600 in 2014 and must also have five months of service in 2014 with a railroad. If you do not meet these requirements, you may be entitled to unemployment benefits from your state of residence.
Unemployment and sickness benefits for railroad employees
(Published July 2015 by the Railroad Retirement Board)
The Railroad Retirement Board (RRB) administers the Railroad Unemployment Insurance Act, which provides two kinds of benefits for qualified railroaders: unemployment benefits for those who become unemployed but are ready, willing and able to work; and sickness benefits for those who are unable to work because of sickness or injury. Sickness benefits are also payable to female rail workers for periods of time when they are unable to work because of pregnancy and childbirth. A new benefit year begins each July 1.
The following questions and answers describe these benefits, their eligibility requirements, and how to claim them.
1. What are the eligibility requirements for railroad unemployment and sickness benefits in July 2015? To qualify for normal railroad unemployment or sickness benefits, an employee must have had railroad earnings of at least $3,600 in calendar year 2014, counting no more than $1,440 for any month. Those who were first employed in the rail industry in 2014 must also have at least five months of creditable railroad service in 2014.
Under certain conditions, employees who do not qualify on the basis of their 2014 earnings may still be able to receive benefits in the new benefit year. Employees with at least 10 years of service (120 or more cumulative months of service) who received normal benefits in the benefit year ending June 30, 2015, may be eligible for extended benefits, and employees with at least 10 years of service (120 or more cumulative months of service) might qualify for accelerated benefits if they have rail earnings of at least $3,637.50 in 2015, not counting earnings of more than $1,455 a month.
In order to qualify for extended unemployment benefits, a claimant must not have voluntarily quit work without good cause and not have voluntarily retired. To qualify for extended sickness benefits, a claimant must not have voluntarily retired and must be under age 65.
To be eligible for accelerated benefits, a claimant must have 14 or more consecutive days of unemployment or sickness; not have voluntarily retired or, if claiming unemployment benefits, quit work without good cause; and be under age 65 when claiming sickness benefits.
2. What is the daily benefit rate payable in the new benefit year beginning July 1, 2015? Almost all employees will qualify for the new maximum daily benefit rate of $72. Benefits are generally payable for the number of days of unemployment or sickness over four in 14-day claim periods, which yields $720 for each two full weeks of unemployment or sickness. Sickness benefits payable for the first 6 months after the month the employee last worked are subject to tier I railroad retirement payroll taxes, unless benefits are being paid for an on-the-job injury. (Claimants should be aware that as a result of a sequestration order under the Budget Control Act of 2011, the RRB will reduce unemployment and sickness benefits by 7.3 percent through September 30, 2015. As a result, the total maximum amount payable in a 2-week period covering 10 days of unemployment or sickness will be $667.44. The maximum amount payable for sickness benefits subject to tier I payroll taxes of 7.65 percent will be $616.38 over two weeks. Future reductions, should they occur, will be calculated based on applicable law.)
3. How long are these benefits payable? Normal unemployment or sickness benefits are each payable for up to 130 days (26 weeks) in a benefit year. The total amount of each kind of benefit which may be paid in the new benefit year cannot exceed the employee’s railroad earnings in calendar year 2014, counting earnings up to $1,860 per month.
If normal benefits are exhausted, extended benefits are payable for up to 65 days (during 7 consecutive 14-day claim periods) to employees with at least 10 years of service (120 or more cumulative service months).
4. What is the waiting-period requirement for unemployment and sickness benefits? Benefits are normally paid for the number of days of unemployment or sickness over four in 14-day registration periods. Initial sickness claims must also begin with four consecutive days of sickness. However, during the first 14-day claim period in a benefit year, benefits are only payable for each day of unemployment or sickness in excess of seven which, in effect, provides a one-week waiting period. (If an employee has at least five days of unemployment or five days of sickness in a 14-day period, he or she should still file for benefits.) Separate waiting periods are required for unemployment and sickness benefits. However, only one seven-day waiting period is generally required during any period of continuing unemployment or sickness, even if that period continues into a subsequent benefit year.
5. Are there special waiting-period requirements if unemployment is due to a strike? If a worker is unemployed because of a strike conducted in accordance with the Railway Labor Act, benefits are not payable for days of unemployment during the first 14 days of the strike, but benefits are payable during subsequent 14-day periods.
If a strike is in violation of the Railway Labor Act, unemployment benefits are not payable to employees participating in the strike. However, employees not among those participating in such an illegal strike, but who are unemployed on account of the strike, may receive benefits after the first two weeks of the strike.
While a benefit year waiting period cannot count toward a strike waiting period, the 14-day strike waiting period may count as the benefit year waiting period if a worker subsequently becomes unemployed for reasons other than a strike later in the benefit year.
6. Can employees in train and engine service receive unemployment benefits for days when they are standing by or laying over between scheduled runs? No, not if they are standing by or laying over between regularly assigned trips or they missed a turn in pool service.
7. Can extra-board employees receive unemployment benefits between jobs?
Yes, but only if the miles and/or hours they actually worked were less than the equivalent of normal full-time work in their class of service during the 14-day claim period. Entitlement to benefits would also depend on the employee’s earnings.
8. How would an employee’s earnings in a claim period affect his or her eligibility for unemployment benefits? If a claimant’s earnings for days worked, and/or days of vacation, paid leave, or other leave in a 14-day registration period are more than a certain indexed amount, no benefits are payable for any days of unemployment in that period. That registration period, however, can be used to satisfy the waiting period.
Earnings include pay from railroad and nonrailroad work, as well as part-time work and self-employment. Earnings also include pay that an employee would have earned except for failure to mark up or report for duty on time, or because he or she missed a turn in pool service or was otherwise not ready or willing to work. For the benefit year that begins July 2015, the amount is $1,440, which corresponds to the base year monthly compensation amount used in determining eligibility for benefits in each year. Also, even if an earnings test applies on the first claim in a benefit year, this will not prevent the first claim from satisfying the waiting period in a benefit year.
9. How does a person apply for and claim unemployment benefits? Claimants can file their applications for unemployment benefits, as well as their subsequent biweekly claims, by mail or online.
To apply by mail, claimants must obtain an application from their labor organization, employer, local RRB office or the agency’s website at www.rrb.gov. The completed application should be mailed to the local RRB office as soon as possible and, in any case, must be filed within 30 days of the date on which the claimant became unemployed or the first day for which he or she wishes to claim benefits. Benefits may be lost if the application is filed late.
To file their applications — or their biweekly claims — online, claimants must first establish an RRB online account at www.rrb.gov. Instructions on how to do so are available through the RRB’s website. Employees are encouraged to establish online accounts while still employed so the account is ready if they ever need to apply for these benefits or use other select RRB Internet services. Employees who have already established online accounts do not need to do so again.
The local RRB field office reviews the completed application, whether it was submitted by mail or online, and notifies the claimant’s current railroad employer, and base-year employer, if different. The employer has the opportunity to provide information about the benefit application.
After the RRB office processes the application, biweekly claim forms are mailed to the claimant, and are also available on the RRB’s website, as long as he or she remains unemployed and eligible for benefits. Claim forms should be signed and sent on or after the last day of the claim. This can be done by mail or electronically. The completed claim must be received by an RRB office within 15 days of the end of the claim or the date the claim form was mailed to the claimant or made available online, whichever is later. Claimants must not file both a paper claim and an online claim form for the same period(s).
Only one application needs to be filed during a benefit year, even if a claimant becomes unemployed more than once. However, a claimant must, in such a case, request a claim form from an RRB office within 30 days of the first day for which he or she wants to resume claiming benefits. These claims may then be filed by mail or online.
10. How does a person apply for and claim sickness benefits? An application for sickness benefits can be obtained from railroad labor organizations, railroad employers, any RRB office or the agency’s website. An application and a doctor’s statement of sickness are required at the beginning of each period of continuing sickness for which benefits are claimed. Claimants should make a special effort to have the doctor’s statement of sickness completed promptly since no claims can be paid without it.
The RRB suggests that employees keep an application on hand for use in claiming sickness benefits, and that family members know where the form is kept and how to use it. If an employee becomes unable to work because of sickness or injury, the employee should complete the application and then have his or her doctor complete the statement of sickness. Employees should note that they must indicate on the application whether they are applying for sickness benefits because they were injured at work or have a work-related illness. They must also indicate whether they have filed or expect to file a lawsuit or claim against a third party for personal injury. If a claimant receives sickness benefits for an injury or illness for which he or she is paid damages, it is important to be aware that the RRB is entitled to reimbursement of either the amount of the benefits paid for the injury or illness, or the net amount of the settlement, after deducting the claimant’s gross medical, hospital, and legal expenses, whichever is less.
If the employee is too sick to complete the application, someone else may do so. In such cases, a family member should also complete Form SI-10, “Statement of Authority to Act for Employee,” which accompanies the statement of sickness.
After completion, the forms should be mailed to the RRB’s headquarters in Chicago by the seventh day of the illness or injury for which benefits are claimed. However, applications received after 10 days but within 30 days of the first day for which an employee wishes to claim benefits are generally considered timely filed if there is a good reason for the delay. After the RRB receives the application and statement of sickness and determines eligibility, biweekly claim forms are mailed to the claimant for completion and return to an RRB field office for processing. The RRB also makes claim forms available for completion online by those employees who establish an online account. The claim forms must be received at the RRB within 30 days of the last day of the claim period, or within 30 days of the date the claim form was mailed to the claimant or made available online, whichever is later. Benefits may be lost if an application or claim is filed late.
Claimants are reminded that while claim forms for sickness benefits can be submitted online, applications and statements of sickness must be returned to the RRB by mail.
11.Is a claimant’s employer notified each time a biweekly claim for unemployment or sickness benefits is filed? The Railroad Unemployment Insurance Act requires the RRB to notify the claimant’s base-year employer each time a claim for benefits is filed. That employer has the right to submit information relevant to the claim before the RRB makes an initial determination on the claim. In addition, if a claimant’s base-year employer is not his or her current employer, the claimant’s current employer is also notified. The RRB must also notify the claimant’s base-year employer each time benefits are paid to a claimant. The base-year employer may protest the decision to pay benefits. Such a protest does not prevent the timely payment of benefits. However, a claimant may be required to repay benefits if the employer’s protest is ultimately successful. The employer also has the right to appeal an unfavorable decision to the RRB’s Bureau of Hearings and Appeals.
The RRB also conducts checks with other Federal agencies and all 50 States, as well as the District of Columbia and Puerto Rico, to detect fraudulent benefit claims, and it checks with physicians to verify the accuracy of medical statements supporting sickness benefit claims.
12. How long does it take to receive payment? Under the RRB’s Customer Service Plan, if a claimant filed an application for unemployment or sickness benefits, the RRB will release a claim form or a denial letter within 10 days of receiving his or her application. If a claim for subsequent biweekly unemployment or sickness benefits is filed, the RRB will certify a payment or release a denial letter within 10 days of the date the RRB receives the claim form. If the claimant is entitled to benefits, benefits will generally be paid within one week of that decision.
However, some claims for benefits may take longer to handle than others if they are more complex, or if an RRB office has to get information from other people or organizations. If this happens, claimants may expect an explanation and an estimate of the time required to make a decision.
Claimants who think an RRB office made the wrong decision about their benefits have the right to ask for review and to appeal. They will be notified of these rights each time an unfavorable decision is made on their claims.
13. How are payments made? Railroad unemployment and sickness insurance benefits are paid by the U.S. Treasury’s Direct Deposit program. With Direct Deposit, benefit payments are made electronically to an employee’s bank, savings and loan, credit union or other financial institution. New applicants for unemployment and sickness benefits will be asked to provide information needed for Direct Deposit enrollment.
14. How can claimants get more information on railroad unemployment or sickness benefits? Claimants with questions about unemployment or sickness benefits, or who are seeking information about their claims and benefit payments, can contact an RRB office by calling toll-free at 1-877-772-5772. Claimants can also access an online service, “View RUIA Account Statement” on the “Benefit Online Services” page at www.rrb.gov, which provides a summary of the unemployment and sickness benefits paid to them. To use this service, claimants must first establish an online account.
Persons can find the address of the RRB office serving their area by calling 1-877-772-5772, or by visiting www.rrb.gov. Most RRB offices are open to the public from 9:00 a.m. to 3:30 p.m., Monday through Friday, except on Federal holidays.
Buried in the $1.1 trillion spending bill that President Barack Obama signed into law is a provision that would allow the benefits of retired truckers, construction workers and others who contributed to so-called multi-employer pensions to be cut for the first time.
This change — potentially affecting as many as 1.5 million current and future retirees in underfunded plans, mostly union workers — will undoubtedly set off volleys of finger-pointing to find a culprit for the accelerating collapse of the system. Many commentators will blame unions for extorting extravagant, unsustainable retirement packages from employers that are now falling apart. But it’s not so simple. In fact, the long, tangled history of U.S. private pensions is equally a story of how business sought to manage labor, conserve profits and block the expansion of a modern welfare state.
Research by historians such as Jennifer Klein and Steven Sass helps explain why the United States is almost unique in its reliance on private, company-sponsored pensions instead of comprehensive, government-sponsored benefits.
WASHINGTON – U.S. workers face a dim future, with stagnant or falling pay and fewer openings for full-time jobs.
That’s the picture that emerges from a survey of Harvard Business School alumni.
More than 40 percent of the respondents foresee lower pay and benefits for workers. Roughly half favor outsourcing work over hiring staffers. A growing share prefer part-time employees. Nearly half would rather invest in new technology than hire or retain workers.
By Calvin Studivant Alternate vice president, Bus Department
Fatigue management was a topic of significant importance earlier this month at a National Transportation Safety Board forum I attended in Washington, D.C.
The troubling news from the forum is that non-union bus operators, employed by so-called low-cost carriers, are being forced to work too many hours, with many of the drivers clearly in violation of hours-of-service regulations.
For too many non-union bus operators, pay is so low they are compromised into working excessive hours to feed their families — and that means driving while fatigued. That’s not only unlawful; it’s dangerous.
Medical experts who study fatigue have concluded that going to work fatigued is like going to work drunk.
An effective solution is not necessarily revising the hours-of-service regulations; but rather revising the law that permits non-union carriers to avoid paying their drivers overtime rates.
At no time should low driver earnings be allowed to compromise safety, but that is the situation too many low-paid, non-union operators face.
Lack of training is another problem for non-union operators employed by carriers whose primary interest is putting a driver — no matter how poorly paid or poorly trained — behind the wheel.
Much emphasis is being placed on revising hours-of-service regulations and installing new technology such as collision warning systems and lane departure warnings. Yes, they are important in assuring safety.
Too often overlooked is the ability of carriers to intimidate drivers into violating the hours-of-service law; and the fact that new technology is not, in itself, a solution to the fatigue problem.
In my mind, it makes eminent good sense to put equal or more emphasis on assuring only qualified, alert and non-fatigued drivers are behind the wheel — drivers who are properly trained and properly recruited with competitive wage and benefits packages.
Within the UTU, we recognize this in our contracts, and it is time for federal and state regulators to recognize the issue among the growing number of so-called low-cost bus companies that put profit ahead of safety.
Take, for example, a bill currently being considered by the U.S. Senate — S. 453, the Motorcoach Enhanced Safety Act. The bill would require safety improvements in construction of new buses, but missing in that bill is recognition that assuring the hiring and retention of properly qualified, fully trained and competitively paid drivers is equally important in assuring safe passenger transportation.
I will be leading discussions on these issues at our regional meetings in San Antonio and New York in June and July, and I hope as many of our drivers as possible will attend these regional meeting bus workshops.
We also will be discussing the Federal Motor Carrier Safety Administration’s new rules for obtaining a commercial driver’s license (CDL) and commerical learner’s permit (CLP). Those new rules are posted on the UTU webpage.
In the San Antonio and New York regional meetings we also will be discussing opportunities for federal grants to help improve the skills of labor negotiators and encourage innovative approaches to collaborative labor-management problem solving. We will work with the UTU National Legislative Office and President Futhey to make application for a grant to the UTU.
I also call your attention to the Bus Department page of the UTU website at www.utu.org. A link has been added on that page to a recent DOT Motorcoach Safety Action Plan. Scroll down on that page and the link is in the fourth column to the right, under “Bus Safety”. The new FMCSA rules on obtaining a CDL and CLP also appear there.
An opinion article recently published by the Financial Times and Fox News, written by conservative financial columnist Liz Peek, takes a nasty and incorrect swipe at Railroad Retirement, saying Railroad Retirement should be eliminated and folded into Social Security.
The argument begins with a major falsehood — that Railroad Retirement is costing the American taxpayer.
In fact, Railroad Retirement costs the American taxpayer not a single penny.
Not only are all Railroad Retirement benefits paid from payroll taxes of railroads and their workers, but so is the overhead operation of the Railroad Retirement Board.
Scrapping Railroad Retirement and folding it into Social Security wouldn’t save the federal government or the American taxpayer a single penny. But shutting it down would ravage the retirement security of some 600,000 current railroad retirees and their families, as well as future railroad retirees and their families.
The truth is:
The Railroad Retirement Tier I benefit is roughly equivalent to Social Security benefits.
Railroads and their employees each pay the same 6.2 percent payroll tax as employers and employees covered by Social Security. In what is strictly an accounting transfer, Railroad Retirement payroll taxes are transferred by the Railroad Retirement Board to the Social Security Administration, and then Social Security returns the equivalent Social Security benefits due railroad retirees to the Railroad Retirement Board. It is strictly an accounting transfer.
Although Tier I does provide benefits beyond what is paid by Social Security — such as early retirement and occupational disability — those additional Tier I benefits are paid entirely out of the Railroad Retirement Trust Fund — maintained entirely by railroads and their employees through payroll taxes.
The Railroad Retirement Tier II benefit, which is equivalent to a defined benefit private pension, is fully funded by additional payroll taxes paid solely by railroads and their employees — 3.9 percent by employees and 12.1 percent by railroads.
If the Railroad Retirement Trust Fund faces a shortfall, railroads are on the hook for higher payroll taxes — not the American taxpayer. That’s the law.
Railroad Retirement was created before there was Social Security, and has remained separate from Social Security, but is funded fully by railroads and their employees.
Although Congress sets the payroll tax rates and benefit levels, it does so in collaboration with railroads and rail labor — and not a penny of general tax revenue has been or is used for Railroad Retirement.
The unwarranted, unsubstantiated and unjust attack on Railroad Retirement by right-wing extremists is as phony as claiming that elimination of public-employee collective bargaining rights will solve state financial problems.
The mean-spirited attack on Railroad Retirement is part of a more broad effort to weaken and destroy organized labor.
The Railroad Retirement Board reports it has adjusted benefits — effective with February benefits checks — for more than 140,000 beneficiaries to reflect new federal income tax withholding rates.
The new rates comply with provisions of the congressionally passed Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.
The new rates apply to withholding from the non-Social Security equivalent portion of Tier I, Tier II, vested dual benefits, and supplemental annuity payments, and will remain in use for the remainder of 2011.
The Railroad Retirement Board says that in the absence of a request not to withhold federal income tax or to withhold the tax at specific amounts, the board will withhold taxes only if the combined portions of the non-Social Security equivalent portion of Tier I, Tier II, vested dual benefit, and supplemental annuity payments are equal to or greater than an annual threshold amount.
In that case, the RRB withholds taxes as if the annuitant were married and claiming three allowances.
The annual threshold amount for 2011 is $1,587.99. The threshold amount for 2010 was $2,063.51.
Annuitants can use form RRB W-4P (Withholding Certificate for Railroad Retirement Payments) to request:
No federal taxes be withheld from their Railroad Retirement payments
Federal taxes be withheld based on the marital status and the number of allowances they wish to claim
An additional amount be withheld from Railroad Retirement payments
Form RRB W-4P may be downloaded at www.rrb.gov by clicking on “Benefit Forms and Publications,” and then clicking on “Income Tax.”
Annuitants who have questions regarding their tax liability should contact the nearest office of the IRS or visit www.irs.gov.
Come May 1, Social Security and Railroad Retirement checks for new recipients no longer will be mailed.
The Social Security Administration and the Railroad Retirement Board are going paperless — sending payment electronically (direct deposit) to those receiving retirement, disability and survivor benefits.
Those already receiving Social Security and Railroad Retirement benefits will have until March 1, 2013 to establish direct deposit at a financial institution, or arrange for the benefits to be credited to a debit card. An exception will be made for those at least 90 years old and those living in remote areas.
The agencies say that eight of 10 benefits recipients already receive them electronically.
Electronic payment eliminates the problem of lost or stolen checks, and makes it easier and more prompt for those away from home to ensure payments are available for use.
Beneficiaries who do not have bank or credit union accounts may obtain a Direct Express debit MasterCard.
For more information and assistance, go to www.GoDirect.org, or call, toll free, (800) 333-1795.
With the election over, change has come to Washington. Since 2001, the congressional political majority has shifted three times. New majorities are nothing new to our UTU legislative team.
While most UTU-endorsed candidates were re-elected, we did lose friends with whom we had long and positive relationships. Thankfully, the UTU is a bipartisan organization that works with lawmakers on both sides of the political aisle.
In the now Republican-controlled House of Representatives, there will be new committee chairpersons – those posts mean everything. Chairpersons decide which bills have hearings and are moved to the House floor for a vote.
Rep. John Mica (R-Fla.) – very knowledgeable on rail, bus and transit issues, and an advocate of investment in infrastructure – likely will chair the Transportation & Infrastructure Committee, where most transportation legislation is first considered. He is one of many Republicans endorsed by the UTU and has exhibited strong support for Railroad Retirement. His door is always open to hear UTU concerns on legislation affecting our membership.
In the Senate, the key committee for transportation legislation is the Commerce Committee, and it likely will continue to be chaired by Sen. Jay Rockefeller (D-W. Va.), another UTU friend. Job number one for the National Legislative Office and talented state legislative directors now is to establish and maintain a dialogue with the newly elected members of Congress and state legislatures – Democrats and Republicans.
Our message will be consistent and focused on job security, better benefits and workplace safety.
Our UTU PAC will continue to be a crucial tool we use to influence legislation. Our UTU PAC helps to establish and maintain relationships. Working families cannot afford to write the large checks provided election campaigns by corporations and wealthy executives. We counter those efforts through our UTU PAC.
Our goal is to have every UTU member registered to vote, paying attention to the issues and contributing $1 per day to the UTU PAC.
You can commit to the UTU PAC by contacting the treasurer of your local, or by calling our Washington legislative office at (202) 543-7714.
Be assured that the UTU will continue working to protect Social Security and Railroad Retirement benefits, secure dependable funding for Amtrak and transit systems, make our jobs more secure and the workplace safer.
Rail workers may now file biweekly claims for railroad sickness benefits directly online with the Railroad Retirement Board.
The agency said rail workers may now access this online service at www.rrb.gov by clicking on “Benefit Online Services.”
The RRB implemented a similar system for unemployment benefits in 2004.
First-time users must request a password request code (PRC), which they will receive by regular mail within 10 days. Those who have already established online accounts do not need to do so again.
Railroad employees who miss work due to illness or injury will still have to file a paper form that serves as their initial application for sickness benefits. Once the application is received, they will continue to receive paper-based claim forms, generally for specific 2-week periods, by regular mail.
However, they now have the option of filing the claims online in order to expedite processing and payment.
UTU Michigan State Legislative Director Jerry Gibson knows the value of the UTU PAC in electing labor friendly lawmakers. He knows how to share those facts, also.
UTU Local 1075 Secretary-Treasurer John Purcell says he and other members of his Trenton, Mich., local had “no clue of what the UTU PAC was. No one had ever explained how it worked” until Gibson showed up at a union local meeting.
Purcell credits Gibson with educating the local’s members “on how PAC funds are used and the benefits the PAC provides. I started contributing myself immediately and began to encourage others to do the same,” Purcell said in a recent e-mail he sent Gibson.
“The value of the UTU PAC was further driven home after my attendance at the regional meetings where I learned what was being done in Washington D.C., and the impact of our PAC funds there,” Purcell said.
More recently, Purcell said the UTU’s get-out-the vote drive for the Nov. 2 elections was a success. Post cards sent members through a project of the National Legislative Office “reached the members’ homes and several contacted me and asked questions,” Purcell said.
“I provided information which included that the UTU PAC is not a partisan program and that it supports candidates that support us regardless of party affiliation,” Purcell said. “I used the information provided, which listed successful legislation that has improved safety and benefits.
“All of this resulted in 12 members either increasing their UTU PAC donation or becoming new donors all together,” Purcell said.
Purcell said he now writes a check to the UTU PAC in the amount of $265 per month, and 44 percent of Local 1075’s members now donate. He said his goal is to gain PAC contributions from 75 percent of Local 1075’s members.
The Railroad Retirement Board has confirmed for rail workers what the Social Security Administration already has told Social Security recipients: There will be no increase in benefits in 2011.
The reason is there was no increase in the Consumer Price Index (CPI) from the third quarter of 2009 to the corresponding period of the current year.
Additionally, and because the CPI did not rise, Railroad Retirement and Social Security beneficiaries will not see an increase in 2011 in the earnings limitation that triggers benefits cuts if they continue working while receiving benefits.
For those under full retirement age throughout 2011, the exempt earnings amount remains at $14,160. For beneficiaries attaining full retirement age in 2011, the exempt earnings amount, for the months before the month full retirement age is attained, remains at $37,680 in 2011.
For employee and spouse annuitants, full retirement age ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later. For survivor annuitants, full retirement age ranges from age 65 for those born before 1940 to age 67 for those born in 1962 or later.
Special work restrictions continue to be applicable to disability annuitants. In 2011, the monthly disability earnings limit will also stay at the previous year’s amount of $780.
Regardless of age and/or earnings, no Railroad Retirement annuity is payable for any month in which an annuitant (retired employee, spouse or survivor) works for a railroad employer or railroad union.
The Department of Health and Human Services has not yet announced if there will be Medicare premium changes for 2011. Information about Medicare changes for 2011, when available, may be found at www.medicare.gov.