Chicago – The railroad retirement system will experience no cash-flow problems during the next 32 years; barring a sudden, unanticipated, large drop in railroad employment or substantial investment losses, according to the U.S. Railroad Retirement Board (RRB) in its report to the President and Congress.
The news gets better. This 32-year estimate is based on the most pessimistic of three scenarios considered by the Actuarial Advisory Committee. The other two projections, described as “optimistic” and “moderate,” both suggest there will be no cash-flow problems for a 75-year projection period.
The advisory committee has further recommended that no change be made in the rate of tax imposed on employers and employees, and no diversion of taxes be made from the Railroad Retirement Account to the Railroad Unemployment Insurance Account.
“The long-term stability of the system, however, is not assured,” said the RRB’s Chief Actuary Frank J. Buzzi. “Under the current financing structure, actual levels of railroad employment and investment return over the coming years will determine whether additional corrective action is necessary.”
As of Dec. 31, 2013, the combined RRB accounts totaled more than $26.5 billion. In comparison, the 25th actuarial valuation forecasted stability over the next 23 years, and Sept. 30, 2011, assets totaling $23.6 billion.
More about this report:
Section 15(g) of the Railroad Retirement Act of 1974 requires that the RRB, at intervals not longer than three years, estimate the liabilities created by the act and include the estimate in its annual report. Section 22 of the Act requires that the board submit to the President and the Congress, by July 1 of each year, a report containing a five-year projection of the revenues to and payments from the Railroad Retirement Account. The Railroad Solvency Act of 1983 requires that the board submit to the Congress, by July 1 of each year, a report on the actuarial status of the retirement system.
The full 104-page report can be found here: http://www.rrb.gov/pdf/act/valuation.pdf.