Every three years, the Railroad Retirement Board’s Chief Actuary conducts a study of the longevity of its annuitants, as part of a valuation of future revenues and benefit payments. The following questions and answers summarize the results of the most recent longevity study.
1. What were the study’s findings on the life expectancy of retired male railroaders?
The most recent data reflected a continued improvement in longevity. Using data through 2012, the study indicated that, on the average, a male railroader retiring at age 60 can be expected to live another 22.4 years, or approximately 269 months. Studies done three, six and nine years ago indicated life expectancies of 21.9, 21.3 and 20.7 years, respectively, for this category of beneficiary. The study also indicated that a male railroader retiring at age 62 can be expected to live another 20.7 years (248 months), while the previous three studies indicated life expectancies of 20.1, 19.6, and 19 years, respectively. A male railroader retiring at age 65 can be expected to live another 18.2 years (approximately 218 months). The previous studies indicated life expectancies of 17.7, 17.1, and 16.6 years, respectively, for this category of beneficiary.
2. How did these life expectancy figures compare to those of disabled annuitants?
As would be expected, disabled annuitants have a shorter average life expectancy than those who retire based on age. At age 60, a disabled railroader has an average life expectancy of 17.7 years, or 4.7 years less than a nondisabled male annuitant of the same age. Studies done three, six and nine years ago indicated life expectancies of 17.2, 16.4 and 15.8 years, respectively, for this category of beneficiary. Nonetheless, the difference in life expectancy at age 60 between disabled annuitants and annuitants who retire based on age has remained relatively stable, ranging between 4.7 and 5 years.
3. Are women still living longer than men?
In general, women still live longer than men. This is shown both in the Railroad Retirement Board’s life expectancy studies of male and female annuitants and by other studies of the general United States population.
For example, at age 60 a retired female railroader is expected on the average to live 25.6 years, 3.2 years longer than a retired male railroader of the same age; and at age 65, a retired female railroader is expected on the average to live 21.1 years, 2.9 years longer than her male counterpart. Spouses and widows age 65 have average life expectancies of 21.2 years and 19 years, respectively.
4. Can individuals use life expectancy figures to predict how long they will live?
Life expectancy figures are averages for large groups of people. Any particular individual’s lifetime may be much longer or shorter than the life expectancy of his or her age and group.
According to the study, from a group of 1,000 retired male employees at age 65, 930 will live at least 5 years, 820 at least 10 years, 655 at least 15 years, and 445 at least 20 years. Of female age annuitants at age 65, 590 will be alive 20 years later.
5. Where can I access the Railroad Retirement Board’s longevity study?
The entire longevity study is available on the agency’s website at www.rrb.gov.
The Railroad Retirement Board (RRB) released its annual tax rates, Thursday, Dec. 3, 2015, for the upcoming 2016 year.
The Tier II tax rates are determined annually from a tax rate schedule based on an average account benefits ratio reflecting railroad retirement fund levels. Employer tax rates can range from 8.2 percent to 22.1 percent. Employee tax rates can range from 0 percent to 4.9 percent.
Experience Rating
In October 2015, each employer was sent a notice of their 2015 Railroad Unemployment Insurance Act (RUIA) contribution rate. If you have not received your notice, please contact the Quality Reporting Service Center.
Retirement and Survivor Benefits
Exempt Amounts for Annual Earnings Test for Less Than Full Retirement Age Annuitants: In 2016, the annual exempt amount for less than full retirement age annuitants is $15,720. The monthly exempt amount for the first year of retirement in 2016 is $1,310.
Exempt Amounts for Annual Earnings Test for Full Retirement Age Annuitants: In 2016, the annual exempt amount for full retirement age annuitants is $41,880. The monthly exempt amount for the first year of retirement in 2016 is $3,490.
No cost-of-living Increase: Annuitants will not receive a cost-of-living increase in 2016.
Unemployment and Sickness Benefits
Maximum Daily Benefit Rate: Under the Railroad Unemployment Insurance Act (RUIA), the maximum daily benefit rate is equal to 5 percent of the monthly RUIA compensation base, rounded down to the nearest multiple of $1.00. For days of unemployment and sickness in registration periods beginning on and after July 1, 2016, the maximum daily rate is $72.00. The maximum rate for registration periods beginning on or after July 1, 2017, is $72.00.
Monthly Compensation Base: The monthly compensation base under the Railroad Unemployment Insurance Act for calendar year 2016 is $1,455.
Qualifying Base Year Compensation: The amount of base year compensation required in 2016 to qualify for benefits in the benefit year beginning July 1, 2016, is $3,637.50.
Compensation of $3,637.50 is also the amount of creditable compensation required to end a voluntary leaving of work disqualification period in months in calendar year 2016. In addition, remuneration earned in calendar year 2016 from employment covered under the Act cannot be considered subsidiary remuneration if the employee’s base year earnings are less than $3,673.50.
Maximum Benefits: The monthly amount of base year 2016 compensation that can be counted in determining the maximum amount of normal benefits payable to an employee in the benefit year beginning July 1, 2017, is $1,879.
Maximum Monthly Compensation Base and the Earnings Test: For unemployment registration periods beginning July 1, 2017 and later, no benefits are payable for which the total amount of an employee’s earnings and other remuneration from railroad and non-railroad work for days in the period exceeds the monthly compensation amount of $1,455.
The 2016 railroad retirement tax rates and maximum compensation bases are as follows:
Tax Type
Tax Rate
Earnings Base
Employee Medicare*
1.45%
No limit
Employer Medicare*
1.45%
No limit
Employee Tier I
6.20%
$118,500
Employer Tier I
6.20%
$118,500
Employee Tier II
4.90%
$88,200
Employer Tier II
13.10%
$88,200
*Additional Medicare Tax: Employees will pay an additional 0.9 percent Medicare tax on earnings above $200,000 who file an individual return or $250,000 (for those who file a joint return). This additional Medicare tax rate is not reflected in the tax rates shown above.
Note: Medicare and Tier 1 Railroad Retirement tax rates are equivalent to Social Security tax rates set for 2016. Tier 2 Railroad Retirement tax rates do not apply to employees subject to Social Security.
The Centers for Medicare & Medicaid Services has announced that the standard monthly Part B premium will be $121.80 in 2016. However, most Medicare beneficiaries will not see an increase in their monthly Part B premiums because of a “hold harmless” provision in the law. Under that provision, Part B premiums cannot increase for current enrollees if there is no cost-of-living increase in social security benefits.
As a result, those individuals will continue to pay a monthly premium of $104.90, the same amount as in 2015. About 70 percent of Medicare beneficiaries will not see their Part B premiums increase due to this provision. However, the higher premium amount will apply to new enrollees in the program, and certain beneficiaries will continue to pay higher premiums based on their modified adjusted gross income.
The monthly premiums that include income-related adjustments for 2016 will be $170.50, $243.60, $316.70, or $389.80, depending on the extent to which an individual beneficiary’s modified adjusted gross income exceeds $85,000 (or $170,000 for a married couple). The highest rate applies to beneficiaries whose incomes exceed $214,000 (or $428,000 for a married couple). The Centers for Medicare & Medicaid Services estimates that less than 5 percent of Medicare beneficiaries pay the larger income-adjusted premiums.
Beneficiaries in Medicare Part D prescription drug coverage plans pay premiums that vary from plan to plan. Beginning in 2011, the Affordable Care Act required Part D beneficiaries whose modified adjusted gross income exceeds the same income thresholds that apply to Part B premiums to also pay a monthly adjustment amount. In 2016, the adjustment amount ranges from $12.70 to $72.90.
The Railroad Retirement Board (RRB) withholds Part B premiums from benefit payments it processes. The agency can also withhold Part C and D premiums from benefit payments if an individual submits a request to his or her Part C or D insurance plan.
The following tables (click here) show the income-related Part B premium adjustments for 2016. The Social Security Administration (SSA) is responsible for all income-related monthly adjustment amount determinations. To make the determinations, SSA uses the most recent tax return information available from the Internal Revenue Service. For 2016, that will usually be the beneficiary’s 2014 tax return information. If that information is not available, SSA will use information from the 2013 tax return.
Those railroad retirement and social security Medicare beneficiaries affected by the 2016 Part B and D income-related premiums will receive a notice from SSA by December 2015. The notice will include an explanation of the circumstances where a beneficiary may request a new determination. Persons who have questions or would like to request a new determination should contact SSA after receiving their notice.
Additional information about Medicare coverage, including specific benefits and deductibles, can be found at www.medicare.gov.
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.
Railroad retirement beneficiaries are reminded that receipt of a private railroad pension may reduce the amount of a supplemental annuity payable by the Railroad Retirement Board (RRB). The following questions and answers provide information on this subject, as well as how distributions from a 401(k) plan affect supplemental annuities, and whether railroad employee contributions to 401(k) plans are subject to railroad retirement payroll taxes. 1.What are the eligibility requirements for a supplemental annuity? Individuals receiving a railroad retirement age and service, or disability annuity, can be paid a monthly supplemental annuity at age 60, if the employee has at least 30 years of creditable railroad service, or at age 65 with at least 25 years of service. (Disabled annuitants under full retirement age, which ranges from age 65 to 67, depending on the year of birth, must relinquish employment rights in order for a supplemental annuity to be paid by the RRB.) A “current connection” with the railroad industry is also required, as is at least one month of creditable rail service before October 1981. The maximum monthly supplemental annuity rate is $43. 2. What effect does the receipt of a private railroad pension have on the payment of a supplemental annuity? If a retired employee also receives a private pension funded entirely or in part by a railroad employer, the supplemental annuity is permanently reduced by the amount of the monthly pension benefit that is based on the railroad employer’s contributions. However, if the employer reduces the pension for the employee’s entitlement to a supplemental annuity, the amount by which the pension is reduced is restored to the supplemental annuity (but does not raise it over the $43 maximum). There is no reduction for a pension paid by a railroad labor organization. 3.What if an employee elects to receive the pension in a lump-sum payment instead of as a monthly benefit? If a retired employee elects to receive his or her pension in a lump-sum payment instead of as a monthly benefit, the supplemental annuity is reduced in the same way as it would be if the employee was receiving the monthly benefit. If the lump sum is paid in installments, the installment payments are not considered monthly benefit payments, but part of the single, lump-sum payment. 4. Does the receipt of a 401(k) plan distribution reduce the amount of a supplemental annuity? No. In Legal Opinion L-2014-2, issued January 13, 2014, the RRB’s General Counsel determined that 401(k) plans should not be considered supplemental pension plans as defined by the Railroad Retirement Act and, therefore, employee supplemental annuities should not be reduced due to the receipt of 401 (k) distributions. In accordance with the legal opinion, the RRB removed the 401(k) distribution reduction from the supplemental annuities of affected beneficiaries effective January 1, 2014, or the supplemental annuity beginning date, whichever date is later. Refunds of the amounts previously deducted for the 401(k) distribution reduction (beginning on the applicable date above) were issued to those beneficiaries in July 2015. 5.Are employee contributions to a 401(k) plan subject to railroad retirement Tier I and Tier II payroll taxes? Yes. Federal budget legislation enacted in 1989 and effective January 1, 1990, provided that employee contributions to 401(k) plans are subject to railroad retirement payroll taxes and brought the treatment of 401(k) plans under railroad retirement law into conformity with the treatment of such plans under social security law. Consequently, employee contributions to a 401(k) plan are also treated as creditable compensation for railroad retirement benefit purposes. For example, an employee earning $40,000 a year, but who has 10 percent of his earnings deferred under a 401(k) plan, would have only $36,000 reported to the IRS as earnings subject to Federal income tax. However, the entire $40,000 would be subject to railroad retirement payroll taxes and therefore creditable as compensation under the Railroad Retirement Act. 6.How can a person get more information about the effect of private rail pensions and 401(k) plan payments on supplemental annuities? Persons can contact an RRB field office for more information via the agency’s website, www.rrb.gov, or by calling toll-free at 1-877-772-5772. 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.
Railroad retirement beneficiaries are reminded that receipt of a private railroad pension may reduce the amount of a supplemental annuity payable by the Railroad Retirement Board (RRB). The following questions and answers provide information on this subject, as well as how distributions from a 401(k) plan affect supplemental annuities, and whether railroad employee contributions to 401(k) plans are subject to railroad retirement payroll taxes.
1.What are the eligibility requirements for a supplemental annuity?
Individuals receiving a railroad retirement age and service, or disability annuity, can be paid a monthly supplemental annuity at age 60, if the employee has at least 30 years of creditable railroad service, or at age 65 with at least 25 years of service. (Disabled annuitants under full retirement age, which ranges from age 65 to 67, depending on the year of birth, must relinquish employment rights in order for a supplemental annuity to be paid by the RRB.) A “current connection” with the railroad industry is also required, as is at least one month of creditable rail service before October 1981. The maximum monthly supplemental annuity rate is $43.
2. What effect does the receipt of a private railroad pension have on the payment of a supplemental annuity?
If a retired employee also receives a private pension funded entirely or in part by a railroad employer, the supplemental annuity is permanently reduced by the amount of the monthly pension benefit that is based on the railroad employer’s contributions. However, if the employer reduces the pension for the employee’s entitlement to a supplemental annuity, the amount by which the pension is reduced is restored to the supplemental annuity (but does not raise it over the $43 maximum). There is no reduction for a pension paid by a railroad labor organization.
3.What if an employee elects to receive the pension in a lump-sum payment instead of as a monthly benefit?
If a retired employee elects to receive his or her pension in a lump-sum payment instead of as a monthly benefit, the supplemental annuity is reduced in the same way as it would be if the employee was receiving the monthly benefit. If the lump sum is paid in installments, the installment payments are not considered monthly benefit payments, but part of the single, lump-sum payment.
4. Does the receipt of a 401(k) plan distribution reduce the amount of a supplemental annuity?
No. In Legal Opinion L-2014-2, issued January 13, 2014, the RRB’s General Counsel determined that 401(k) plans should not be considered supplemental pension plans as defined by the Railroad Retirement Act and, therefore, employee supplemental annuities should not be reduced due to the receipt of 401 (k) distributions.
In accordance with the legal opinion, the RRB removed the 401(k) distribution reduction from the supplemental annuities of affected beneficiaries effective January 1, 2014, or the supplemental annuity beginning date, whichever date is later. Refunds of the amounts previously deducted for the 401(k) distribution reduction (beginning on the applicable date above) were issued to those beneficiaries in July 2015.
5.Are employee contributions to a 401(k) plan subject to railroad retirement Tier I and Tier II payroll taxes?
Yes. Federal budget legislation enacted in 1989 and effective January 1, 1990, provided that employee contributions to 401(k) plans are subject to railroad retirement payroll taxes and brought the treatment of 401(k) plans under railroad retirement law into conformity with the treatment of such plans under social security law. Consequently, employee contributions to a 401(k) plan are also treated as creditable compensation for railroad retirement benefit purposes. For example, an employee earning $40,000 a year, but who has 10 percent of his earnings deferred under a 401(k) plan, would have only $36,000 reported to the IRS as earnings subject to Federal income tax. However, the entire $40,000 would be subject to railroad retirement payroll taxes and therefore creditable as compensation under the Railroad Retirement Act.
6.How can a person get more information about the effect of private rail pensions and 401(k) plan payments on supplemental annuities?
Persons can contact an RRB field office for more information via the agency’s website, www.rrb.gov, or by calling toll-free at 1-877-772-5772. 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.
Beginning in 2002, a significant portion of the assets of the Railroad Retirement Board (RRB) has been invested in private stocks, bonds, and other investments. Prior to the Railroad Retirement and Survivors’ Improvement Act of 2001, P.L. 107-90, surplus railroad retirement assets could only be invested in U.S. government securities— just as the Social Security trust funds must be invested. The 2001 act established the National Railroad Retirement Investment Trust (NRRIT; hereinafter, the Trust) to manage and invest part of the RRB’s assets in the same way that the assets of private-sector and most state and local government pension plans are invested. The remainder of RRB’s assets continues to be invested solely in U.S. government securities.
Congress structured the Trust to ensure independence of investment decisions and limit political interference. It also aimed to increase railroad retirement system funding, add enhanced benefits, potentially reduce taxes, and protect system financing in case of market downturns. The Trust’s assets are invested in a diversified portfolio, both to minimize investment risk and to avoid disproportionate influence over an industry or firm. Since the Trust is a nongovernmental agency, it is not subject to the same oversight as federal agencies. However, the act requires an annual management report to Congress.
The Trust’s investments have generally followed the markets’ recent performance. From FY2003 to FY2014, the Trust’s annual returns averaged 8.7 percent, just slightly above the expectations of the bill’s drafters, who assumed nominal annual returns of 8.0 percent. The economic downturn did not spare the Trust, which lost 19.1 percent in FY2008, 0.7 percent in FY2009, and 0.1% in FY2011. However, the Trust exceeded its own strategic policy benchmarks in FY2012, FY2013, and in FY2014 with a FY2014 rate of return of 10.2 percent. As the Trust’s investment portfolio diversified over time, its administrative expenses steadily increased, to 36 basis points in FY2011, but fell to 29 basis points in FY2013 and remain low when compared with other mutual funds.
The Trust is designed to maintain four to six years’ worth of benefits in case of lower-than-expected returns. To maintain this balance, the tier II tax rates are set to automatically adjust as needed. This tax adjustment does not require congressional action. The tier II tax rates increased in 2013 and again in 2014.
Read the full report from the House Ways and Means Committee here.
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. Click here to learn more about the benefits the RRB offers in which you may be entitled to. Click here for claim forms from the RRB.
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.
A new benefit year under the Railroad Unemployment Insurance Act began July 1, 2015. The maximum daily benefit rate payable for claims under this Act increases to $72 in the new benefit year. Benefits are normally paid for the number of days of unemployment or sickness over four in 14-day registration periods, so maximum benefits for biweekly claims would total $720.
However, as a result of a sequestration order under the Budget Control Act of 2011, the U.S. Railroad Retirement Board (RRB) will reduce unemployment and sickness benefits by 7.3 percent through September 30, 2015. Future reductions, should they occur, will be calculated based on applicable law.
For this reason, at the start of the new benefit year the maximum amount of benefits payable in a two-week period will be $667.44. In addition, sickness benefits paid for other than on-the-job injuries are reduced for regular tier I payroll taxes of 7.65 percent. Coupled with the 7.3-percent reduction, the maximum amount payable on these sickness benefits will be $616.38 over two weeks.
During the first 14-day claim period in a benefit year, benefits are payable for each day of unemployment or sickness in excess of seven, rather than four, which, in effect, provides a one-week waiting period. Initial sickness claims must also begin with four consecutive days of sickness. However, only one waiting period is required during any period of continuing unemployment or sickness, even if that period continues into a subsequent benefit year. Claimants already on the rolls will, therefore, normally not be required to serve another waiting period because of the onset of the new benefit year.
To qualify for normal railroad unemployment or sickness benefits in the benefit year beginning July 1, 2015, 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 that year.
Under certain conditions, employees with at least 10 years of service who do not qualify in the new benefit year on the basis of their 2014 earnings may still be able to receive benefits after June 30, 2015. For example, such employees who received normal benefits in the benefit year ending June 30, 2015, might still be eligible for extended benefits. In addition, 10-year employees may be eligible 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.
Application forms for unemployment and sickness benefits may be obtained from railroad employers, railroad labor organizations, any RRB office, or the agency’s website at www.rrb.gov. Also, as an alternative to applying for unemployment benefits through the mail, rail workers can file applications and subsequent claims for unemployment benefits online. Similarly, they can file claims for sickness benefits online, although the original application must still be submitted by mail. Employees can also access information about their individual railroad unemployment insurance account statements online. These account statements provide a summary of the unemployment and sickness benefits paid under the Railroad Unemployment Insurance Act to rail employees.
To access these online services, employees must first establish an RRB Internet Services account. Instructions for establishing an online account can be found in the “Benefit Online Services Login” section on the www.rrb.gov home page. For security purposes, first-time users must apply for a Password Request Code (PRC). The agency automatically mails a PRC to any employee who files a paper application for unemployment or sickness benefits. If an individual has not received a PRC, they can request one by clicking the appropriate box on the home page. They will then receive the PRC by mail at their home address in about 10 days.
Claimants with questions about unemployment or sickness benefits should contact an RRB office by calling toll free at 1-877-772-5772. Claimants can also find the address of the RRB office servicing their area and get information about their claims and benefit payments by calling this toll-free number. 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. Field office locations can also be found online at www.rrb.gov.
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, 2014. 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 2014 to career rail employees was $3,180 a month, and for all retired rail employees the average was $2,535. The average age retirement benefit being paid under Social Security was nearly $1,305 a month. Spouse benefits averaged $945 a month under railroad retirement compared to $635 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 at the end of fiscal year 2014 averaged about $3,710 a month while monthly benefits awarded to workers retiring at full retirement age under Social Security averaged nearly $1,815. If spouse benefits are added, the combined benefits for the employee and spouse would total $5,135 under railroad retirement coverage, compared to $2,720 under Social Security. Adding a supplemental annuity to the railroad family’s benefit increases average total benefits for current career rail retirees to nearly $5,170 a month.
3. How much are the disability benefits currently awarded?
Disabled railroad workers retiring directly from the railroad industry at the end of fiscal year 2014 were awarded almost $2,870 a month on the average while awards for disabled workers under Social Security averaged over $1,235.
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. 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 that 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.
6. 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 2014, the average annuity being paid to all aged and disabled widow(er)s was $1,515 a month, compared to $1,220 under Social Security.
Benefits awarded by the RRB at the end of fiscal year 2014 to aged and disabled widow(er)s of railroaders averaged more than $1,990 a month, compared to almost $1,170 under Social Security .
The annuities being paid at the end of fiscal year 2014 to widowed mothers/fathers averaged $1,800 a month and children’s annuities averaged $1,025, compared to $920 and $815 a month for widowed mothers/fathers and children, respectively, under Social Security.
Those awarded at the end of fiscal year 2014 averaged $1,925 a month for widowed mothers/fathers and $1,425 a month for children under railroad retirement, compared to $885 and $805 for widowed mothers/fathers and children, respectively, under Social Security.
7. 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 $1,005. 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.
8. How do railroad retirement and Social Security payroll taxes c ompare?
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 $118,500 in 2015, 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 2015, the Tier II tax rate on earnings up to $88,200 is 4.9 percent for employees and 13.1 percent for employers.
9. How much are regular railroad retirement taxes for an employee earning $118,500 in 2015 compared to Social Security taxes?
The maximum amount of regular railroad retirement taxes that an employee earning $118,500 can pay in 2015 is $13,387.05, compared to $9,065.25 under Social Security. For railroad employers, the maximum annual regular retirement taxes on an employee earning $118,500 are $20,619.45, compared to $9,065.25 under Social Security. Employees earning over $118,500, and their employers, will pay more in retirement taxes than the above amounts because the Medicare hospital insurance tax is applied to all earnings.
Every three years, the Railroad Retirement Board’s Chief Actuary conducts a study of the longevity of its annuitants, as part of a valuation of future revenues and benefit payments. The following questions and answers summarize the results of the most recent longevity study.