The Railroad Retirement Act in 1954
Total Page：16
File Type：pdf, Size：1020Kb
The Ruilroad Retirement Act ila 1954 by ROBERT J. MYERS and JOHN A. MACDOUGALL” The past 3 years have seen the enactment of several laws that hearings were held by the Eighty- a$ect the operation of the railroad retirement program. Be- third Congress.While proponents of cuuse of the close relationship between that program and the provision made up the majority old-age and survivors insurance, the recent legislation is of those who testiiled, the opinion of summarized here and its eflects_. considered for the convenience those opposing it prevailed, and of Bulletin readers. amending legislation was recom- mended by both the House and Sen- ate committees. AS a result, both INCE the enactment of the 1951 In the following pages the infiu- Housesof Congressadopted the pro- amendments to the Railroad ence of these laws on the railroad S vision, which became Public Law NO. Retirement Act, several laws retirement program is reported. The 398 with President Eisenhower’s sig- have been adopted that have affected amendments to the Railroad Retire- nature on June 16, 1954. The new operations under that act. In order ment, Act are considered first and law repealed the dual-benefit provi- of their enactment, these laws are: then the 1952 and 1954 amendments sion retroactively to October 30, 1951, (1) Public Law No. 590 (Eighty- to the Social Security Act. A short when it had become effective. second Congress); this law--the So- history of the operation of the finan- One of the main arguments Put cial Security Act Amendments of cial interchange provision of the forth by those who opposed passage 1952-affected the railroad retire- Railroad Retirement Act is alS0 of the law was that, since the rail- ment program through the operation given. road retirement system was operat- of the “old-age and survivors insur- ing at a deficit, no legislation should ance minimum guarantee” and flnan- Public Law 398 be enacted that would increase the cial interchange provisions of the One of the provisions contained in deficit. It was also stated that prohi- Railroad Retirement Act. the 1951amendments to the Railroad bition of the receipt of dual benefits. (2) Public Law No. 398 (Eighty- Retirement Act concerned dual bene- as deflned in the 1951 amendments, third Congress), signed June 16,1954, fits under old-age and survivors in- was both equitable and necessary. which repealed the “dual-benefit” surance and the railroad retirement The dual-benefit provision was in restriction in the 1951 amendments program. Under it, a railroad an- operation from October 30, 1951, to to the Railroad Retirement Act. nuitant eligible for both a railroad June 16, 1954. Its repeal affected an (3) Public Law No. 746 (Eighty- retirement annuity and an old-age estimated 36,000 persons out of the third Congress), signed August 31, insurance beneflt would have his 294,000 retired railroad employees 1954, which included several changes railroad annuity reduced by the por- who were receiving benefits in June in the Railroad Retirement Act; the tion based on service before 1937, or 1954.These 36,000persons (and their most important were a reduction of by the amount of the old-age insur- wives, if any) received adjustment the eligibility age for survivor bene- ance benefit, whichever was smaller. checks, since the repeal was retro- fits for widows, dependent widowers, Under a saving clause, the annuities active to October 30, 1951. Refunds and parents from age 65 to age 60 of those already retired when the were also made for an additional and the raising of the maximum 1951 amendments were enacted were 3,000 retired employeeswho had died. wage base for computation of bene- not reduced below the amount. they The Railroad Retirement Board fits and payment of contributions were previously receiving (although has estimated that repeal of the from $300 to $350 per month. the increase generally provided was dual-benefit provision will increase (4) Public Law No. 761 (Eighty- in such caseswholly or partially can- the cost, of the system by 0.15 percent third Congress), the Social Security celled). The provision was opposed of payroll. Before the provision wa8 Amendments of 1954; this law, like by the annuitants affected--those repealed, the system had a level-cost the 1952 amendments to the Social whose railroad annuities were based deficiency of 0.91 percent of payroll Security Act, affected the railroad on service before lQ37-but it had (according to the latest valuation, retirement program through the the support (or at least not the op- completed in early 1953). The deficit operation of the old-age and sur- position), both at enactment and was thus increased to an estimated vivors insurance minimum guarantee during its existence, of the majority 1.06 percent of payroll. In contrast. and the financial interchange provi- of railroad labor, railroad manage- when the 1951 amendments were en- sions of the Railroad Retirement Act. ment, and the Railroad Retirement acted, the level-cost deficiency was Board. estimated at 1.93 percent of payroll, *Mr. Myers is Chief Actuary of the It was not long after enactment of or well above the deficiency of 1.06 Social Security Administration, and Mr. MacDougall Is a member of the staff of the 1951 amendments that legisla- percent after Public Law No. 398 was the Division of the Actuary, Offlce of the tive measureswere introduced to re- enacted. Commissioner. peal the dual-benefit provision, and The passage of this law did not Bulletin, February 1955 7 make the railroad retil’ement system bursements resulting from the repeal j the .,Railroad Retirement Act-most less solvent than it wasestimated to of this provision will cease. ‘1 of which became effective September be when the 1951 amendments were 1, 1954-are listed in the following adopted; in fact, it was much nearer Public Law 746 paragraphs. so’vency. In actual dollars, the Rail- On August 31, 1954, President (1) In what is probably the most road Retirement Board has esti- Eisenhower signed Public Law No. significant change, the eligible age mated that the additional disburse- 746. Several important changes af- for receipt of survivor benefits by a ments each year would average $11 fecting retirement and survivor bene- widow, dependent widower, or de- million for the first 10 years after re- fits are made by the new law, and pendent parent was reduced from 65 peal, $15 million for the following substantial increases are made in un- to 60. The application of the old-age 10 years, $9 million for the third 10 employment and sickness benefits and survivors insurance minimum years, $3 million for the fourth under the Railroad Unemployment guarantee was extended also to such 10 years, and steadily decreasing Insurance Act. In addition, the tax- individuals between the ages of 60 amounts thereafter until about the able earnings base for both systems and 65, even though they cannot be year 2000, after which additional dis- is increased. The major changes in eligible for old-age and survivors in- Principal provisions of the Railroac. 1R etirement Act, as amended in 19.54 Initial qualification for benefits: (3) Completely insured status: At least 10 years of railroad service is required to qualify for (a) Current connection, and either (i) 1 quarter of cover- all but one type of beneilt under the Railroad Retirement age for each 2 quarters after 1936 (or after age 21 if Act (see item A (8)). Persons with less than 10 years of later) and before age 65 (or death or retirement if, service are transferred to OASI 1 system. earlier), with minimum of 6 quarters of coverage, or (ii) 40 quarters of coverage; or A. Benefits payable to- (b) Retirement annuity based on at least 10 years of service accrued before 1948, or pension payable. (1) Age annuitant: (4) Partially insured status : Aged 65 or over, or aged 60 or over if 30 or more years of Current connection, and 6 quarters of coverage in year of service -(but for men under age 65, annuity reduced death or retirement and 3 preceding years. l/180 for each month under age 65 at time of retire- (5) Transfer of credits to OASI system: merit) . If not insured as in items (3) and (4)) railroad credits used (2) Disability annuitant : in determining survivor benefits under OASI. Unable to engage in any regular employment: or unable to engage in usual occupation, if “current connection” C. Amount of retirement benejits with railroad industry when disabled and if 20 or more years of service or aged 60 or over. (1) “Years of service”: (3) Spouse of annuitant aged 65 or over: All service after 1936 plus-for those in “employment Aged 65 or over (husband to be eligible must be de- status” on August 29, 1935-service before 1937 that will pendent), or regardless of age for wife with dependent make total of not more than 30 years. child under age 18 present (or aged 18 or over if child (2) “Average monthly compensation”: is disabled and disability began before that age). Average of creditable compensation paid in period of serv- (4) Widow: ice counted; maximum of $300 creditable for any month Aged 60 or over, or with dependent child under age 18 (or before July 1954 and $350 for any month after June aged 18 or over if child is disabled and disability began 1954. For retirement after end of year in which age 65 before that age). Dependent widower aged 60 or over. is attained, amount computed as of end of such year is (5) Children of deceased individual: used if larger.