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_. consideredfor 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 becamePublic Law NO. Retirement Act, several laws retirement program is reported. The 398 with President Eisenhower’ssig- 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 In order ment, Act are considered first and law repealed the dual-benefit provi- of their enactment, these laws are: then the 1952 and 1954amendments sion retroactively to October 30, 1951, (1) Public Law No. 590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 which repealed the “dual-benefit” surance and the railroad retirement The dual-benefit provision was in restriction in the 1951 amendments program.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- sionsof 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, 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 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. Special method used for determining Under age 18 (or aged 18 or over if child is disabled and average earnings for service before 1937. disability began before that age). (3) Monthly benefit amount: (6) Dependent parent: 2.76% of flrst $50 of monthly compensation, plus 2.07% of Aged 60 or over, and no surviving spouse or child who next $100, plus 1.38% of next $200, all multiplied by could ever receive monthly benefits. years of service on which average monthly compensation (‘7) Lump-sum death payment: is based. For deaths when no monthly benefits payable immediately. (4) Minimum beneAt amount: (8) Residual death payment: (a) If having current connection at retirement, amount Payable after all benefit rights, including those of sur- determined under item (3) shall not be less than vivors, have terminated--to assure total payments of at least of $69, $4.14 times years of service, or average least employee contributions paid plus some allowance monthly compensation. for interest. Suitable modifications for those with less (b) “OASI minimum guarantee” (see item F (9) ) . than 10 years of service. (See item on initial qualifica- tion.) D. Basic amount of survivor benefits

B. Inswecl status for survivor bertefits (1) “Average monthly remuneration”: Based on railroad compensation and OASI credits from (1) “Quarter of coverage”: 1937 to retirement (or death, if earlier) divided by total In general, calendar quarters with $50 or more of railroad time elapsed in such period, with maximum combined COXIIpSnSatiOn after 1936, or similar credits under CASI. credits of $3,600 a year before July 1954 and $4,200 a (2) “Current connection”: year after . Average may be computed at age In general. exists at time of retirement or death if 1 year 65 if higher amount results. of railroad service in preceding 2% years. (2) “Basic amount”:

1 OASI means old-age and survivors insurance under the So&l Security Act.

8 Social Security surance beneflts until they reach age anee minimum guarantee also ‘ap- fits. The increase in the ,maximum 65. (Under the minimum guarantee, plies to mother and child benefi- compensation considered for both the retirement or survivor beneflt ciaries in this category. taxing and benefit purposes went under the railroad program, plus any (3) Recipients of survivor benefits into effect July 1, 1954; the corre- old-age and survivors insurance under the Railroad Retirement Act sponding increase for old-age and benefits payable, may not be less became eligible to receive retirement survivors insurance (from $3,600 a than the old-age and survivors insur- beneflts under the Railroad Retire- year to $4,300 a year under the 1954 ante benefits would be on the basis ment Act in their own right without amendments to the Social Security of wage credits earned under both any reduction in the survivor bene- Act) became effective as of January systems combined.) At& 1, 1955. (2) Benefits were made payable to (4) The maximum creditable com- (5) In computing benefits, an em- a disabled child over age 17 and to pensation was raised from $300 a ployee’s earnings after age 65 may his widowed mother if the child be- month to $350 a month. This increase be excluded in the determination of came disabled before he reached age is applied in computing the amounts his “average monthly compensation” 18. The old-age and survivors insur- for both survivor and retirement bene- if a higher benefit will result. The

Principal provisions of the Railroad Retirement Act, as amended in 1%4-Continued

40% of first 875 of average monthly remuneration, plus fits are payable. 10% of remainder of average monthly remuneration, a11 (5) Duplication of benefits under railroad System: increased by 1% for each year after 1936 with $200 or Survivor beneficiary may also receive retirement annuity more of remuneration. Minimum basic amount is $14. concurrently. For individuals completely insured as under item B (3) (6) Duplication of retirement annuity with OASI beneilts: (b) , basic amount alternatively computed from average Duplication allowed. monthly compensation (item C (2)) or from average (7) Duplication of spouse’s annuity with OASI benefits: monthly earnings of pensioner, and higher amount When individual is eligible only for OASI wife’s benefit, used. no reduction is made in annuity. When individual is (3) Maximum family beneflts: eligible for other type or types of OASI beneflt, annuity $160, or 2 2/3 times the basic amount, whichever is the is reduced by any excess of all OASI benefits over full lesser- but not less than $30 or the OASI minimum amount of wife’s benefit (if any). guarantee (see item F (9) ) . (8) Duplication of survivor benefits with OASI benefits: (4) Minimum family benefits: Not permitted; in effect, only larger beneilt payable. $14; also OASI minimum guarantee (see item F (9) ) . (9) “OASI minimum guarantee” provision: The guarantee that retirement or survivor benefits under E. Normal amounts of dependen; and survivor benefits railroad system, plus any OASI benefits payable, will not be less than OASI benefits would be on basis of com- (1) Spouse: bined credits under both systems. ,:I- 50% of full retirement or disability annuity (disregarding (10) Credit for military service: any reduction made for retirement before age 65), with Given at rate of $160 per month for service during a maximum of $40. war-service period if in railroad service in year of ‘( 2) Widow : entry into military service or in preceding year. Special 100% of survivor basic amount. Widow’s annuity shall not provisions for crediting military service rendered be- be less than any spouse’s annuity received immediately fore 1937. Provisions against using same service under before widow’s annuity. more than one Federal system. (3) Child of deceased worker: (11) Time within which beneflts must be claimed: 66 2/3% of survivor basic amount. Lump-sum death payment within 2 years. No limit for ‘(4) Dependent parent: residual death payment. Monthly beneflts retroactive 66 2/3% of survivor basic amount. for 12 months. (5) Lump-sum death payment: (12) Right of waiver of annuity or pension: 10 times the basic amount. Any person may decline to accept all or any part of an annuity or pension. F. Miscellaneous benept provisions G. Financing provisions (1) Employment permitted retired workers and spouses: (1) Tax rates: None for any railroad or for last employer before retire- 6% % on employer and 6% % on employee, paid on maxi- ment. No restriction on other employment except where mum compensation of $350 per month. OASI minimum guarantee applies. ,(2) Employment permitted disability annuitants: (2) Government contribution: Earnings of $100 or less per month in wages and self- Actuarially determined cost of additional beneflts for employment in any month in which individual is under military service rendered before 1937. Regular employer 65 and still disabled is allowed without forfeiture of and employee taxes on other creditable military service that month’s benefits. based on imputed earnings of 8160 per month. (3) Employment permitted survivor beneilciaries: (3) Interest rate on investments: None for any railroad and to the same extent as for GASI Minimum of 3% per year prescribed by Railroad Retire- beneficiaries (full beneflts if earnings from wages and ment Act. self-employment are $1,200 or less per year, but in any (4) OASI “interchange”: event for months with $60 or less of wages and no sub- OASI trust fund to be put in same position in which it stantial service in self-employment). would have been if railroad employment after 1936 had (4) EfIect of railroad employment on beneAts of GASI bene- been covered thereunder, by transfers in appropriate ficiaries: direction. Takes into account, among other matters, Railroad earnings counted in determining whether bene- Payment of benefits on basis of combined wage credits.

BuUetin, February 1955 9 new provision is retroactive to No- at $350 a month, his monthly an- Illustrative monthly survivor an- vember 1951, when service and earn- nuity would be $186.30. nuities for various periods of service ings after attainment of age 65 be- Table 1 gives illustrative monthly are shown in table 2. The majority came creditable toward annuities. retirement annuities under the Rail- of the benefit amounts are payable (6) Under a new disability “work road Retirement Act for various under the old-age and survivors in- clause,” a disability annuitant may periods of service. The annuities surance minimum guarantee, about earn as much as $100 a month in which more will be said in the fol- wages and self-employment without Table L--Illustrative monthly retire- lowing section. forfeiting benefits in that month. ment annuities under the Railroad In summary, the amendments to This clause replaces the provision Retirement Act the Railroad Retirement Act made that a disability annuitant who earned [hmmitieswouldalso becomputedon the basisof the by Public Law No. 746 did not ap- old-age andsurvivors insurance minimum guarantee, more than $75 in each of 6 consecu- but in relatively few oaw would this procedure re- ply to provisions affecting beneflt tive months was deemed not to be sult in BU increase] amounts, with one exception-that in which the limit on taxable earn- disabled thereafter. Amount of annuity The amendments include no provi- Average ings is raised from $300 to $350 a monthly sion for raising the benefits under compensation month. Any other increases in bene- the act other than that making credit- fit amounts will be the result of the able a worker’s monthly earnings up 1954 amendments to the Social Se- to $350, rather than $300. Through 10years’ service curity Act. this provision it is possible for future $lOo- _ _. ______. _. _ - ’ $24.15 * $36.23 Before the passageof Public Law railroad beneficiaries to obtain higher IEJJ. ______- _____._ 1 34.50 1 51.75 No. 746, the level-premium cost of 200 ------_ ___- __ _---.- 41.40 62.10 beneiits than those formerly payable. 250.-.-...---...--.... 48.30 72.45 the Railroad Retirement Act as esti- 300 -_-_.______._... 55.20 82.80 For a railroad annuitant to have the 350’__._..______. __ 62.10 93.16 mated by the Railroad Retirement maximum average monthly compen- Board (with the effect of the addi- sation, however, all his service must 20 years’ service tional cost of benefits provided in have been since June 1954. Thus it Public Law No. 398 omitted from will be some time before this change ’ $48.30 1 $72.45 consideration) was 13.41 percent of 69.00 103.50 will produce sizable increases in bene- 82.80 122.80 taxable payroll. The level-premium 90.60 136.60 fits. 110.40 150.40 cost of the same beneflts, after If a man retires, for example, on 124.20 104.20 changing the limit on taxable earn- January 1, 1957, with 20 years of ings from $300 to $350 a month and service in which he earned the maxi- 30 years’ service before allowing for the increase in beneflts that arises from the cor- mum amount creditable ($300 a $100~~. _ _. _ -. -. -. -. - month from January 1, 193’7, until 150-.--_--....--.-.... %::i Yi: t: responding increase in the limit on 2Qo ______. .._... 124.20 164.20 June 30, 1954, and $350 a month 250.-.-.---._.-.-...-- 144.96 184.90 creditable earnings, is 12.30 percent 300 ---_ _ __.__._._----- 165.60 205.60 of payroll. The change in the limit from July 1, 1954, to December 31, 350’... ..___.._..._ 186.30 226.30 1956). his average monthly compen- on creditable earnings from $300 to sation will be $306.25. His monthly 40 years’ service $350 a month raised the cost of re- retirement beneilt would be $112.12. tirement and survivor beneflts 0.57 Without the 1954 amendments, his $loo-- _. _. _. _. _. _. _. um:g percent of payroll, and the reduc- 150...... ~.~.... %:% beneflt would have been $110.40, so 2M)..... ___..-.._-.--. 166.60 205.60 tion from 65 to 60 in the eligibility 250.. ____._.___....-.. 193.20 233.20 age for aged survivor beneficiaries that the increase is only $1.72 a 300. __ _ _. . _ _ _ _ _. _. _ _ _. 220.80 260.80 month. If, however, a man retires on 350’...... -.-...... 248.40 288.40 increased the cost by 0.43 percent. or after July 1, 1974, with 20 years of The change in the disability work 1 The minimum annuity provision would be sppli’ clause reduced the cost by 0.03 per- continuous service at $350 a month, cable for persons with “current connection” and his benefit will be $124.20, or about would yield larger amounts than those shown. In cent of payroll. Continuance of sur- such cases this provision would raise the benefits for 10 percent larger. a IO-year man to those shown for a man with average vivor benefits to a dependent dis- monthly compensation of $260 and bene6ts for B 20- Another example is that of a man year man to those for a man with 8150. abled child past age 18 (and to the who retires on January 1, 1967, with *All service must be after June 30,1954. mother) and other minor changes 30 years of continuous service at the increased the cost by 0.02 percent maximum compensation creditable. based on an average monthly com- of payroll. Thus, the total increase He would have worked 210 months at pensation of $350 apply only to serv- in beneilt costs is 0.99 percent of $300 a month and 150 months at ice after June 1954. For a person in payroll, which, added to the ad- $350. The result would be an average railroad service before July 1954 who justed level-premium cost of the monthly compensation of $320.83, had always earned $350 or more a benefits under the old law (12.30 which gives a monthly annuity of month, the annuity will fall between percent of payroll), produces a total $174.22. Under the law as it was be- those based on average monthly level-premium cost of 13.29 percent fore the 1954 amendments, the bene- compensation of $300 and those of payroll. In dollars, Public Law fit would be $165.60. If a man were based on $350, approaching the lat- No. 746 represents an additional to retire on or after July 1, 1984, ter as the empIoyee obtains more average annual income of $56.0 mil- with 30 years of continuous service service credits after June 1954. lion and, in the long run, an addi- 10 Social Security tional average annual expenditure old-age and survivors insurance sys- monthly earnings of $100 or less, of $53.8 million. tem are changed. The second provi- would be replaced by old-age and The cost of a retirement system sion required a study and subsequent survivors insurance benefits. For sur- is best measured by looking at the transfers of funds to carry out its vivor benefits based on service contribution rates in relation to pay- intent. greater than 30 years, even at, higher roll. In the case of the railroad re- Both the 1952 and 1954 amend- earnings levels, the benefit amount tirement system, the financing is ments to the Social Security Act would, in more cases, be computed now on a level-contribution rate raised benefit amounts through ad- under the railroad retirement for- basis. The net cost effect of Public justing the formula upon which the mula. Since most survivor annuitants, Law No. 746 is a decrease in cost of benefits are based. As a result, the excluding aged widows, usually are 0.12 percent. of payroll (13.41 percent minimum amount guaranteed to rail- entitled on the basis of shorter dura- minus 13.29 percent). which almost road retirement beneficiaries was tions of service (less than 30 years), exactly balances the increase in cost also raised in many cases. In the the great majority will be computed of 0.14 percent of payroll arising future, survivor benefits under the on the basis of the old-age and sur- from Public Law No. 398 (after al- railroad retirement formula will be vivors insurance formula (table 2). lowing for the fact that the payroll almost completely replaced by cor- After the passage of the financial base is approximately 10 percent responding benefits computed under interchange provision, the Railroad larger because of Public Law No. the old-age and survivors insurance Retirement Board and Social Secu- 746). Thus the railroad retirement formula. Survivor benefits based on rity Administration began the work system is in virtually the same actu- railroad service up to 30 years, ex- and study necessary to compute the arial balance relative to payroll fol- cept for a few based on average amounts as of June 30, 1952, that lowing these two 1954 amendments would place the old-age and sur- as it was before the legislation; as vivors insurance trust fund in the Table 2.-Zllustrative monthly sur- a result it is in a substantially better vivor annuities under the Railroad same position it would have been in position than that indicated by the Retirement Act l if railroad employment after 1936 estimates made when the far-reach- had been covered by old-age and sur- ing 1951 amendments were enacted. Amount of annuity vivors insurance. This was the first Average monthly portion of the study as prescribed Efects of Coordinating remuneration Widow aged Widow and by the law. Upon its completion, 60 or over 2 children Provisions I $488.2 million was certified as the The 1951 amendments to the Rail- 10 years’ service amount, “owed” the old-age and sur- road Retirement Act contain two vivors insurance trust fund by the $100 ______~~.~~~~~~ railroad retirement system as of provisions that are directly affected 150 ._.______-.---.-- by the old-age and survivors insur- 200. ______- _ -. - - -. June 30. 1952. Under the law this 2.50.. _. ______------. - amount remains in the railroad re- ance benefit conditions. Under the 300 _._.___ -_- _.--.--.-- first. any beneficiary under the rail- 354 .______.~~~~~~~~ tirement account, as a credit to old- road retirement system would receive age and survivors insurance. 20 years’ service a benefit amount at, least equal to An initial, rough estimate of $700 the amount that his railroad retire- I million had been arrived at, by both ments earnings, plus any earnings in the Social Security Administration employment covered by old-age and and the Railroad Retirement Board survivors insurance, would entitle as the amount owed the old-age and him to under the latter program. The survivors insurance trust fund as of second provision called for a flnan- the end of 1950. This estimate differs cial interchange between the two substantially from the $488.2 million programs that maintains the old-age $1&L... ._____-___.__. ‘$45.00 $98.68 later certified. Interest of $11,595,000 150.-.-----.----.------151.40 2 120.00 on the certified amount for the fiscal and survivors insurance trust fund in 2ol. ______------. f 58.90 8 157.10 250 ___.______- _ --.--. * 66.40 * 177.20 year 1952-53 was certified for trans- the same position it would have been 300... ______-.-_---. 3 73.90 f 197.10 in if railroad employment had been 35x3-.. ___._ ___-_ _.-_-- f 81.40 ~200.00 fer to the old-age and survivors in- covered by old-age and survivors in- surance trust fund in February 1954. surance since January 1, 193’7. 40 years’ service As prescribed by the law, the sec- Through the operation of the first ond portion of the study was to de- f $100 ___-______-_-_-- termine the amount. that would put provision, the railroad retirement sys- 150 ______-_ 52% *:E% 200--..--.------... 59.50 * 157: 10 the old-age and survivors insurance tem is automatically affected every 25%. _--_------.-- 66.60 8 177.20 300 ______-__-_-- _- * 73.90 * 197.10 trust fund in the “same situation” as time the beneflt amounts under the 350 ___--_ -_-- __-_____ -_ *Cd.40 ~2oo.ou , of June 30, 1953. As a result of this IFor a more detailed description of the study, the amount owed to the old- 1 Individual assumed to enter railroad service at financial interchange provisions see Robert age 21 in 1966 or later and to remain steadily em- age and survivors insurance trust J. Myers, “Railroad Retirement Act Amend- ployed therein at a level wage. Figures indicate fund was determined to be $424.5 ments of 1961: Financial and Actuarial survivor benefits should death ooeur at ages 31, 41, 51, and 61, respectively. million (table 3). Interest, of $9,551,000 Aspects,” Social Security Bulletin, March 1 Old-age and survivors insurance minimum guar- 1963. antee applies. on this amount for the fiscal year Bulletin, February 1955 11 Table 3.-Summary of calculations of relative maturity of the railroad Table I.-Progress of old-age,and sur: amount in the railroad retirement system in comparison with old-age vivors insurance trust fund, includ- account to be credited to the old-age ingexperience of railroad retirement and survivors insurance trust fund and survivors insurance, it is believed system as computed under the fi- as of June 30.1953, according to the by the Social Security Administra- nanciai interchange provision of the financial interchange provision of tion that in the long-run the trans- Railroad Retirement Act, 1937-52 the Railroad Retirement Act 1 fers between the two systems will be [In millions] [In millions1 to the advantage of the old-age and - - - survivors insurance system. This be- rienefits :md ad- Balance Ad- Cnlendm at end 1Belle- lief is further reinforced by the fact year minis- [ntemst COP fit minis- In- trative Of year tribu- ,retive that the 1954 amendments to the ‘xpenses tions Pay- es- 1:erest I nents wxlses Social Security Act, although in- -__ -- _- _- creasing benefits, also provide ulti- 193X..-.. $551.2 $1. 1 $2. 5 193K.....~ 367 7 10.9 16. 5 “% z 1937..... $37.2 $0. 1 . _ _. w: ; mately larger contribution rates than 1939...-. 606:3 15.5 28.9 1,545:6 193x-... 24. 7 .9 . _ _. . Y:? 1940..--. 647. 9 70. 7 45.9 2,16X.7 1939.-.. 40. 3 1. 3 1.9 103. 1 had been prescribed previously. The 1941...-. 59. 9 2.937.4 1940.... 40.9 6. 7 3. 0 137.9 Railroad Retirement Board, on the 839.0 130.2 1941_... 49. 7 13.9 $i:: 3. 7 175.3 1942x.-. l,Oi4.8 180.8 76. 6 3.90K.2 other hand, believes that, on the 1943...-. 1,314.2 223.5 93. 4 5,092.3 1942.... 62.3 20. 0 2.2 4. 5 2i9.9 basis of estimates they made both at 1944...-.. 1,399.z 272.8 112.7 6,331.4 1943..-. 74. 7 25. 7 2. 4 5. 2 271.7 194..-. 1,3iO. 2 346.5 141.5 i,496.6 194... 83. 5 32.0 2.6 6. 0 3'213. 6 1946-.--- 1,383.2 472.4 159.5 I 8.566.9 N-4..- 84. 7 40. 0 2.6 7. 2 375, L) the time of the 1951 amendmentsand 1946-.- 87.8 51. 6 3.0 7. 9 417.0 subsequently, a gradual liquidation of 194..-. 1,649.3 575.9 172.5 9.812.8 1948...-- l,iK3.2 682.9 294.6 11,207.7 194... 91.4 61. 0 3. 1 8. 3 452.6 this “fund” will occur, and that even- 1949...-- 1.757.8 808. Y 152.2 12,306.8 1948...- 95.4 72.0 3. 4 13.4 486.0 tually there will be a flow of cash re- 1950..._. 2,800.2 1.138.5 267.4 14.237.6 194-.. 87. 8 84. 2 3. 3 6. 5 492.8 1951.-..- 3,520.l 2.153.1 432.4 1950..-. 129.4 112.8 3. 6 10.4 516.2 imbursements from the old-age and 16,0:ii.0 1951...- 152.9 183.6 3. 5 15. 1 49;. 1 survivors insurance trust fund to the 1952-..-. 3,973. !I 2,486.i X-6. 3 li,900.5 1952_.-. 155.0 , 201.1 3.4 11. 1 458.7 L 19532m.m 75. 5 113.0 2.0 5. 3 424.5 railroad retirement account. - - The work required by this Anan- ‘Amounts shown represent estimates for wbilt cial interchange provision has pro- ment system included. It will be would have been additional receipts and expeudi- twes of the old-age and survivors insurance trust duced, in addition to the results re- noticed that the railroad retirement fund if railroad retirement employment after 1936 experience has had relatively little had been under old-age and survivors insurance and quired by law, an interesting analysis the resulting amount that is owed to the old-age and of the experience of a closed group of effect on the overall progress of the survivors insurance trust fund. 2 I’reliminary estimate for first 6 months. workers and the effect on them of fund, as would be expected in view the old-age and survivors insurance of the relative size of the coverage 1953-54 was transferred to the old- system. Railroad employment has of the two programs. age and survivors insurance trust been somewhat stable in past years; As provided by law, new estimates fund in July 1954. there has been no great net influx of will be given as of the end of each Table 3 gives a year-by-year sum- new workers, and at the same time fiscal year in the future. The prog- mary of the amount owed to the old- the number who are retired as a per- ressof the fund to date will be indi- age and survivors insurance trust centage of those eligible to retire has cated, and the amount agreed to by fund by the railroad retirement sys- been approximately 75 percent for both agencies as the amount neces- tem. The amount increases gradually the past 5 years and, even earlier, sary to be transferred (from either through 1950 to a peak of $516 mil- was close to this. Consequently, the one of the funds to the other) will lion and then declines somewhat study showswhat might be the prog- be certified. For some time any until June 30, 1953, when it reaches ress of the old-age and survivors in- transfer that may occur from old- $425 million. A decrease will prob- surance fund under the conditions of age and survivors insurance to the ably continue for at least several a mature and stable working popu- railroad retirement account will years. However, with the further in- lation. probably be deducted, according to creases in the contribution rates Table 4 shows the progress of the law, from the amount that is owed under old-age and survivors insur- old-age and survivors insurance trust the old-age and survivors insurance ance, the extension of old-age and fund from 1937 through 1952, with trust fund by the railroad retirement survivors insurance coverage, and the the experience of the railroad retire- system.

$ 12 Social Security