RETIREMENT SYSTEM FOR INTERSTATE CARRIERS' EMPLOYEES FRIDAY, MAY 21, 1937 UNITED STATES SENATE, COMMITTEE ON INTERSTATE COMMERCE, Washington, D. C. The committee met, pursuant to call, at 10:30 a. m., in room 412, Senate Office Building, Senator Burton K. Wheeler (chairman of the committee) presiding. Present: Senators Wheeler (chairman), Smith, Brown of New Hampshire, Minton, Truman, Johnson of Colorado, White, Davis, and Austin. The CHAIRMAN. Gentlemen, we have before us this morning for consideration S. 2395, the Railroad Retirement Act, entitled "An act to establish a retirement system for employees of carriers subject to the Interstate Commerce Act, and for other purposes", approved August 29, 1935. (S. 2395 is as follows:) [S. 2395, 75th Cong. 1st sess.] A BILL To amend an act entitled "An act to establish a retirement system for employees of carriers subject to the Interstate Commerce Act, and for other purposes", approved August 29, 1935 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, PART I That the Act of August 29, 1935, entitled "An Act to establish a retirement system for employees of carriers subject to the Interstate Commerce Act, and for other purposes", be, and it is hereby, amended to read as follows: DEFINITIONS SECTION 1. For the purpose of this Act (a) The term "employer" means any express company, sleeping-car company, or carrier by railroad, subject to part I of the Interstate Commerce Act, and any company which may be directly or indirectly owned or controlled thereby or under common control therewith, and which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad, and any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the property or operating all or any part of the business of any such "employer": Provided, however, That the term "employer" shall not include any street, interurban, or suburban electric railway, unless such railway is operating as a part of a general steam-railroad system of transportation, but shall not exclude any part of the general steam-railroad system of transportation now or hereafter operated by any other motive power. The Interstate Commerce Commission is hereby authorized and directed upon request of the Board or upon complaint of any party interested to determine after hearing whether any line operated by electric power falls within the terms of this proviso. The term 1 "employer" shall also include railroad associations, traffic associations, tariff bureaus, demurrage bureaus, weighing and inspection bureaus, collection agencies and other associations, bureaus, agencies, or organizations controlled and maintained wholly or principally by two or more employers as hereinbefore defined and engaged in the performance of services in connection with or incidental to railroad transportation; and railway labor organizations of employees, national in scope, which have been or may be organized in accordance with the provisions of the Railway Labor Act, as amended, including their State and national legislative and general committees and insurance departments, established pursuant to the constitution and bylaws of such organizations. (b) The term "employee" means any person in the service of one or more employers for compensation and any person who is in the employment relation to one or more employers. The term "employee" shall also include any officer or official representative of an organization of employees other than a labor organization included in the term "employer" as defined in section 1 (a), who before or after the enactment date was in the service of an employer as defined in section 1 (a) and who is duly authorized and designated to represent employees in accordance with the Railway Labor Act, as amended, and any person who is regularly assigned to or regularly employed by such officer or official representative in connection with the duties of his office, and such employees are hereinafter sometimes called "employee representatives." (c) A person is in the service of an employer wherever his service is rendered if he is subject to the continuing authority of the employer to supervise and direct the manner of rendition of his service, which service he renders for compensation: Provided, however, That a person shall be deemed to be in the service of an employer not conducting the principal part of its business in the United States only when he is rendering service to it in the United States. (d) A person is in the employment relation to an employer if he is on furlough subject to call for service within or outside the United States and ready and willing to serve, or on leave of absence, or absent on account of sickness or disability; all in accordance with the established rules and practices in effect on the employer: Provided, however, That a person shall not be deemed to have been on the enactment date in the employment relation to an employer not conducting the principal part of its business in the United States unless during the last payroll period in which he rendered service to it prior to the enactment date, he rendered service to it in the United States: And provided further, That a person shall not be deemed to have been, on the date he became eligible to receive an annuity under this Act, in the employment relation to an employer not conducting the principal part of its business in the United States unless during the last payroll period in which he rendered service to it prior to that date, he rendered service to it in the United States. (e) The term "United States", when used in a geographical sense, means the States, Alaska, Hawaii, and the District of Columbia. (f) The term "years of service" shall mean the number of years a person as an employee shall have rendered service to one or more employers for compensation or received wages for time lost, computed in accordance with the provisions of section 3 (b): Provided, however, That, where service prior to the enactment date may be included in the computation of years of service as provided in subdivision 1 of section 3 (b), it may be included as to service rendered to an employer subject to this Act on the enactment date, irrespective of whether at the time such service was rendered the employer was an employer as defined in section 1 (a). Twelve calendar months, consecutive or otherwise, in each of which an employee has rendered such service or received such wages for time lost shall constitute a year of service. An ultimate fraction of six months or more shall be taken as one year. An ultimate fraction of less than six months shall be taken at its actual value. (g) The term "annuity" means a monthly sum which is payable on the first day of each calendar month for the accrual during the preceding calendar month. (h) The term "compensation" means any form of money remuneration earned by a person for services rendered as an employee to one or more employers, including wages paid for time lost as an employee but wages paid for time lost shall be deemed earned in the month in which such time is lost. (i) The term "Board" means the Railroad Retirement Board. ANNUITIES SEC. 2. (a) The following-described persons, if they shall have been employees on or after the enactment date, shall be eligible for annuities after they shall have ceased to engage in employer service and relinquished all rights to return to employer service, irrespective of when they shall have relinquished such rights, except that the requirement of relinquishment of rights to return to employer service shall not apply to the persons mentioned in 2 (b) and subdivision 3 of this subsection prior to attaining age sixty-five: 1. Persons who on or after the enactment date shall be sixty-five years of age or over. 2. Persons who on or after the enactment date shall be sixty years of age or over and (a) either have completed thirty years of service or (b) have become totally and permanently disabled for regular employment for hire, but the annuity of such persons shall be reduced at the rate of one-fifteenth for each year or monthly fraction thereof that they are under age sixty-five when the annuity begins to accrue. 3. Persons, without regard to age, who on or after the enactment date are totally and permanently disabled for regular employment for hire and shall have completed thirty years of service. Such satisfactory proof of the permanent total disability and of the continuance of such disability until age sixty-five shall be made from time to time as may be prescribed by the Board. If the person fails to comply with the requirements prescribed by the Board as to proof of the disability or the continuance of the disability until age sixty-five, his right to an annuity under subdivision 2 or subdivision 3 of this subsection by reason of such disability shall, except for good cause shown to the Board, cease, but without prejudice to his rights under subdivision 1 or 2 (a) of this subsection. If, prior to attaining age sixty-five, such a person recovers and is no longer disabled for regular employment for hire, his annuity shall cease upon the last day of the month in which he so recovers and if after such recovery the person is granted an annuity under subdivision 1 or 2 (a) of this subsection, the amount of such annuity shall be reduced on an actuarial basis to be determined by the Board so as to compensate for the annuity previously received under this subdivision. (b) An annuity shall begin to accrue as of a date to be specified in a written application to be signed by the person entitled thereto, and approved by the Board, which date shall not be more than sixty days before the filing of the application: Provided, however, That in no case shall the annuity begin to accrue before the date the applicant shall cease employer service. COMPUTATION OF ANNUITIES SEC. 3. (a) The annuity shall be computed by multiplying a person's "years of service" by the following percentages of this "monthly compensation": 2 per centum of the first $50; 11⁄2 per centum of the next $100; and 1 per centum of the next $150. (b) The "years of service" of a person shall be determined as follows: (1) In the case of a person who was an employee on the enactment date and on the date he became eligible to receive an annuity under this Act, and also in the case of a person who was an employee on the enactment date, but prior to the date he became eligible to receive an annuity under this Act had ceased active service for an employer because of a permanent physical or mental disability, the years of service shall include all his service subsequent to December 31, 1936, and if the total number of such years is less than thirty, then the years of service shall also include his service prior to January 1, 1937, but not so as to make his total years of service exceed thirty: Provided, however, That with respect to any such person who rendered service to any employer after January 1, 1937, and who on enactment date was not an employee of an employer conducting the principal part of its business in the United States no greater proportion of his service rendered prior to January 1, 1937, shall be included in his "years of service" than his total compensation (including compensation in any month in excess of $300) for service after January 1, 1937, rendered anywhere to an employer conducting the principal part of its business in the United States or rendered in the United States to any other employer as defined in section 1 (a) of this Act bears to his total compensation (including compensation in any month in excess of $300) for service rendered anywhere to an employer after January 1, 1937. (2) In all other cases the years of service shall include only the service subsequent to December 31, 1936. (3) Where the years of service include only part of the service prior to January 1, 1937, the part included shall be taken in reverse order beginning with the last calendar month of such service. (4) In no case shall the years of service include any service rendered after June 30, 1937, by a person who is sixty-five years of age or over, except for the purpose of computing his monthly compensation as provided in subsection (c) of this section. (c) The "monthly compensation" shall be the average compensation earned by an employee in calendar months included in his "years of service", except (1) that with respect to service prior to January 1, 1937, the monthly compensation shall be the average compensation earned by an employee in calendar months included in his years of service in the years 1924-1931, and (2) that where service in the period 1924-1931 is insufficient to constitute a fair and equitable basis for determining the monthly compensation for service prior to January 1, 1937, the Board may determine the monthly compensation for such service in such manner as in its judgment shall be just and equitable. If the employee earned compensation after June 30, 1937, and after the last day of the month in which he attained age sixty-five, such compensation shall be disregarded if the result of taking such compensation into account would be to diminish his annuity. In computing the monthly compensation no part of any month's compensation in excess of $300 shall be recognized. (d) The annuity of a person who shall have been an employee representative shall be determined in the same manner and with the same effect as if the employee organization by which he shall have been employed were an employer as defined in section 1 (a) of this Act. (e) If the person was an employee when he attained age sixty-five and has completed twenty years of service, the minimum annuity payable to him shall be $40 per month: Provided, however, That if the monthly compensation on which his annuity is based is less than $50, his annuity shall be 80 per centum of such monthly compensation, except that if such 80 per centum is less than $20, the annuity shall be $20 or the same amount as the monthly compensation, whichever is less. In no case shall the value of the annuity be less than the value of the additional old-age benefit he would receive under title II of the Social Security Act if his service as an employee after December 31, 1936, were included in the term "employment" as defined therein. (f) Annuity payments due a person but not yet paid at death shall be paid to a surviving spouse if such spouse is entitled to an annuity under an election made pursuant to the provisions of section 4 of this Act; otherwise they shall be paid to the same person or persons who may be entitled to receive any death benefit that may be payable under the provisions of section 5 of this Act. (g) No annuity shall accrue with respect to the calendar month in which an annuitant dies. (h) After an annuity has begun to accrue, it shall not be subject to recomputation on account of service rendered thereafter to an employer, except as provided in subdivision 3 of section 2 (a). (i) If an annuity is less than $2.50, it may, in the discretion of the Board, be paid quarterly or in a lump sum equal to its commuted value as determined by the Board. JOINT AND SURVIVOR ANNUITY SEC. 4. A person whose annuity shall not have begun to accrue may elect prior to January 1, 1938, or at least five years before the date on which his annuity begins to accrue, or upon furnishing proof of health satisfactory to the Board, to have the value of his annuity apply to the payment of a reduced annuity to him during life and an annuity after his death to his spouse during life equal to, or 75 per centum of, or 50 per centum of such reduced annuity. The amounts of the two annuities shall be such that their combined actuarial value as determined by the Board shall be the same as the actuarial value of the single-life annuity to which the person would otherwise be entitled. Such election shall be irrevocable, except that it shall become inoperative if the person or the spouse dies before the annuity begins to accrue or if the person's marriage is dissolved or if the person shall be granted an annuity under subdivision (3) of section 2 (a): Provided, however, That the person may, if his marriage is dissolved before the date his annuity begins to accrue, or if his annuity under subdivision (3) of section 2 (a) ceases because of failure to make the required proof of disability, make a new election under the conditions stated in the first sentence of this subsection. The annuity of a spouse under this subsection shall begin to accrue on the first day of the calendar month in which the death of the person occurs. DEATH BENEFITS SEC. 5. The following benefits shall be paid with respect to the deaths of persons who were employees after December 31, 1936: (a) If the deceased should not be survived by a widow or widower who is entitled to an annuity under an election made pursuant to the provisions of section 4 of this Act, there shall be paid to such person or persons as the deceased may have designated by a writing filed with the Board prior to his death, or if there be no designation, to the legal representative of the deceased, the amount if any, by which 4 per centum of the aggregate compensation earned by the deceased after December 31, 1936, exceeds the sum of the total of the annuity payments actually made to the deceased plus the total of the annuity payments due the deceased but not yet paid at death. If the person or persons designated to receive the death benefit do not survive the deceased, the death benefit shall be paid to the legal representative of the deceased. (b) If the deceased should be survived by a widow or widower entitled to an annuity under an election made pursuant to the provisions of section 4, there shall, on the death of the widow or widower, be paid to such person or persons as the deceased may have designated by a writing filed with the Board prior to his death, of if there be no designation, to the legal representative of the deceased, the amount, if any, by which four per centum of the aggregate compensation earned by the deceased after December 31, 1936, exceeds the sum of the total of the annuity payments actually made to the deceased plus the total of the annuity payments actually made to the widow or widower under an election made pursuant to the provisions of section 4 of this Act and under the provisions of section 3 (g) of this Act plus the total of the annuity payments due the widow or widower but not yet paid at death. If the person or persons designated to receive the death benefit do not survive the widow or widower, the death benefit shall be paid to the legal representative of the deceased In computing the aggregate compensation for the purpose of this section, no part of any month's earnings in excess of $300 shall be recognized. PENSIONS TO PERSONS ON PENSION OR GRATUITY ROLLS OF EMPLOYERS SEC. 6. Beginning July 1, 1937, each person then on the pension or gratuity roll of an employer by reason of his employment, who was on such roll on March 1, 1937, and was not, prior to July 1, 1937, eligible for annuity under this Act, based in whole or in part on service rendered prior to January 1, 1937, shall be paid on July 1, 1937, and on the first day of each calendar month thereafter during his life, in substitution for the pension or gratuity from his employer, a pension equal in amount to the pension or gratuity granted to him by the employer without diminution by reason of a general reduction or readjustment made subsequent to December 31, 1930, and applicable to pensioners of the employer: Provided, however, That no pension payable under this section shall exceed $120 monthly: And provided further, That no person on the pension or gratuity roll of an employer not conducting the principal part of its business in the United States shall be paid a pension under this section unless, in the judgment of the Board, he was, on March 1, 1937, carried on the pension or gratuity roll as a United States pensioner. No person shall be entitled to receive both a pension under this section and an annuity under section 2 of this Act. SEC. 7. Nothing in this Act shall be taken as restricting or discouraging payment by employers to retired employees of pensions or gratuities in addition to the annuities or pensions paid to such employees under this Act, nor shall the Act be taken as terminating any trust heretofore created for the payment of such pensions or gratuities. CONCLUSIVENESS OF RETURNS OF COMPENSATION AND OF FAILURE TO MAKE RETURNS OF COMPENSATION SEC. 8. (a) Returns of compensation required by the Board to be filed with it shall be under oath and shall be conclusive as to the amount of compensation earned by a person during a particular calendar month and the fact that no return was made of the compensation claimed to be earned by a person during a particular calendar month shall be taken as conclusive that no compensation was |