of 5 years the amount of increased tax which would be paid and the increase in benefits which would accrue, assuming that all service after the increase in the creditable base is at $350 per month or more. Very truly yours, A. E. LYON, Executive Secretary. Effect of increasing creditable and taxable base to $350 per month on employees retiring on full annuities after 30 years of service, assuming all service after increase in base to be at $350 Hon. CHARLES A. WOLVERTON, RAILWAY LABOR EXECUTIVES' ASSOCIATION, Chairman, House Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: It occurs to us that the following information may be useful to you and members of your committee in connection with your consideration of the proposals in H. R. 7840 which have to do with railroad unemployment insurance. During the course of the hearings on this bill mention was made of the effect of the 1948 amendments which established the sliding scale of contributions to the railroad unemployment insurance account. Table A-2, page 87, of the last annual report of the Railroad Retirement Board shows the following information as to contributions made by the railroad companies: Fiscal year: Contributions Before enactment of the 1948 amendments, the operations of the railroad unemployment insurance account were financed by means of contributions paid by the railroads equal to 3 percent of payroll, exclusive of amounts paid to any employee in excess of $300 per month. Under the 1948 amendments to this law, which was retroactive to January 1, 1948, the contribution rate on compensation paid during the calendar year depends on the balance to the credit of the railroad unemployment insurance account at the close of business on September 30 of the preceding year, as follows: If the balance on September 30 is— $450,000,000 or more.. $400,000,000 but less than $450,000,000. $350,000,000 but less than $400,000,000_ $300,000,000 but less than $350,000,000_ $250,000,000 but less than $300,000,000_ Less than $250,000,000——- The rate for the following year is 2 percent. 1 percent. 12 percent. 2 percent. 22 percent. 3 percent. Since January 1, 1948, when the above scale of rates became effective, the balance in the account has been over $450 million. In fact, the balance as of December 31, 1953, was $688 million. Therefore, the minimum rate of 0.5 percent has applied since January 1, 1948. During the 5-year period from July 1, 1948, to June 30, 1953, the total contributions by the carriers amounted to $91,425,823, or only 63 percent of the contribution for the single fiscal year July 1, 1947, to June 30, 1948. Very truly yours, A. E. LYON, Executive Secretary. The CHAIRMAN. We have with us this morning our distinguished colleague from Florida, Mr. Bennett, who is interested in this legislation and because he has committee duties to perform I assume there will be no objection to his appearing at this time. Mr. Bennett, you may proceed. STATEMENT OF HON. CHARLES E. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA Mr. BENNETT. I thank you for this privilege and I would not have asked it except for the fact that General Grunther is expected to appear before the committee I am on and I feel an obligation to be there as soon as possible. I deeply appreciate the privilege of your giving me the privilege of appearing here and testifying on proposals to improve the railroad retirement system. It is my understanding that we are primarily discussing H. R. 7840 here today. I would like to read into the record a telegram concerning H. R. 7840 which I received on Monday of this week from Mr. J. R. Taylor, president of the Grand Association of Veterans Railway Employees. This is a Jacksonville, Fla. association of retired railroad employees. He says: At meeting today I was instructed by unanimous vote to request you to represent this association before the committee Tuesday the ninth hearing on bill H. R. 7840 which this membership endorses in its entirety. I believe this adequately outlines the enthusiastic stand which this organization has taken on H. R. 7840. One of my purposes in coming here today is to explain various proposals which have been made by the Grand Association of Veteran Railway Employees for improving the railroad retirement system. There are very many retired railroad employees in the district which I represent. I do not know how many thousands of them, but there are a substantial number of them. Several years ago, I was beseiged on all sides by retired railroad employees who were interested in different types of revisions to the Railroad Retirement Act. I told those who contacted me that I believed it would be best if an organization were formed to study and debate proposals to amend the act and to agree upon a set of proposals. In this way, we in Congress could be presented with concrete proposals which represented the views and wishes of a majority of those interested, after full debate. They thereupon organized the Grand Association of Veteran Railway Employees. After debate and discussion, they presented five proposals for amending the act upon which they were in agreement. First, they proposed that full annuities be paid to male and female employees after 30 years of service or at age 60, whichever is first reached, but retirement not being compulsory. They point out that under present law, female employees already have the benefit of this suggestion. They argue that there is no reason why male employees should be treated less favorably, since their contributions to the fund are no less than those of female employees. Second, they suggested that maximum retirement annuities be increased to $180 and minimum to $75, or that annuities be computed at not less than half the amount of the employee's salary or wages, based upon the 5 highest years of earnings, whether or not such years are consecutive. The 1951 amendments partially achieved the maximum and minimum objectives of this proposal; they raised the maximum to $165.50 and the minimum to $69. However, the Grand Association still believes these figures are too low. The 5 highest year alternative offered in this proposal would override the present requirement that credit for earnings before 1936 must be based upon average earnings during the years between 1924 and 1931. Salaries during those years were extremely low. The present requirement works a hardship upon those with service before 1936. Their third proposal is that the widow's annuity should be no less than the actual retirement annuity her husband was receiving before his death or would have received if he had lived to age 65. The Grand Association argues that an employee's wife is really a part of the family working team, performing many services necessary to his continued efficiency and effectiveness as an employee. They also maintain that the increase thus requested is necessary for adequate provision for the widow's upkeep and that she is very unlikely to be able to supplement the income by employment. The fourth suggestion of the Grand Association was that there be no reduction in disability, retirement, and survivor annuities on account of other incomes. Their fifth suggestion was that an employee who continues in employment after age 65 be given additional credits. The 1951 amendments subsequently enacted their last suggestion into public law. These proposals were in the form of a petition signed by about 1,000 retired railway employees. I have today sent the committee a copy of the full text of that petition. The original was filed with the Douglas committee which was appointed about a year ago. In addition, they have asked that everything possible be done to reduce administrative expenses of the Railroad Retirement Board in order that benefits may be made more liberal. They are especially critical of the public relations, advertising, and publicity expenditures of the Board, especially since participation in the program is compulsory. There may have been some reduction in administrative expenses since these suggestions were made. Nevertheless, I believe this committee should exercise close surveillance over the operating expenses of the Board with a view to recommending needed economies. I have also sent to the committee a copy of a letter outlining ways in which economy and efficiency might be promoted in the administration of these acts. The contents of this letter were the result of the suggestions of this group of thousands of retired railroad employees in the district I represent. Another aspect of railroad retirement legislation in which this organization has shown considerable interest is separating railroad retirement from social security. However, this committee has already acted effectively in this field, having reported favorably H. R. 356, which has now passed the House. I am wholeheartedly in favor of these proposals if the committee should find that they are actuarially sound. Of course, I would not favor and I am certain the Grand Association would not favor and I am certain this committee would not favor depleting the fund in such a way that it would endanger the future of the railroad retirement program. However, to the extent that we may liberalize benefits within the bounds of actuarial soundness, we will be helping a very deserving group of people who served our country's transportation system faithfully over a long period of years. They made very substantial contributions to their modest pensions, particularly when contrasted with those who draw social-security benefits. I deeply appreciate the committee's allowing me to be present with you today. The CHAIRMAN. We appreciate your presence, Mr. Bennett. We shall give consideration to the suggestions you have made. I assume from the first portion of your statement that the organization whose viewpoints you have expressed this morning is in favor of H. R. 7840. Of course, as you realize, the suggestions contained in that communication are not before us in the bill, H. R. 7840, but nevertheless it will be taken into consideration if and when those matters to which it relates are taken up. Mr. BENNETT. Thank you very much, sir. (The following additional information was later submitted by Mr. Bennett:) Hon. CHARLES A. WOLVERTON, HOUSE OF REPRESENTATIVES, Washington, D. C., March 10, 1954. Chairman, House Interstate and Foreign Commerce Committee, Washington, D. C. DEAR MR. WOLVERTON: In my testimony before the committee today, I referred to two sets of suggestions which have been made by the Grand Association of Veteran Railway Employees of Jacksonville. I preferred not to submit these statements as part of my testimony, since I did not want my statement to be unduly lengthy. Nevertheless, I feel that I have a responsibility to call these suggestions to the attention of your committee. I would appreciate your consideration of them, enclosed herein. Thanking you and with kindest regards, I am Sincerely, CHARLES E. BENNETT, M. C. 45159-54 5 STATEMENT ON WHY THE CHANGES IN THE RAILROAD RETIREMENT ACTS SHOULD BE MADE, AND MADE IN BEHALF OF A GROUP OF PROPOSALS SENT TO HON. CHARLES E. BENNETT, FEBRUARY 15, 1952, IN THE FORM OF A PETITION SIGNED BY ALL CLASSES OF RAIL WORKERS THAT SO DESIRED PROPOSAL NO. 1 That full annunities be paid to male and female employees after 30 years of service or age 60, whichever is reached first, but retirement not being compulsory. STATEMENT The law now allows female employees, who will have attained the age of 60 and will have completed 30 years of service, to retire with full pension, yet it also allows an individual (or male) to retire at age 60, who has completed 30 years of service, but his annuity is cut one one hundred and eightieth for each calendar month that he is under age 65, when his annuity begins to accrue, Why? This is a very clear case of discrimination, as both male and female employees are required to pay taxes in the amount of 64 percent on their salary up to $300 each month. So why should the male have to take a reduction in his annuity if he selects to retire after he has 30 years' service and is 60 years old. A good argument on the 30-year service or 60-year-old retirement is that 90 percent of all railworkers begin their employment at age 21 to 30. Therefore they will have to work an average of 35 to 44 years before they will be entitled to full annuities. It is true that the longer he works the greater his annuity will be, but this is not the idea of a good sound pension. Majority of all the railworkers feel that there should be a goal to work forward to, such as a 30 years of service or age 60 plan, then if he is physically able he can continue on for bonus credits instead of being compelled to do so or take a cut. Statistics show that the average railworker of today is required to have a higher education, stand a more rigid physical and mental examination and be able to stand any kind of weather and unusual condition, it also shows that the work and operation of the trains are more strenuous on the mind of the average worker, due to the speed and accuracy that the Nation's railroads must operate in order to meet the requirements of the public and shippers and competition of other carriers. According to the Railroad Retirement Board's annual report of 1950, on page 30 and 31, there were 33,100 rail employees who died in 1949, 53 percent had been receiving benefits when they died, but only 1,500 of them were pensioners. The remaining 47 percent had not retired before their death. According to the report their ages were as an average, 54 years old for the nonretired and 72 years old for the retired. Therefore, as shown by the report, 47 percent of the men died with 11 years to go before they could have retired on full annuities, while 53 percent died 7 years after their pension had started, or to go further, the chart, table B27 on page 128 of the annual report of 1950, shows that out of the 33,100 employees who died in 1949, there were 30,641 males; out of the 30,641 a total of 14,729 had not reached the age of retirement or 65. Out of the remaining 15,912, 8,977 died between the ages of 65 and 76. Thereby as a matter of record, this proves that nearly half of the men die before reaching 65 and over half of the remainder died within 10 years after reaching 65. It is true that this is only 1 year's tabulation, but it is a good figure to base almost all of the preceding years. He It is true that the present law provides for disability annuities, but the average railworker does not care to feature himself as a hopeles cripple or injured person in order to draw benefits that he has paid for so many years. had rather have a goal to work to, and know that after he has completed his time with his employer, that he will have a few years left to enjoy this beautiful United States and be able to meet his expenses on the annuity he has paid for with money and service to his occupation. It will be a grand and glorious feeling for a railworker to know that he would be able to do this rather than to work until he's gone before he is allowed to step down. Under the present setup it's just like comparing an old wornout piece of machinery being replaced by a new piece of equipment, the old piece to be discarded as junk to lay around and rust. The same way with the old pensioner, just thrown aside on a small annuity until he dies. That is why they are seeking the proposed amendment. |