PROPOSAL NO. 2 (a) That the maximum retirement annuities be increased to $180, and minimum annuities to $75, or (b) That annuities to be not less than half salary or wages, based on the 5 highest years of earnings, whether or not such years are consecutive. STATEMENT Proposal 2 (a) was partially taken care of by the 1951 amendments. But it only gave a maximum of $165.50 and a minimum of $69, a difference of $14.40 and $16, maximum and minimum, respectively. Proposal (b) was offered in conjunction with 2 (a), as a substitute, although it has its important bearings too. Since the law was enacted on August 29, 1935, and the final procedure was dated January 1, 1936, a railworker at this time cannot have over 16 years' service paid into the acts. So in order that he can establish credits of 30 years' service, should he desire to go on his pension at this time, he would have to go back before 1936 to get his remaining 14 years, but in so doing so the law states that he must base his earnings for those 14 years on his average earning during the years of 1924 and 1931. It is true that the railworker that was working at that time did work more regularly, but it is also true that the reduction in forces has cut many a railworker off and there were thousands that did not render a day's service on account of the depression that hit those years. It is also true that the salaries at that particular time were extremely low. Most of the operating railworkers only made from $100 to $180 a month, and the nonoperating from $50 to $120. Therefore if the railworker wanted to take his pension at this time, he would most likely have an average of $250 in compensation for the 16 years he had paid into the acts, but when he had to go back for those years he lacked, the 1924-31 average would cut his whole average down to around $180 monthly compensation for the 30-year period. The law states, "The annuity shall be computed by multiplying an individual's 'years of service' by the following percentages of his 'monthly compensation': 2.76 percent of the first $50; 2.07 percent of the next $100; and 1.38 percent of the next $150." So it can easily be seen that the individual would have been entitled to an annuity of about $150, but the 1924-31 clause cut him down to about $115. The figures mentioned in explaining this procedure as to the salary and annuity are only as an example and in no way figures as an average, as the Railroad Retirement's Board issue of the Monthly Review for March 1952 shows that the average annuity now being paid is $94.53. This does not seem justifiable in accordance with the amount that the employees and employers invest into the fund. Now if the 5 highest years of a man's or woman's earnings were used to compute the annuity, as proposed, then it would do away with computing the employee's annuity on the 1924-31 average, when it was necessary for them to have to go back before 1936 to establish service credits. And it is believed by a large majority that if this plan was accepted that it would do away with a lot of administrative expense and research under the 1924-31 plan, and help to offset the expense that may occur under the 5 highest years proposal. PROPOSAL NO. 3 Where the death of an employee occurs before or after retirement, his widow shall receive the pension or annuity her husband would have received or was receiving at the time of his death, provided she does not remary, but in no instance will it be amended to be less than 75 percent. STATEMENT This proposal speaks within itself. The law is now set up in the following manner for the employee, if he is injured or becomes disabled: "Individuals having a current connection with the railroad industry, and whose permanent physical or mental condition is such as to be disabling for work in their regular occupation, and will have completed 10 years of service, or will have attained the age of 60, will be entitled to an annuity of $4.14 multiplied by the number of hi years of service, or $69, or his monthly compensation, whichever is the least It is the opinion of all concerned, that where this is the case set up by! law for all employees that if he should get killed, or die, that it would be o nature of total disability to his spouse, as she participates in his employment as much as he does. She keeps him physically fit by preparing his meals regardless of hours. She keeps his clothes clean and presentable and takes care of him morally and physically so that he is able to render his service to his employer in the proper efficiency, and last but not least, she is a preson that shares all his worries and responsibilities as well as maintaining his home and housheold duties. And it is felt by all that she should immediately start receiving an annuity as proposed, if anything should happen to her husband as stated above, without her having to wait until she is 65 years old, or being forced to take a lump-sum settlement, if the circumstances are such that she can't afford financially to wait until she is the required age, which in average cases is the truth. It is true that the law provides for the widow, if she should have a child under the age of 18, or if she is age 65, at the time of the loss of her husband, but the annuity of the widow with the child under 18 is cut out when the youngest child reaches 18, and she is not eligible again, until she reaches the age of 65, and it is commonly known that it is almost impossible for an elderly female to obtain employment. The Railroad Retirement Board's Annual Report for 1950 shows that out of the 30,641 males that died in 1949, 69 percent were married, 52 percent of the married employees were survived by widows under age 65 with no children under age 18, 31 percent by widows age 65 or over, and the remaining 17 percent, by widows under age 65 with children under age 18. These statistics can be found on page 32, of the 1950 annual report. It can easily be seen why this proposal should be added, as it is already set up as a guaranty for the employee and could be passed on to his survivor without any more expense. PROPOSALS NOS. 4 AND 5 That disability, retirement, and survivor annuities be not reduced by any amount because of other incomes. That an employee who continues in employment after age 65, shall receive additional credits. STATEMENT NOS. 4 AND 5 Were taken care of in the 1951 amendments and do not at this time seem too important as if the above proposals are accepted, it will adjust a big part of the proposals 4 and 5 that were not amended in 1951. CONCLUSIVE REMARKS All the emphasis that can possibly be used should be in testimony before the committee, of the importance of using economy on the Railroad Retirement Board's administrative expense. There is no doubt whatsoever that the Board's administrative offices are overloaded, from the main office right on down to the local field offices, and that if a lot of economy was used in the Board's administrative duties, it could bring about more benefits for the individual investor. This was proven in the Railroad Unemployment Insurance Acts. By this we mean that the railroads were taxed 3 percent on all salary of an employee up to $300. They asked a cut in taxes as the fund was growing too large, but the Congress only doubled the benefits for the employee, but the fund still continued to grow in spite of this award, so the Congress cut the tax to one-half percent as long as the balance in the fund does not fall below $450 million, but the fund still continues to grow and it has not been necessary to increase the tax. It cannot be understood by the average railworker why it is necessary to pay 3 men $15,000 a year plus expenses and per diem allowance to act as an executive board, or to maintain a personal relation, advertising, and publicity department, when the participation is compulsory. They can't understand why it takes so many workers in the local offices when they don't keep any records to speak of or are able to give you any information asked of them readily. Or why the offices are in high-rent districts. Or last but not least, why it took $4,744,000 to administer the Railroad Retirement Board alone for the year 1950. This does not include the expense for the Unemployment Insurance Acts as the railworker does not contribute to it and thereby has no argument to its expense, but he is compelled to finance half of the retirement account, and therefore should have a voice in this matter as well as selection of its duties and the manner in which it is carried out. REFERENCE Data used and compiled here was taken from United States Code Annotated, title 45, Railroad Retirement Acts, and Railroad Retirement Board's Annual Report 1950. GRAND ASSOCIATION OF VETERAN RAILWAY EMPLOYEES, INC., 4350 Bethwood Circle, Jacksonville, Fla., December 28, 1951, Hon. CHAS. E. BENNET, Member of Congress, Jacksonville, Fla. DEAR MR. BENNETT: At a meeting of the members of this association held on December 14, 1951, I was instructed to submit the following suggested changes in the law governing the administration of the Railroad Retirement Act: 1. That a study be made with a view of decentralizing the general offices of the Railroad Retirement Board in Chicago by establishing divisional or regional offices for the processing of claims and the payment of annuities. We believe that this would result in better and more prompt service, and would result in much savings, and suggest the following changes. (a) That all district offices be abolished. It is our concerted opinion based on personal contacts and observations, that these offices serve no purpose that fieldmen working out of divisional or regional offices could not serve better and more economically; (b) That fieldmen out of divisional or regional offices be required to visit all persons having difficulty in establishing their claims, and assist and advise them, and make individual reports on facts learned. We know and have known of many persons who have struggled along for months, even years, trying to accumulate information necessary to establish their claims. Some of these were illiterate and/or disabled and unable to understand or do the things necessary, and consequently suffered hardships during the processing of their claims; (c) That officers and employees of the Railroad Retirement Board be taken from the ranks of railroad employees, as far as practicable, and that railroad employees and/or their widows or their children receive priority in positions with the Railroad Retirement Board; and (d) That officers and employees of the Railroad Retirement Board be restricted to their administrative duties only as provided under the Railroad Retirement Act. 2. That the practice by the Railroad Retirement Board be prohibited from deducting 5 percent from service records established by affidavits, and that they be required to give credits for these deductions in all cases where same has been done. We find no law for this deduction, but think it to have been an arbitrary rule fixed by the Board. If it is sanctioned by law, we suggest the law be repealed. It would be just as reasonable to discount these affidavits in their entirety as to discount them 5 percent, or any other amount. 3. That a thorough inquiry be made into the unemployment law, and the benefits thereunder with a view of: (a) Reducing to a minimum the requirements for establishing claims thereunder, and (b) Increased benefits thereunder, taking into consideration the very great increase in actual living costs. Your transmittal of these suggested changes to the committee appointed to make a study of the Railroad Retirement Act, with your recommendation that they be given consideration, will be highly appreciated. The undersigned, with other members of our committee, would be glad to discuss these matters with you at your convenience, if you desire. Thanking you very much for the consideration I am sure you will give these matters, I am Yours very truly, W. B. GUNN, Chairman, Legislative Committee. The CHAIRMAN. The next witness will be Mr. Thomas Stack, president of the National Railroad Pension Forum, Inc., Chicago, Ill. Mr. Stack, you may proceed. STATEMENT OF THOMAS STACK, PRESIDENT, NATIONAL RAILROAD PENSION FORUM, INC. Mr. STACK. Mr. Chairman, and members of the Committee on Interstate and Foreign Commerce of the House, my name is Thomas Stack. I reside at 1104 West 104th Place, Chicago, Ill. I am president of the National Railroad Pension Forum, Inc., a chartered organization under the laws of the State of Illinois as a nonprofit educational group comprised of union and nonunion employees, subject to the Railroad Retirement Act. We are the largest pension group in the country with membership on 321 railroads and affiliated bureaus. We deal exclusively with the Railroad Retirement Act and its beneficiaries. In this position of trust, we are in a position to voice the sentiment of those under the act, and through the medium of some 1,400 group leaders we have in the various terminals, offices, and yards of the railroads, we are kept informed as to the needs of the employees on the various systems. So, we at all times have our hand on the pulse of the railworker and can say without fear of contradiction that we express the needs and desire of all railroad employees inasmuch as 90 percent of our membership comprise members of the various crafts of the brotherhood. I have behind me some 38 years of service on the rails, before being drafted for the position I now hold. In 1947 when changes in our retirement act detrimental to the interests of our employees were forced upon us by an act of Congress, that deprived the employees of the lump sum residual benefits and increased our taxes almost double to maintain the system, it was then that the National Railroad Pension Forum, Inc., was born to carry this task, when it became apparent that we, the railroad employees, were being exploited by sinister interest foreign to the interests of our people. I rise today in opposition to H. R. 7840, which, to say the least, is a hallucination of the top brass and their satellites in the labor movement. Not a railroad man in the country knows about this bill. I received, over the weekend, long-distance calls from Dallas, Minneapolis, Chicago, Savannah, New York, Wilmington, Philadelphia, and Baltimore, all asking what the bill was about and how they could assist in opposing same. That will be the nationwide sentiment in connection with this legislation. I will, at the conclusion of my remarks, ask you honorable gentlemen, to substitute this bill for H. R. 5269 which has been universally accepted by the railworkers of this Nation. H. R. 7840 does nothing for the taxpaying employees except to increase the tax base from $300 per month to $350 per month. All railroad employees today feel they are paying too much for the meager benefits received. To increase the tax base will increase the liability and the reserve fund will benefit little. Your honorable chairman, under Concurrent Resolution 52 of the Senate during the 82d Congress, served well on the Joint Committee of Railroad Retirement study. I would refer you to page 424 of that study report which, in substance, advises that if the tax base was raised to apply on $500 per month taxable payroll, it would increase the fund about $100 million per year but $67 million of this would be absorbed by the increase in the benefit formula. To increase the tax base less than $500 per month would in crease the liability so that the addition to the reserve account would be nil. This bill does nothing at all for the retired worker who is trying to subsist in the present economy. Here again, I would refer to part 2 of the study report, pages 26 and 27, which shows interesting statistics on the costs of living in the various cities of the country. You will note, for example, Chicago, the greatest rail center of our Nation, that a man and his wife would have to receive $1,818 per annum in order to live in our present economy. I will refer you to the monthly review of the Railroad Retirement Board, January 1954, which shows on page 18 that the average annuity granted for October 1953, was $103.49 per month and for November 1953 was $104.01. H. R. 7840 proposes to exempt labor delegates from paying the supporting taxes into the retirement system from their union salaries. If those gentlemen manifested their alleged interest in the solvency of the railroad retirement fund, they certainly would not advance such a proposition in order to relieve them from the necessary accounting of this tax. They propose to give widow survivor benefits of age 60 years but make no mention of the employee who has lost his job with the railroads and finds himself, after years of service, destitute, unable to get work at his age and unable to qualify for railroad retirement benefits because he is under the present age of retirement which is 65 years for the male employees, although under the present law the female help can retire at 60 years. H. R. 5269 again relieves this situation. H. R. 7840 provides a work clause of $100 per month on disability annuitants, on the grounds they are deemed recovered if they can earn this amount. This clause, in itself, is very viscious, and while at no time will we approve a work clause on railroad retirement, we want to point out to this honorable committee that 32 percent of our disabled workers have lost a member of their body, an eye, arm, or leg. Any financial balm they would receive would not recover them and to bar them from the field of labor would be most tragic. There may be minor cases of abuse in this connection but we should not throw away the whole apple because it carries a little spot. Now, under the provisions of our present act, those poor souls are entitled to increase their small railroad pension by doing little jobs as long as they do not receive more than $75 a month in six consecutive months. I realize, as some of those labor leaders testified a few weeks ago before the other body, that they were interested in eliminating this cheap help from the labor market so they could keep up the high wage standards. Sometimes, I question why those gentlemen should be allowed the profanity of calling themselves brotherhoods. Another feature of H. R. 7840 is the unemployment insurance proWe are a rank-and-file organization and, inasmuch as the tax supporting this feature is paid exclusively by the carriers, we did not interest ourselves in the unemployment, sickness, and maternity provision of our act. However, under this bill those labor leaders have told us that an unemployed man should receive half his daily rate of pay while unemployed with a maximum of $8 per day. I believe the President in his message to Congress put those fine words in their mouth. But there is no difference today between an unemployed man and those on |