4

At that time, however, it did not appear that H.R. 1 would be acted upon in 1972, and, therefore, the provisions in question were never introduced in the 92d Congress. Since H.R. 1 was subsequently enacted on October 30, 1972, as Public Law 92-603, this bill is being sponsored by the Board and would make the following changes:

(1) a child's survivor benefit would continue after his

(2)

adoption by anyone, instead of by a close relative only;

a survivor benefit would be paid to a child for a
disability which began before age 22, rather than
before age 18 as is provided under present law
this amendment, I might add, would also permit
widows under age 60 and certain wives under age 62

to become eligible for annuities if they have a

child in their care who became disabled between the
ages of 18 and 22;

(3) a student child would continue to receive benefits

(4)

until the end of the school term in which he

reaches age 22; and

a dependent grandchild would be treated as a child of
his grandparent.

The costs resulting from these changes in eligibility conditions, together with the costs and savings from the technical amendments enacted last year, which were originally to contain them, and additional financial interchange gains because of the enactment of Public Law 92-603, balance out so that

no financial burden to the railroad retirement system would result.

-5

In addition to the above-discussed provisions, Public Law 92-603

so provided medicare coverage, beginning July 1, 1973, to individuals sured under the Social Security Act, their spouses, or their dependent ildren who need treatment for kidney disease, but failed to provide ch coverage for persons covered under the Railroad Retirement Act. is oversight is corrected by the bill, thereby fully restoring persons wered under the railroad retirement system to the same medicare coverage is provided persons covered under the social security system in all her respects railroad retirement beneficiaries are already entitled the same medicare coverage as their social security counterparts. This concludes our statement, Mr. Chairman and Members of the We hope that you will report favorably on the bill at

mmittee.

ur earliest convenience.

90

Senator HATHAWAY. We have next on our witness list Mr. Neil P. Speirs. Would you like to read or summarize your statement for us, please?

STATEMENT OF HON. NEIL P. SPEIRS, LABOR MEMBER, RAILROAD RETIREMENT BOARD

Mr. SPEIRS. Mr. Chairman and members of the committee, my name is Neil P. Speirs, and with me is Wythe D. Quarles, Jr. We are both members of the Railroad Retirement Board representing railroad employees and employers, respectively. We appear here to discuss the provisions of the bill, H.R. 7200, as it was passed by the House, and the bill, S. 1867.

We favor the provisions in section 101 of each bill which provides for unreduced annuities to men at age 60 with 30 years of service, effective with respect to annuities which first begin to accrue on or after July 1, 1974.

This amendment is long overdue in that it would eliminate the discrimination between men and women employees in this regard. For the past several years, many Members of Congress have introduced bills to achieve this result. The Railroad Retirement Board, however, found it necessary to oppose such bills because, in all such instances, the bills made no provision for the financing of the added cost.

This time, however, we as members of the Board, are in favor of this amendment because it is quite clear from the other provisions of the bill that the representatives of railroad labor and management are seriously negotiating very substantive changes for the railroad retirement program which will require them to take into account the cost of the entire program including, of course, the cost of this amendment.

In this connection, we are opposed to the last sentence of section 108(a) of the Senate bill. This sentence would make inapplicable the provisions of section 101 as of the close of December 31, 1974. We favor the House version which would make unnecessary the provisions of section 120 (a) of the Senate bill.

Similarly, we favor the provisions of section 102 of both bills which provide for reducing employee railroad retirement tax rates to the level of the social security employee tax rates, effective with respect to compensation paid for service rendered after September 1973.

This reduction would be from 10.60 percent of taxable payroll to 5.85 percent-a reduction of 4.75 percent. The same section would increase the employer railroad retirement tax rate by 4.75 percent of taxable payroll to compensate for the reduction in the employee tax

rate.

This increase would be from 10.60 percent to 15.35 percent. We believe that, after months of serious negotiations, the representatives of railroad labor and management have made great progress toward the goal of solving the problems confronting the railroad retirement system.

In its report on these problems, the Commission on Railroad Retirement made a number of recommendations with regard to the restructuring of the system. One of such recommendations would place railroad employees on a par with employees in other industries with regard to railroad retirement taxes.

9.1

ction 6 of Public Law 42-460, after discussing the problems coning the railroad retirement program, directed representatives of Dad labor and management to submit to Congress a report conng their joint recommendations for improving the railroad retiresystem and that such recommendations should take into account ecommendations of the Commission on Railroad Retirement. ction 102 of each bill is a partial compliance with this congres1 mandate and the recommendation of the Commission; this secprovides for reducing employee railroad retirement_tax_rates, ive with respect to compensation paid for services rendered after -mber 1973, to the social security employee tax rate.

also favor the provisions of section 103 of both bills. This secwould extend to December 31, 1974, the temporary 15-percent ase in railroad retirement benefits provided in 1970 by Public 91-377, the temporary 10-percent increase in such benefits proin 1971 by Public Law 92-46, and the temporary 20-percent ine in such benefits provided in 1972 by Public Law 92-460, all of are due to expire on June 30, 1973.

e reason for this extension is obvious. We doubt that anyone I want to see these temporary benefits terminated next June 30. termination would require reducing annuities under the Railroad ement Act by about one-third and we are certain no one wants to is happen.

support section 104 of both bills, but before discussing this secwe think it important to review briefly a provision in the Railroad ement Act which requires that annuities be computed under a I formula (instead of the regular railroad retirement formula) h computation would produce a higher annuity. Cowen discussed that in this statement.

such special formula annuities are increased automatically whensocial security benefits are increased. However, annuities comunder the regular railroad retirement formula cannot be ind without special congressional action.

tion 104 of both bills provides for increasing all regular formula ties, but only if social security benefits are increased in the period , 1973, to December 31, 1974, and only by no more than the same amount by which they would be increased under the Social ity Act if the service and compensation on which they are based een employment and wages, respectively, under the Social Secu

ct.

you know, no increase in social security benefits is contemplated s period, and the cost-of-living increases now provided in the Security Act will not be effective before January 1, 1975. ertheless, as a precautionary measure, section 104 of both bills make certain that, should social security benefits be increased t period, regular formula annuities under the Railroad RetireAct would also be increased.

differences between the two bills are as follows:

he Senate bill would terminate the provision in section 101 for uced annuities to male employees at age 60 with 30 years of servof the close of December 31, 1974. Although section 120 (a) of -nate bill would make this provision permanent effective Janu

92

2. Section 107 of the House bill requires the parties to continue their negotiations and to report their joint recommendations to the Congress not later than July 1, 1974. This would allow the parties about a year to negotiate, and to reach agreement on, the very complex problems confronting the railroad retirement system-problems which, in our judgment, can be resolved only by them because they understand these problems and they will be personally affected by their solutions. Only through collective bargaining were the parties able to reach the agreement on the tax provisions provided in section 102 of both bills.

Considering the complexity of these problems and the fact that representatives of railroad labor consist of two groups-the Congress of Railway Unions and the Railway Labor Executives' Associationand that representatives of railroad management consist of two groups the Association of American Railroads and the National Railway Labor Conference-and the fact that sometimes there are differences of opinion among representatives of any one of those groups, the provision to allow them 12 months to negotiate with a view to reaching agreement is quite reasonable.

Under section 107 of the Senate bill, however, the representatives of railroad labor and management would have to report to the Congress their joint recommendations not later than March 1, 1974, instead of July 1, 1974. Of course, if they should reach agreement within less than the 12-month period, provided in the House bill, they would so report to the Congress.

On the other hand, if they should be unable to reach agreement within the 8-month period allowed in the Senate bill the unresolved problems would fall into the lap of the Congress; and this, of course, we believe should be avoided.

This section of the Senate bill provides further that the representatives of railroad labor and management should give notice to the Congress, within 30 days after the enactment of the bill, of the identity, by name and position, of each of them.

In addition they would be required to hold meetings not less often than once a month, to keep minutes of their meetings, and to file with the Congress "interim reports as to the progress being made toward completion" of their report. In this connection Mr. Quarles and I have had considerable experience as negotiators in the railroad industry at the national level.

It is our opinion that some of the provisions contained in section 107 of the Senate bill would not tend to stimulate collective bargaining on these very complex issues, but, on the contrary, may very well act as a deterrence.

Particularly we believe that the requirement to keep minutes of the meetings will impede a free exchange of ideas among the negotiators. We have no objections to the requirement that the parties hold meetings as required by this section.

However, the very nature of negotiations are such that progress cannot be indicated by periodical reports since often all elements remain tentative with neither party committed until the entire package is agreed upon. In our opinion, therefore, such a requirement might be a deterrence instead of an aid to negotiations.

We should point out that representatives of railroad labor and management have an impressive record of reaching agreements on