The Board, accordingly, recommends that no favorable consideration be given to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. Hon. J. PERCY PRIEST, RAILROAD RETIREMENT BOARD, Chicago, Ill., January 16, 1956. Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 7986 which was introduced in the House of Representatives by Mr. Van Zandt on January 3, 1956, and which was referred to your committee for consideration. The bill would increase all retirement and survivor annuities by 20 percent. The bill would not increase (i) a minimum annuity which, under section 3 (e) of the Railroad Retirement Act, is equal to the employee's "monthly compensation," (ii) a spouse's annuity which is now $54.30, (iii) a spouse's annuity by as much as 20 percent if such annuity is now over $45.25, (iv) a survivor annuity which, after the enactment of the bill, would be payable under the social-security minimum, and (v) a survivor annuity by as much as 20 percent if such annuity is now payable under the social-security minimum even though after the enactment of the bill such annuity would be payable under the regular formula. The amendments would be effective with respect to annuities, covered by the bill, accruing for months following the month of enactment of the bill. All recertifications required by the bill would have to be made by the Board without application therefor. The Board is opposed to the enactment of the bill for the following reasons: 1. The bill, if enacted, would increase the cost of the railroad retirement system by about 3 percent of payroll, or $160 million a year; 2. The bill makes no provision for financing the additional cost which its enactment would entail; 3. The railroad retirement system cannot absorb the added cost because the sixth actuarial valuation of the railroad retirement system shows that the net level cost of benefits under the act is 14.13 percent of taxable payroll. 4. The effect of the enactment of the bill would be to increase the deficiency to 4.63 percent of payroll or $246 million on a level basis. This would bring about a situation where the balance in the railroad retirement account would begin to decrease almost immediately because the total benefit disbursements would exceed the tax collections plus the interest earned by the account. The Board, accordingly, recommends that no favorable consideration be given to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOArd, Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 7987, which was introduced in the House of Representatives by Mr. Van Zandt on January 3, 1956, and which was referred to your committee for consideration. The bill would increase widows' insurance annuities under the Railroad Retirement Act of 1937, as amended, by 15 percent. The bill would not increase dependent widowers' annuities. The amendments would be effective with respect to widows' insurance annuities for months following the month of enactment of the bill. All recertifications required by the bill would have to be made by the Board without application therefor. The Board is opposed to the enactment of the bill for the following reasons: 1. The bill, if enacted, would increase the cost of the railroad retirement system by 0.47 percent of payroll, or about $25 million a year. 2. The bill makes no provision for financing the additional cost which its enactment would entail. 3. The railroad retirement system cannot absorb the added cost because the sixth actuarial valuation of the railroad retirement system shows that the net level cost of benefits under the act is 14.13 percent of taxable payroll. Since the actual tax rate is only 12.50 percent, the present benefit structure already involves an actuarial deficiency of 1.63 percent of payroll, which is equivalent to about $86 million a year on a level basis. 4. The effect of the enactment of the bill would be to increase the deficiency to 2.10 percent of payroll or approximately $110 million a year. The Board, accordingly, recommends that no favorable consideration be given to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOARD, Chicago, Ill., January 17, 1956. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate nad Foreign Commerce, DEAR MR. PRIEST: This is a report on H. K. 7988, which was introduced in the House of Representatives by Mr. Van Zandt on January 3, 1956, and which was referred to your committee for consideration. The bill would increase all retirement and survivor annuities by 15 percent. The bill would not increase (i) a minimum annuity which, under section 3 (e) of the Railroad Retirement Act, is equal to the employee's monthly compensation, (ii) a spouse's annuity which is now $54.30, (iii) a spouse's annuity by as much as 15 percent if such annuity is now over $47.22, (iv) a survivor annuity which, after the enactment of the bill, would be payable under the social security minimum, and (v) a survivor annuity by as much as 15 percent if such annuity is now payable under the social security minimum even though after the enactment of the bill such annuity would be payable under the regular formula. The amendments would be effective with respect to annuities, covered by the bill, accruing for months following the month of enactment of the bill. recertifications required by the bill would have to be made by the Board without application therefor. All The Board is opposed to the enactment of the bill for the following reasons: 1. The bill, if enacted, would increase the cost of the railroad retirement system by about 2.25 percent of payroll, or about $120 million a year. 2. The bill makes no provision for financing the additional cost which its enactment would entail. 3. The railroad retirement system cannot absorb the added cost because the sixth actuarial valuation of the railroad retirement system shows that the net level cost of benefits under the act is 14.13 percent of taxable payroll. Since the actual tax rate is only 12.50 percent, the present benefit structure already involves an actuarial deficiency of 1.63 percent of payroll which is equivalent to about $86 million a year on a level basis. 4. The effect of the enactment of the bill would be to increase the deficiency to 3.88 percent of payroll or about $206 million on a level basis. This would bring about a situation where the balance in the railroad retirement account would begin to decrease in the very near future because the total benefit disbursements would exceed the tax collections plus the interest earned by the account. The Board, accordingly, recommends that no favorable consideration be given to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOARD, Chicago, Ill., January 17, 1956. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 7989, which was introduced in the House of Representatives by Mr. Van Zandt on January 3, 1956, and which was referred to your committee for consideration. The bill would increase widows' insurance annuities under the Railroad Retirement Act of 1937, as amended, by 10 percent. The bill would not increase dependent widowers' annuities. The amendments would be effective with respect to widows' insurance annuities for months following the month of enactment of the bill. All recertifications required by the bill would have to be made by the Board without application therefor. The Board is opposed to the enactment of the bill for the following reasons: 1. The bill, if enacted, would increase the cost of the railroad retirement system by 0.32 percent of payroll, or about $17 million a year. 2. The bill makes no provision for financing the additional cost which its enactment would entail. 3. The railroad retirement system cannot absorb the added cost because the sixth actuarial valuation of the railroad retirement system shows that the net level cost of benefits under the act is 14.13 percent of taxable payroll. Since the actual tax rate is only 12.50 percent, the present benefit structure already involves an actuarial deficiency of 1.63 percent of payroll which is equivalent to about $86 million a year on a level basis. 4. The effect of the enactment of the bill would be to increase the deficiency to 1.95 percent of payroll or approximately $103 million a year. The Board, accordingly, recommends that no favorable consideration be given to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOARD, Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 7990 which was introduced in the House of Representative by Mr. Van Zandt on January 3, 1956, and which was referred to your committee for consideration. The bill would increase all retirement and survivor annuities by 10 percent. The bill would not increase (i) a minimum annuity which, under section 3 (e) of the Railroad Retirement Act, is equal to the employee's monthly compensation, (ii) a spouse's annuity which is now $54.30, (iii) a spouse's annuity by as much as 10 percent if such annuity is now over $49.36, (iv) a survivor annuity which, after the enactment of the bill, would be payable under the social-security minimum, and (v) a survivor annuity by as much as 10 percent if such annuity is now payable under the social-security minimum even though after the enactment of the bill such annuity would be payable under the regular formula. The amendments would be effective with respect to annuities, covered by the bill, accruing for months following the month of enactment of the bill. All recertifications required by the bill would have to be made by the Board without application therefor. The Board is opposed to the enactment of the bill for the following reasons: 1. The bill, if enacted, would increase the cost of the railroad retirement system by about 1.57 percent of payroll, or $83 million a year. 2. The bill makes no provision for financing the additional cost which its enactment would entail. 3. The railroad retirement system cannot absorb the added cost because the sixth actuarial valuation of the railroad retirement system shows that the net level cost of benefits under the act is 14.13 percent of taxable payroll. Since the actual tax rate is only 12.50 percent, the present benefit structure already involves an actuarial deficiency of 1.63 percent of payroll which is equivalent to about $86 million a year on a level basis. 4. The effect of the enactment of the bill would be to increase the deficiency to 3.20 percent of payroll or $169 million on a level basis. The Board, accordingly, recommends that no favorable consideration be given. to this bill. Inasmuch as hearings on bills to amend the Railroad Retirement Act have been set for January 24, 1956, this report is submitted without prior clearance with the Bureau of the Budget. A copy of the report is being forwarded to the Bureau of the Budget today and you will be informed of the views of that Bureau as soon as they are received. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOard, Chicago, Ill., June 14, 1955. IIon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 2026 which was introduced in the House of Representatives by Mr. O'Konski on January 11, 1955, and which was referred to your committee for consideration. The bill would amend the Railroad Retirement Act of 1937, as amended, by eliminating paragraph 2 of section 5 (g) of the act retroactively to July 31, 1946. The effect of such an amendment would be as follows: 1. The restriction that an individual may receive no more than one survivor i annuity under the Railroad Retirement Act, would be repealed. At present, only one such annuity (the largest) is payable. 2. The present restriction in section 5 (g) (2), requiring the reduction of survivor annuities by the amount of certain insurance benefits under the Social Security Act, would be repealed. 3. The restoration of reductions in railroad retirement survivor benefits in accordance with changes 1 and 2 above would be retroactive to January 1, 1947, the date on which survivor insurance benefits first became payable under the Railroad Retirement Act. Specifically, the bill would permit survivors to receive retroactively from January 1, 1947, full benefits under the Railroad Retirement Act even though they may simultaneously be entitled to other survivor annuities under the Railroad Retirement Act or to certain insurance benefits under the Social Security Act. At present, multiple survivor insurance annuities are not payable under the Railroad Retirement Act, and railroad retirement survivor benefits are reduced by the amounts of specified social security benefits. The combined employer-employee taxes for the support of the railroad retirement system amount to 12.5 percent of taxable payroll with a limit of $350 a month per employee. The latest actuarial estimates made in connection with the 1954 amendments to the Railroad Retirement Act show that the level cost of benefits under the act is 13.43 percent of payroll, indicating a present deficiency of about $51 million a year. We estimate that the additional cost of the amendments proposed in H. R. 2026 would come to approximately $14 million a year on a level basis. This would increase the deficiency from $51 million to $65 million a year. Although there are other important reasons why the Board believes that this bill should not be enacted, the fact that it would provide no additional revenue to meet the substantial increase in the cost of benefits, compels the Board, for that reason alone, to recommend that no favorable consideration be given to the bill. The Bureau of the Budget advises that it has no objection to the Board's submission of this report. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT Board, Chicago, Ill., June 14, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 4301 which was introduced in the House of Representatives by Mr. O'Konski on February 23, 1955, and which was referred to your committee for consideration. Except for minor differences in language, this bill is identical to H. R. 3401 which was introduced in the House by Mr. Boyle on February 2, 1955. Accordingly, for H. R. 4301, we refer to our report on the earlier bill previously mentioned. For the reasons stated in our report on H. R. 3401, the Board recommends that no favorable consideration be given to the practically identical bill, H. R. 4301. The Bureau of the Budget advises that it has no objection to the Board's submission of this report and recommends against enactment of the bill. Sincerely yours, RAYMOND J. KELLY, Chairman. RAILROAD RETIREMENT BOARD, Chicago, Ill., June 14, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. PRIEST: This is a report on H. R. 3401 which was introduced in the House of Representatives by Mr. Boyle on February 2, 1955, and which was referred to your committee for consideration. The bill would amend the Railroad Retirement Act of 1937, as amended, in the following manner: 1. Spouse's annuities would become payable at age 60 instead of the present age 65. 2. The monthly compensation would be based on 5 calendar years (consecutive or otherwise) of highest earnings during the employee's whole working lifetime. At present, the monthly compensation is based on total creditable earnings during the whole period of the employee's railroad service with special provisions made for the computation of earnings before 1937 according to the base period 1924-31. 3. The limit on all creditable monthly compensation would retroactively be raised to $350. Under present law, the limit is $300 a month per employee in service before July 1954, and $350 a month thereafter. 4. The formula for computing the "basic amount" which enters in the calculation of survivor insurance benefits would be revised so as to result in increasing such "basic amount" by a minimum of 25 percent to a maximum of slightly over 32 percent. The changes would become effective the first of the month following the month of enactment of the bill. The Board would be required to recertify, without application, all annuities which could be affected by any of the changes specified in the bill. Apart from any other consideration, the amendments proposed in the bill would create administrative difficulties which would be almost insurmountable. First, it would be necessary to secure detailed earnings records for service before 1937 in order to make adjustments for the increased limit on creditable compensation. In a large number of cases old payroll records may no longer be available. The |