RAILROAD RETIREMENT LEGISLATION WEDNESDAY, JANUARY 25, 1956 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS Washington, D. C. The subcommittee met at 10:15 a. m., pursuant to recess, in room 1334, House Office Building, Hon. Oren Harris (chairman) presiding. Mr. HARRIS. The committee will come to order. The committee resumes hearings this morning on the various bills proposing to amend the Railroad Retirement Act and the Railroad Unemployment Insurance Act. Yesterday we heard several of our colleagues on various bills that they sponsored. We have several more of our colleagues here today, whom we are glad to welcome. First I should like to recognize the presence of the members of the Railroad Retirement Board, who were also present yesterday. I think everyone knows who you are, but in order that the record may show your continued interest in this program, and your presence here, I should like to present you informally. We have the Chairman of the Board, Hon. Raymond J. Kelly and his associates, Hon. Horace W. Harper, and Hon. Thomas W. Healy. We are glad to have you gentlemen, and the members of your staff who are here. We, of course, always welcome you, too. The first witness this morning we shall be glad to hear from is our colleague, the Honorable Byron G. Rogers from Colorado. Mr. Rogers is a sponsor of H. R. 3612, to amend the Railroad Retirement Act. We are very glad to welcome you, Byron, if I may say so informally, to give the committee your statement and explanation of the bill which you have introduced on this important subject. STATEMENT OF HON. BYRON G. ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO Mr. ROGERS. Mr. Chairman and members of the committee, my name is Byron G. Rogers. I am a Representative of the First Congressional District of Colorado, which is the city and county of Denver. I thank you and the members of this committee for the opportunity to appear and testify concerning my bill, H. R. 3612, to amend the Railroad Retirement Act and related bills. During the adjournment between the 1st and 2d sessions of the 84th Congress, it was my privilege to discuss my bill and other pending bills that seek to amend the Railroad Retirement Act with many railroad men who are covered by this act. Incidentally, my district is a railroad center, and most of the employees of the railroad are residents of the city and county of Denver and are vitally affected by any action taken by the Congress. The general sentiment reflected by those who have paid into the fund is that there should be an increase in the amount that beneficiaries can receive under the act. It was pointed out that the increased cost of living has made it extremely difficult for those who have retired to exist on the amount now being paid; and, because of this condition, there is a hesitancy of those eligible to retire to take their retirement. It is felt that if a sufficient increase were authorized by Congress, some of the men eligible would retire and make room for younger men. There was also sentiment that the length of service should be a factor in determining eligibility for retirement. As most of you know, the law now requires that a man reach a certain age before he is eligible for retirement. It is felt that if an individual has performed services for 30 or 35 years, he should be eligible for retirement. Then again sentiment was expressed that there should be a change in the law whereby men could take their five highest earning years and use that as the basis for the computation of their retirement. It was pointed out that in many instances, due to the change in conditions in the railroad industry, some men are not able, because of the uncertainty of their employment, to have a high average. Nevertheless, they have for a number of years been employees and, due to circumstances beyond their control, their average earnings do not constitute a sufficient amount to make retirement attractive. By necessity, they must continue in their employment. Some adjustment should be made to alleviate the condition where an individual may have been employed for a number of years but did not reach his peak. Naturally, I recognize this is a self-sustaining fund, and we want to keep it actuarially sound at all times. However, many inequities have developed, and I am hopeful this committee will explore all of the potentials and if possible report a bill that will give an adequate increase to meet the high cost of living and rearrange the formula so that it will be most beneficial to those employed in the railroad industry. That is the short statement I have, which I will file with the committee. If there are any questions on my bill or any matter that the members of the committee would like to direct my attention to concerning the conference I had, I would be glad to answer. I may state that we did have a meeting of a number of people interested, and at this meeting the Railroad Retirement Board sent one of their men to explain most of the situations that develop. We have an office in the city and county of Denver that has operated very satisfactorily so far as I am concerned, and any requests that have ever been made from them in trying to get facts and figures and other information, they have been most cooperative. Mr. HARRIS. Thank you very much, Mr. Rogers. When was this meeting held? Mr. ROGERS. It was about December 18, 1955. Mr. HARRIS. By whom was the meeting called? Mr. ROGERS. The meeting was called by representatives from all of the brotherhoods, plus the clerks and others who are under the act. They were asked to send representatives to the meeting, where these matters were discussed. Mr. HARRIS. They came to you and you in turn asked representatives of the Railroad Retirement Board to come in? Mr. ROGERS. That is right. It was at night, and I am sure that they did not give them any extra compensation for coming, but the gentlemen came and stayed throughout the meeting. Mr. HARRIS. The meeting was attended by these representatives of each group? Mr. ROGERS. There was a representative from every group, plus other individuals who were not necessarily officers of the particular group that they may belong to. Of course, there were the carmen and engineers and firemen. Mr. HARRIS. How many people would you say attended this meeting? Mr. ROGERS. We had about 150. Mr. HARRIS. They were all local? Mr. ROGERS. Yes, sir. Mr. HARRIS. Around the city of Denver? Mr. ROGERS. That is right. Mr. HARRIS. How many people would you say they represented? Mr. ROGERS. They would represent in the neighborhood of 3,000. Mr. HARRIS. Were all of the brotherhoods represented at that meeting? Mr. ROGERS. Yes, sir. Mr. HARRIS. Were methods discussed at the meeting as to how the present deficit in the railroad retirement account, together with the cost of proposed additional benefits, could be taken care of? Mr. ROGERS. Yes. It was discussed, but the question came up, as I have indicated here, as to the actuarial soundness under the method we have proceeded under in the past. Naturally, there is a division that you and I are familiar with of the two groups. Mr. HARRIS. Yes, of course. Mr. ROGERS. I must say that no individual suggested an absolute solution. Some took the position that so long as they were paying this amount in, and it was a large amount, and was being matched by the employer, that they saw no reason why we could not consider it a good deal like an insurance company or any other group that has commitments to meet, that the continued operation of that particular company or of this particular railroad retirement funds. If, for example, they had to either pay back everything that they had taken in, and take the obligations that they had acquired as a result of the act, naturally it would not pay all the way around. But it was felt that if we would consider the future as the insurance companies and others do, that there would be a sufficient fund probably to increase it. Some disputed the fact whether they had full knowledge of it or not. They were of the opinion that there should be a sufficient fund to do it, giving an increase and changing some of the formulas. Mr. HARRIS. Is there any information available to your group about the status of the retirement fund as reported by the Board a few days ago in its Sixth Actuarial Report? Mr. ROGERS. That is a few days ago? Mr. HARRIS. Yes. Mr. ROGERS. No, it was not. Mr. HARRIS. Did you have information at that time that the actuarial status of the Railroad Retirement Board showed a deficit of about 1.63 percent of payroll? Mr. ROGERS. When was that report made, may I inquire? Mr. HARRIS. December 22 is the date I see on the copy of the report that I have here. It is the Sixth Actuarial Valuation of the Railroad Retirement System, related to the law in effect on December 31, 1955. It shows that the net level cost of the Railroad Retirement System as it now exists is 14.13 percent of the taxable payroll. Of course, the contributions now, as you know, are 12.5 percent of payroll. Mr. ROGERS. Yes. Mr. HARRIS. Which makes a deficiency, according to this actuarial report, of 1.63 percent, or about $86 million a year on the level basis. You did not have this information at the time you discussed this problem, I suppose. Mr. ROGERS. At the time the problem was discussed it was brought out that a study was to be made. I assume that this is that report, or is this just the report of the Retirement Board, because there is some disagreement among the actuaries. Mr. HARRIS. I realize that. Mr. ROGERS. That was discussed, and it also was discussed that some had reported that there would be a deficit even if it continued under the present law. Of course that led to quite an argument. Some said that they did not see how that could be possible, and then they asked the question, how much it cost to administer the fund. When it was pointed out that it was very small in comparison with other administrations of funds, it was not discussed any further. I will put it this way, that at least one group said, "Let us keep that actuarially sound regardless of what amount we get out of it," and that led to quite an argument. But we did not have the brokendown figures as you have submitted them here. Mr. HARRIS. I am going to ask you some questions about your meeting because this is the first report that we have received directly from a meeting such as you have described, where the people have come together and discussed the retirement system. That is the reason I think it is pretty important that we get such information as you have and can give us. Your bill is identical, I believe, to H. R. 2573, by our colleague, Mr. Cunningham. Mr. ROGERS. That is right. Mr. HARRIS. Is there any difference in the bill you introduced and the bill that Mr. Bennett of Florida, Mr. Van Zandt of Pennsylvania, and others have introduced? Mr. ROGERS. Yes, there is some difference. The exact differences I am not in a position to point out at this time. However, they were discussed. The chief thing that I think that all of them seek to attain Mr. HARRIS. I stand corrected myself. I believe the bill of Mr. Bennett of Florida is identical to the bill you and Mr. Cunningham introduced. Mr. ROGERS. The Van Zandt bill, I think, is different. That is what I had reference to. I think probably Van Zandt has one bill somewhat similar to this, but he has a number of others. |