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RAILROAD RETIREMENT ACT

"COMPUTATION OF ANNUITIES

"SEC. 3. (a) (1) ***

"(e) In the case of an individual having a current connection with the railroad industry, the minimum annuity payable shall, ***

"For the purposes of the first proviso in the first paragraph of this subsection, (i) completely and partially insured individuals shall be deemed to be fully and currently insured, respectively; (ii) individuals entitled to insurance annuities under subsections (a) (1) and (d) of section 5 of this Act shall be deemed to have attained age 62 (the provisions of this clause shall not apply to individuals who, though entitled to insurance annuities under section 5 (a) (1) of this Act, were entitled to an annuity under section 5 (a) (2) of this Act for the month before the month in which they attained age 60); (iii) individuals entitled to insurance annuities under section 5 (a) (2) of this Act shall be deemed to be entitled to insurance benefits under section 202(e) or (f) of the Social Security Act on the basis of disability; (iv) individuals entitled to insurance annuities under section 5 (c) of this Act on the basis of disability shall be deemed to be entitled to insurance benefits under section 202(d) of the Social Security Act on the basis of disability; (v) women entitled to spouses' annuities pursuant to elections made under section 2(h) of this Act shall be deemed to be entitled to wives' insurance benefits determined under section 202 (q) of the Social Security Act; (vi) individuals not entitled to an annuity under section 2 or 5 of this Act shall not be included in the computation under such first proviso except a spouse who could qualify for an annuity under section 2(e) or (h) of this Act if the employee from whom the spouse's annuity under this Act would derive had attained age sixty-five, and such employee's children who meet the definition as such contained in section 216(e) of the Social Security Act; (vii) after an annuity has been certified for payment and such first proviso was inapplicable after allowing for any waiting period under section 223 (c) (2) of the Social Security Act, and after having considered the inclusion of all persons who were then eligible for inclusion in the computation under such first proviso, or was then applicable but later became inapplicable, any recertification in such annuity under such first proviso shall not take into account individuals not entitled to an annuity under section 2 or 5 of this Act except a spouse who could qualify for an annuity under section 2 (h) of this Act when she attains age sixty-two if the employee from whom the spouse's annuity would derive had attained age sixty-five, and who was married to such employee at the time he applied for the employee annuity; (viii) in computing the amount to be paid under such first proviso, the only benefits under title II of the Social Security Act which shall be considered shall be those to which the individuals included in the computation are entitled; (ix) the average monthly wage for an employee during his lifetime shall include (A) only his wages and self-employment income creditable under the Social Security Act through the later of December 31, 1971, or December 31 of the year preceding the year in which his annuity began to accrue, and (B) his compensation

up to the date his annuity began to accrue; [and] (x) in computing the average monthly wage in clause (ix) above, section 215 (b) (2) (C) (ii) of the Social Security Act shall, solely for the purpose of including compensation up to the date the employee's annuity began to accrue, be deemed to read as follows: 'the year succeeding the year in which he died or retired'; (xi) years of coverage as defined in section 215(a) of the Social Security Act for an employee who has been awarded an annuity under section 2 of this Act shall be determined only on the basis of his wages and self-employment income credited under the Social Security Act through the later of December 31, 1971, or December 31 of the year preceding the year in which his annuity began to accrue; and (xii) in determining increment months for the purpose of a delayed retirement increase, section 202 (w) (2) (B) (ii) of the Social Security Act shall be deemed to read as follows: 'such individual was not entitled to an old-age insurance benefit'; and, for the purposes of this subsection, any possible deductions under subsections (g) and (h) (2) of section 203 of the Social Security Act shall be disregarded."

"ANNUITIES AND LUMP SUMS FOR SURVIVORS "SEC. 5. (a) **

"(1) Definitions.-For the purposes of this section the term 'employee' includes an individual who will have been an 'employee', and— "(1) The qualifications for 'widow', 'widower', 'child', and 'parent' shall be, except for the purposes of subsection (f), those set forth in section 216(c), (e), (g), and (k), and section 202 (h) (3) of the Social Security Act, respectively; and in addition

"(i) a 'widow' or 'widower' shall have been living with the employee at the time of the employee's death; a widower shall have received at least one-half of his support from his wife employee at the time of her death or he shall have received at least one-half of his support from his wife employee at the time her retirement annuity or pension began;

"(ii) a 'child' shall have been dependent upon its parent employee at the time of his death; [shall not be adopted after such death by other than a step parent, grandparent, aunt, uncle, brother or sister; shall be unmarried; and

"(A) shall be less than eighteen years of age; or

"(B) shall be less than twenty-two years of age and a fulltime student at an educational institution (determined as prescribed in this paragraph); or

"(C) shall, without regard to his age, be unable to engage in any regular employment by reason of a permanent physical or mental condition which disability began before he attained [age eighteen] age twenty-two or before the close of the 84th month following the month in which his most recent entitlement to an annuity under section 5(c) of this Act terminated because he ceased to be under such a disability, and "(iii) a 'parent' shall have received, at the time of the death of the employee to whom the relationship of parent is claimed, at least one-half of his support from such employee.

A 'widow' or 'widower' shall be deemed to have been living with the employee if the conditions set forth in section 216 (h) (2) or (3), whichever is applicable, of the Social Security Act, as in effect prior to 1957, are fulfilled, or if such widow or widower would be paid benefits, as such, under title II of the Social Security Act but for the fact that the employee died insured under this act. A 'child' shall be deemed to have been dependent upon a parent if the conditions set forth in section [202(d)(3) or (4) 202 (d) (3), (4) or (9) of the Social Security Act are fulfilled (a partially insured mother being deemed currently insured). In determining for purposes of this section and subsection (f) of section 2 and subsection (f) of section 3 whether an applicant is the wife, husband, widow, or widower, child or parent of an employee as claimed, the rules set forth in section 216(h) of the Social Security Act shall be applied deeming, for this purpose, individuals entitled to an annuity under section 2(e) or (h) to be entitled to benefits under subsection (b) or (c) of section 202 of the Social Security Act and individuals entitled to an annuity under subsection (a) or (b) of this section to be entitled to a benefit under subsection (e), (f) or (g) of section 202 of the Social Security Act. In determining for purposes of this section and subsection (f) of section 3 whether an applicant is the grandchild, brother, or sister of an employee as claimed, the rules set forth in section 216(h) (1) of the Social Security Act, as in effect prior to 1957, shall be applied the same as if such persons were included in such section 216 (h) (1). Such satisfactory proof shall be made from time to time, as prescribed by the Board, of the disability provided in clause (ii) of this paragraph and of the continuance, in accordance with regulations prescribed by the Board, of such disability. If the individual fails to comply with the requirements prescribed by the Board as to the proof of the continuance of the disability his right to an annuity shall, except for good cause shown to the Board, cease. A child whose entitlement to an annuity under section 5(c) of this Act was terminated because he ceased to be disabled as provided in clause (ii) of this paragraph and who becomes again disabled as provided in such clause (ii), may become reentitled to an annuity on the basis of such disability upon his application for such reentitlement. Where a woman has qualified for an annuity under this section as a widow, and marries ***. A child whose entitlement to a child's insurance annuity, on the basis of the compensation of an insured individual, terminated with the month preceding the month in which such child attained age eighteen, or with a subsequent month, may again become entitled to such an annuity (providing no event to disqualify the child has occurred) beginning with the first month thereafter in which he is a fulltime student and has not attained the age of twenty-two, if he has filed an application for such reentitlement.

"A child who attains age twenty-two at a time when he is a fulltime student (as defined in subparagraph (A) of paragraph 7 of section 202 (d) of the Social Security Act and without the application of subparagraph (B) of such paragraph) but has not (at such time) completed the requirements for, or received, a degree from a fouryear college or university shall be deemed (for purposes of determining whether his entitlement to an annuity under this section has terminated under subsection (j) and for purposes of determining his

initial entitlement to such an annuity) not to have attained such age until the first day of the first month following the end of the quarter or semester in which he is enrolled at such time (or, if the educational institution in which he is enrolled is not operated on a quarter or semester system, until the first day of the first month following the completion of the course in which he is so enrolled or until the first day of the third month beginning after such time, whichever first occurs). Social Security Act

"Sec. 226 (a) (1) * * *

*

"(e) Notwithstanding the foregoing provisions of this section, every individual who

(1) has not attained the age of 65;

(2) (A) is fully or currently insured (as such terms are defined in section 214 of this Act) or would be fully or currently insured if his service as an employee (as defined in the Railroad Retirement Act of 1937) after December 31, 1936, were included in the term employment as defined in this Act, or (B) is entitled to monthly insurance benefits under title II of this Act or an annuity under the Railroad Retirement Act of 1937, or (C) is the spouse or dependent child (as defined in regulations) of an individual who is fully or currently insured or would be fully or currently insured if his service as an employee (as defined in the Railroad Retirement Act of 1937) after December 31, 1936, were included in the term employment as defined in this Act, or (D) is the spouse or dependent child (as defined in regulations) of an individual entitled to monthly insurance benefits under title II of this Act or an annuity under the Railroad Retirement Act of 1937 ; and

(3) is medically determined to have chronic renal disease and who requires hemodialysis or renal transplantation for such disease;

shall be deemed to be disabled for purposes of coverage under parts A and B of Medicare subject to the deductible, premium, and copayment provisions of title XVIII.”

APPENDIX-AGENCY REPORT

UNITED STATES OF AMERICA,
RAILROAD RETIREMENT BOARD,
Chicago, Ill., May 24, 1973.

Hon. HARRISON A. WILLIAMS, Jr.,
Chairman, Committee on Labor and Public Welfare, U.S. Senate,
Washington, D.C.

DEAR MR. CHAIRMAN: This is the report of the Railroad Retirement Board on S. 1886 [identical to H.R. 7357, as reported], which was introduced by Mr. Hathaway on May 23, 1973. For the reasons stated below, the Board favors the bill and hopes for its early enactment. The amendments proposed by the bill were discussed with representatives of railroad management (Association of American Railroads) and railroad labor (Congress of Railway Unions and Railway Labor Executives' Association) who are also in favor of the bill.

The enactment of the amendments proposed by section 1 of the bill would simplify administration of the social security minimum guaranty provision contained in Section 3 (a) of the Railroad Retirement Act. This provision guarantees that the combined monthly retirement benefits which an individual and a dependent deriving benefits from him will receive under the Railroad Retirement Act and the Social Security Act (based on the individual's earnings record) would be no less than 110 percent of the amount which would have been payable to that family under the Social Security Act on the basis of the individual's combined railroad and nonrailroad earnings if his railroad service after 1936 had been covered under the Social Security Act. Under the law prior to the enactment of Public Law 92-460 on October 4, 1972, when computing an annuity under the guaranty provision the Board was required to take into account an employee's earnings in and after the year of his retirement. This necessitated a continuous policing of an annuitant's post-retirement wage record to determine whether he had received additional nonrailroad earnings and, if he did, further necessitated recomputations to determine whether the guaranty provision would, in light of the post-retirement earnings, provide a higher benefit than the regular railroad retirement annuity formula. It is a rare case where the inclusion of post-retirement social security earnings in the guaranty provision computation would result in an annuity previously paid at the rate provided by the regular formula being transferred to the rate provided under the guaranty provision. Therefore, in order to relieve the Board of the problems created by the aforementioned requirement, clauses (ix) and (x) were added to Section 3 (e) of the Act by Public Law 92-460 to provide that, in computing the "average monthly wage" for purposes of determining the amount payable under the guaranty provisions, only the individual's social security earnings through the year before his annuity began to accrue would be included.

(11)

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