(The following material was submitted for the record :) RAILWAY LABOR EXECUTIVES' ASSOCIATION, Washington, D. C., April 5, 1954. Hon. CHARLES A. WOLVERTON, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: We have received your letter of March 26 concerning H. R. 7843, which you state may be offered as an amendment to H. R. 7840 by a member of your committee when consideration is given to the latter bill. You ask for the benefit of our views with respect to H. R. 7843. This bill would eliminate the present requirement of cessation of service for a person, other than an employer covered by the act, as a condition for eligibility for an annuity; it would eliminate the present requirement of relinquishment of rights to return to the service of a person, other than an employer covered by the act, as a condition for receipt of an anuity; and it would eliminate the restriction on an annuitant with regard to working for the person, other than an employer, by whom the annuitant was last employed prior to the beginning date of his annuity. These provisions have been in the Railroad Retirement Act since 1937. They have not been considered unduly restrictive or improper by either labor or management. We do not believe that these eligibility requirements should be removed and we therefore do not favor adoption of the provisions of the bill. One of the basic principles of the railroad retirement system is involved. It may be helpful if we review the eligibility requirements. We must bear in mind that retirement is not compulsory at any age. A railroad employee may retire and be paid a monthly retirement annuity if he has stopped all compensated service, whether for a covered or noncovered employer, and if he is: (1) 65 years of age and has completed 10 years of service; (2) 60 to 64 years of age and has completed 30 years of service; (3) 60 to 64 years of age, has completed 10 years of service, is permanently disabled for work in his regular occupation, and has a current connection with the railroad industry; (4) less than 60 years of age, has completed 20 years of service, is permanently disabled for work in his regular occupation, and has a current connection with the railroad industry; (5) less than 65 years of age, has completed 10 years of service, and is permanently disabled for all regular gainful employment. A person who becomes eligible for a retirement annuity, under any one of the specified categories, makes a choice as to whether he wants to keep on working or actually retire from the employment in which he is engaged. A person cannot keep on working at his regular employment or for his regular employer and also draw an annuity. Such an arrangement would not be a bona fide retirement system, as we view the matter. H. R. 7843 would draw a line of distinction between retiring from the service of a railroad company and retiring from the service of a nonrailroad employer. In other words it would treat a person who stays with railroad work until reaching retirement age differently than a person who leaves railroad work and takes other employment before becoming qualified for an annuity. The very great majority of railroad retirement annuitants are persons who remain in the railroad industry until they reach retirement age or until they are unable to continue in railroad work due to disability. We do not think they should be treated less favorably than those relatively few who, for one reason or another, are outside the railroad industry when they become eligible. We understand the Railroad Retirement Board has estimated that enactment of H. R. 7843 would impose additional annual costs amounting to $8,500,000 or 0.17 percent of payroll. If the changes proposed by H. R. 7843 were limited only to disability annuitants the costs would be somewhat less. But we cannot justify different treatment for disability annuitants than for age annuitants in respect to cessation of service or return to service after becoming an annuitant. We do not believe the system should be changed as H. R. 7843 proposes because in a very few cases it may have appeared to have worked in an inequitable manner under unusual circumstances. On the whole the present provisions are desirable and necessary and we recommend that they not be changed. This letter may be considered a response to your inquiry from not only the Railway Labor Executives' Association but also from the four train and engine service brotherhoods, whose representatives have approved its contents. Respectfully yours, A. E. LYON, Executive Secretary. Hon. CHARLES A. WOLVERTON, ASSOCIATION OF AMERICAN RAILROADS, LAW DEPARTMENT, Washington, D. C., April 13, 1954. Chairman, House Committee on Interstate and Foreign Commerce, House of Representatives, Washington 25, D. C. MY DEAR MR. WOLVERTON: This is in response to your letter of March 26, 1954, asking for the views of this association with respect to H. R. 7843, a bill which would amend the Railroad Retirement Act in such a way as to permit an individual to collect a railroad-retirement annuity and at the same time to continue to work for the nonrailroad employer for whom he was working at the time he became eligible for a railroad annuity. Under the present act, if a former railroad man is working for a nonrailroad employer at the time he reaches age 65, he cannot collect his railroad-retirement annuity until he leaves the service of that employer. And if he returns to the service of that nonrailroad employer, his railroad annuity is not paid for any month in which he works for that employer. This association is opposed to the passage of H. R. 7843 for a number of reasons. In the first place the bill, according to the estimates of the Railroad Retirement Board, would impose an additional annual cost on the railroadretirement system of $82 million. The bill itself provides no means of providing funds to pay this additional cost. If H. R. 7843 were added to H. R. 7840 as an amendment to that bill it would increase the costs of H. R. 7840 to a point where they would be substantially in excess of the revenues derived from the increased taxes provided for in H. R. 7840. As has been shown in testimony before your committee during the course of hearings on other bills dealing with amendments to the Railroad Retirement Act, the retirement fund's annual deficit on a level-cost basis over the years is $45 million. The railroads have always taken the position that it is of the greatest importance that the railroad-retirement system be maintained on a sound financial basis. H. R. 7843 would not improve the present unsatisfactory situation, but would materially increase the large annual deficit in the railroad-retirement fund. For that reason, if for no other, the railroads would oppose H. R. 7843. Those provisions of the act which would be changed by H. R. 7843 are of long standing. In 1937, at the instance of the President of the United States, the railroad industry and the standard railroad labor organizations reached agreement on a railroad retirement bill and that bill was introduced in the Congress. The bill in the form introduced provided that service earned by an employee prior to January 1, 1937, should not be taken into consideration in determining that employee's annuity unless two factors were present-that he had been an employee on August 29, 1935, and also that he was a railroad employee when he reached retirement age and became eligible for retirement benefits. Those two factors had to coincide before prior service could be taken into consideration in computing the annuity. After the bill was introduced the labor organizations suggested certain changes in the bill. One of those changes was to strike the requirement that in order to receive credit for prior service an individual had to be in an employment relationship when he reached retirement age and became eligible for his annuity. This permitted a man who was in an employment relationship with a railroad on August 29, 1935, and who dropped out of railroad service before he reached the age of 65, to claim an annuity at 65 and count all of his service both subsequent to January 1, 1937, and prior to that date up to a maximum of 30 years. This proposed change in the agreed bill, of course, added to the costs of the system and for that reason, the labor representatives accompanied their first proposal with a second proposal to offset the cost of the first. The second proposed amendment provided that an employee who left railroad service before reaching retirement age and went to work for a nonrailroad employer had to relinquish his employment and employment rights with such employer in order to receive an annuity under the Railroad Retirement Act. The financial result of the second proposal was found by the actuaries to be sufficient to offset the costs of the first suggested change. The railroads agreed to these changes suggested by the labor organizations, and the agreed bill with the agreed amendments became the 1937 act. Congress, while amending the Railroad Retirement Act on a number of subsequent occasions, has continued both of the above provisions in effect. To the best of my knowledge neither the railroads nor the standard railroad labor organizations have suggested any amendments such as are provided for in H. R. 7843. The provisions of the Railroad Retirement Act which would be stricken by H. R. 7843 were included in the agreed act of 1937 as a method of saving money for the railroad retirement system in order to make money available to pay the cost of providing certain additional benefits for annuitants. The savings provided by those provisions have been spent by paying such additional benefits. If those provisions should be repealed as H. R. 7843 proposes to do, it would amount to spending the same money twice. For the reasons set forth in this letter, the railroads believe that your committee should not favorably report H. R. 7843. Sincerely, J. CARTER FORT. (Thereupon, at 12:25 p. m., the hearing was closed.) |