« PreviousContinue »
1. Each of the proposed revisions will only affect employees with at least 30 years of service; otherwise the set of benefits under the present Retirement Act will remain unchanged. It is necessary to introduce such a limitation because the cost of benefits relative to pay roll would be far out of reach if the second and third provisions were applied in all cases of retirement. Under such circumstances, for example, it would be possible for a limitless number of individuals to work for just 1 day in a month, withdraw from the industry permanently and then be able to draw an annuity of $50 a month when retirement age was attained. This was obviously not the intention of the suggested changes in the present act. 2. Compensation will be credited up to a maximum of $300 per month in line with present provisions. 3. The proposed annuities represent the minimum amounts which will be available monthly to individuals satisfying the eligibility requirements. Otherwise there could be instances in which a smaller monthly annuity would be paid than under the present act. The additional cost for retirement after 30 years of service regardless of age would be about 3% percent of pay roll. This represents a probable figure in the event that the retirement provision is permissive rather than compulsory. In the latter instance when employees must retire as soon as they obtain 30 years of service, the increase in cost would be closer to 7 percent of pay roll. Let us now consider the effect of the proposed change in the benefit formula. For individuals with maximum earnings of $300 per month and 30 years of service the present act would make an annuity of $120 per month available. The change in the benefit formula would increase this amount to $150, representing an increase of 25 percent. For individuals at the $200 monthly earnings level, with 30 years of service, the change would be from $90 to $100 per month or about 11 percent. There would be no modification when the monthly compensation dropped to the $150 level. In both cases the annuity would then be $75 per month. Taking these facts into consideration we figure that the change in annuity formula would add about 9% percent of pay roll to costs. Survivor benefits: Not only would there generally be an increase in the widows’ annuities under the suggested proposal but also such survivor annuities would be payable regardless of her age and would only cease upon her remarriage or death. Under the present act the widow's insurance annuity would be paid from age 65 while the widow's current insurance annuity would cease at the latest when the youngest child reaches age 18. We estimate that the additional cost for this element of your proposals would be about 1% percent of pay roll. Thus, on the assumption that employee retirement after 30 years of service, regardless of age, will be premissive rather than compulsory, the increased cost of this series of amendments over, and above that for the present act could well be about 5% percent of pay roll (3% plus 4 plus 1%). It is emphasized in this connection that no changes whatsoever have been provided for with respect to all other benefits in cases where the employee has less than 30 years of service. If you have in mind liberalizations of the present provisions where the individual dies or retires with less than 30 years of service then the cost estimate made herein must be revised upward. I trust that the information given above will be satisfactory for your purposes. Very truly yours, WALTER MATSCHECK, Director of Research.
Another important reason for the railroader's desire for earlier retirement is his constant apprehension of being removed from service in advanced years for failure to continue to meet the high physical standards set for his important occupation. Constantly exposed to the hazards of the elements, working long hours, called out to both day and night duty, living away from home, subjected to dangers to life and limb, the strains and stresses of constant repair work, he suffers a high incidence of malignant illnesses, such as heart disease, diabetes, kidney inflammation, high blood pressure, hypertension, etc. These diseases, according to the recent reports of the United States Census Bureau, accelerate in tempo from the ages of 45 to 64 and an even greater proportion from the ages of 65 upward. For most of this, the railroad man is not today eligible for disability retirement, as he may be held capable of continuing work at his own occupation, at the cost of shortening his alloted life span. The right to a reasonably early retirement after having served the carrier and the public 30 years would go far to give these workers the help they so badly need.
The retirement pension bears, too, on the increasing threat to railroad workers of mass lay-offs and unemployment. Railroad management has launched a national movement to put into effect consolidations, mergers, and abandonment of small unprofitable railroad lines. The placing in use of Diesel engines in vast numbers, has already caused the closing down of roundhouses, and repair yards. This accelerating process is causing a rising unemployment situation in the railroads. Employment on class 1 roads in January 1948 was about 65,000 below the month of July 1947 (the I. C. C. shows in its Monthly Comment on Transportation Statistics). In the case of consolidations, the I. C. C. in its Sixty-first Annual Report (1947), recommends terminal unifications and more than just the use of one company's tracks and terminal facilities by other companies. The I. C. C. has recently authorized a merger of the Wheeling & Lake Erie with the Nickel Plate Railroad. Railroad labor is partially protected under the Transportation Act of 1940 by a displacement allowance up to 4 years of severance pay with other benefits as payment of home, moving charges, etc. An earlier retirement would go far to maintain employment by retiring the older worker earlier instead of leaving the younger worker in constant fear of unemployment. It would also be more economical to the carriers insofar as it would effect a saving of severance pay. This would make for a sensible comprehensive plan which gives earlier rest to a worker of advanced years, and a young man entering the industry could for once plan his life for steady employment, and plan to retire after having given the best 30 years of his life in some measure of certainty. It has been argued by some that retirement after 30 years of service, with no absolute age minimum might serve to flood the labor market with the competition of workers who, because of pensions, could compete unfairly to the detriment of other workers, not so subsidized. But this is without basis. There would not be any inducement for a man, untrained in a trade or skill outside of railroading to which he has given 30 years of his life, to compete at a late age with other workers of a new, different craft, when, if he can and wishes to work, he can remain on the railroad with top seniority of jobs, choice runs, and pay. Few retired railroaders would be able to work in private industry upon retirement and few would be eligible to meet the competitive requirements and age limits of Civil Service. At best they would be likely to get only odd jobs, self-employment, or such, none of them covered under the Social Security Act. We know that today, under the present Retirement Act, many pensioners are forced to seek additional employment to supplement the pittance now received. Under S. 2055–H. R. 4695, that need would be eliminated. Representative Katherine St. George, of New York, on the floor of the House called attention to the retirement situation since the constant increase in the cost of living, the rates of annuity are wholly inadequate. Under the Clason bill, H. R. 4695, which is the House equivalent of S. 2055, “providing retirement for all railroad employees after 30 years of service on one-half pay with payments made into the retirement fund to be made equally by the workers and the railroads, it would seem to bring the act up to date. It would also keep it there because by the simple method of retiring workers of half pay, it will prove fair and equitable. The clause making retirement possible after 30 years of service is far better than on age. This last method often works a hardship. It would seem that after 30 years of continuous service, any man or woman has earned retirement if he or she desires it.” So says Representative St. George. All in all, this would make for a sensible comprehensive plan. It gives earlier leisure to a worker. A young man entering the industry can for, once plan his life for steady employment, plan his insurance; have his home paid off by the time of his retirement. This is in a democratic way a self-contained plan for security. This adds up to the American way of life.
RAILROAD PENSION ConFERENCE,
FURTHER TESTIMONY IN REGARD TO RAILROAD RETIREMENT LEGISLATION
In addition to the testimony presented in behalf of the need for enactment of 30-year retirement at one-half pay in this session of Congress as embodied in the Clason bill, H. R. 4695, I would like to make some further remarks in regard to the proposed amendment H. R. 6766.
The Railroad Pension Conference doubts the wisdom of granting the carriers a reduction in the unemployment insurance tax. Lay-offs in all crafts are now taking place in increasing amounts. Employment on class I railroads in January 1948 was about 65,000 below the month of July 1947 (the I. C. C. shows in its monthly Comment on Transportation Statistics). Further, the Railway Labor Executives Association revealed in its report Labor and Transportation in 1947 that an economic recession would affect over 400,000 railroad employees. In addition plans that are being made for consolidation of railroads would further greatly reduce the number employed by the railroads. Enough money must be available in the Railroad Unemployment Insurance fund to take care of such situations when they arise. The Railroad Pension Conference maintains that if there is a reduction in the taxation of the unemployment insurance for the carriers, it should be entered into the account of the Railroad Retirement Fund so as to provide 30-year retirement for the reasons stated elsewhere in our testimony. The 20 percent increase in annuities and pensions as provided in H. R. 6766 is not sufficient to meet the high cost of living as based on the present formula of computing annuities. While the 20 percent increase may look good on paper to some, and considered good publicity by others, the actual increase is too small. At best it can be only considered a very small patch on the quilt, and a baby ston the right direction. e do support the return of the lump-sum benefit as provided in the Crosser bill and also in H. R. 6766. We sincerely hope the committee will give every consideration to the facts stated above and report the Clason bill # *. 4695 out of committee and present it to Congress for passage. Respectfully submitted. CLARENCE B. CARTER.
CHARLOTTEsville, VA., June 2, 1948. Hon. CHARLEs A. Wolverton, Chairman, House of Representatives, Committee on Interstate and Foreign Commerce, Washington, D. C. DEAR SIR: Enclosed is a memorandum with reference to bills for amendment of the Railroad Retirement Act with respect to which I understand your committee is now holding hearings. I regret that I cannot attend the hearings and therefore request that you incorporate this communication in the minutes of the hearings. Respectfully submitted, RAINARD B. Robbins.
By way of identification: Formerly vice president, Teachers' Insurance and Annuity Association of America. Member of the social security technical staff of the Committee on Ways and Means of the House of Representatives, which preared the 1946 report entitled “Issues in Social Security”. Author of Railroad §. Security, printed in 1945, and Federal Legislation of 1946 and 1947 Bearing on Social Benefit Plans, mimeographed, 1947, both published by American Enterprise Association.)
MEMORANDUM WITH REFERENCE To H. R. 5993 AND H. R. 6704, To LIBERALIZE BENEFITs of THE RAILROAD RETIREMENT ACT, JUNE 2, 1948
These benefits should not be liberalized. Our railroads are still privately owned. The benefits provided by the Railroad Retirement Act and by the Social Security Act, alike, apply after employment ceases; their need is not related to particular employments. So long as the railroads are privately owned, the responsibility of Congress with reference to social benefits for their workers is the same as for workers in other industries; all should be met under one Social Security Act. Whenever the railroads are nationalized, the responsibility of Congress with reference to social benefits for their workers will be the same as for civil-service employees. Benefits under the Railroad Retirement Act are already more liberal than those rovided by Congress for workers in other private industry under the Social §. Act. This unjustified favoritism through national legislation can be cited as a precedent by any other group of industrial workers who want special consideration with respect to social benefits.
As a forerunner for Government ownership, not only of railroads but of many other industrial systems in which the public is vitally interested, nothing could be more helpful than further riveting of special social benefit legislation for railroad workers by Congress.
There is no proper defense for congressional favoritism of employees in a particular industry other than anticipation of the responsibilities of an employer through nationalization of the industry.
- RAINARD B. Rob BINs.
To the Honorable Committee on Interstate and Foreign Commerce:
My name is William E. Young and I reside at 7614 Kaywood Drive, Dallas 9, Tex. I am a regional vice president of the National Railroad Pension Forum, Inc., a nonprofit organization chartered under the laws of the State of Illinois, with headquarters in Chicago. The forum was organized by, and has as its members, employees of railroads (and associated industries) § are opposed to the unjust provisions of the Railroad Retirement Act as presently in effect. As a regional vice president, my duties consist primarily of obtaining new members, distribution of information and literature and otherwise being a connecting link between the Chicago headquarters and members in my region which is composed of Arkansas, Louisiana, and Texas. I have been employed by the railroads continuously since 1920, the last 15 years of which have been with the Texas & Pacific Railway as a freight tariff compiler. Let me state here how I happened to become associated with the Pension Forum. On or shortly after February 21, 1947, two petitions were handed to me for my signature. Being addressed to Senator W. Lee O'Daniel and Representative J. Frank Wilson, these petitions were a general protest of the Crosser amendment of the Railroad Retirement Act. At my suggestion, the originators of these petitions agreed to a rewording and an enlargement thereof with six definite objections set forth. This new petition, bearing 603 signatures, was sent, with appropriate letters, to Chairman Wolverton of this committee, Senators Tom Connally, and W. Lee O'Daniel, Representative J. Frank Wilson, and Speaker Martin, asking their support of Mr. Gillette's H. R. 2169 which proposed repeal of the so-called Crosser amendment and would restore us to our former status with which we were more satisfied. A copy of this petition was also sent to Mr. Tom Stack, president of the Railroad Employees' Pension Protective Committee of Chicago area and as a result thereof, Mr. Stack wrote me on June 25, 1947, announcing their intention of forming a national organization and, subject to my acceptance, my name would be submitted to his committee as a regional vice president. I accepted the nomination and was advised that at a meeting held on September 15, 1947, the National Railroad Pension Forum, Inc., was organized and that my name was approved as vice president of the southwestern region. I am appearing here in support of Representative O'Hara's H. R. 6397 and I shall try to cover the proposed changes in the same order as they appear in the bill. The first change here contemplated is to reduce the retirement age from 65 to 60. The benefits of this are so apparent that I hesitate to take up the time of this committee by elaborating thereon but I will say that, especially in the operating end of our railroads, such a change will not only benefit the individual employees but will have a direct bearing on the public safety. Sections 2 and 3 of this bill propose changes which will result in increased retirement annuities and their benefits will be covered as one. The best way I know how to show the effects of these changes is by a concrete example. There is a stenographer in my office who plans to retire on January 1, 1949, after 40 years of service. Her annuity, being based partially on the lean years of the 1920's and 1930's, will amount to $73.20 which does not afford an existence in these times especially with a dependent brother. Under the amendments here proposed, this lady would receive approximately $132 per month which is quite an improvement. This is brought about by the proposed increase in the percentages in the annuity formula coupled with the provision that said formula is to be applied to her average salary for her five highest paid years of service. As a matter of information, the change proposed in section 3 of this bill increases her average monthly compensation from $146 to $239. To my knowledge, the removal of the so-called lump-sum death benefit on January 1, 1947, created more dissatisfaction among rail employees than perhaps any other change brought about by the Crosser amendment including the increased tax rate. Up to that time, a man could tell his wife, almost to the dollar, how
much she would receive in the event of his death. Under the present complex law, this is impossible and forces an employee to practically ignore these benefits, if any, in his insurance program. The restoration of the lump-sum death benefit, as proposed by section 4 of H. R. 6397, would actually put the plan back on a “paying basis” and tend to make the “contributors” feel like they will get their money back out of it. This is particularly true of single employees or childless couples where the widow is still in her thirties or forties. In my bulletin No. 5 of January 10, 1948, I set forth in detail the method of arriving at the “survivor's monthly annuity” for my wife and two daughters in the event of my death on January 1, 1948. My wife would have received the magnificent sum of $39.11 and my daughters $26.06 per month, subject, of course, to the many restrictions and conditions imposed by the law and which I dealt with at length in said bulletin. With the increases proposed in section 5 of Mr. O'Hara's bill, these figures would become $44.89 and $30.57, respectively, and are very near to the maximum. Even if these figures were doubled they are not enough to see the girls through high school. The basic trouble with this entire plan is that it tries to cover too much territory, or in the vernacular of the insurance fraternity, it is a “Mother Hubbard.”. Most “Womb to the tomb” plans are weak. If we are to have a retirement plan let it be retirement and an adequate one where we can look forward to the earliest day we can take off instead of dreading the day when we are forced to. With the interests of railroad workers and their families at heart, it is hoped that H. R. 6397 will receive favorable action in this session of Congress. Respectfully submitted. WILLIAM E. YoUNG, Regional Vice President, National Railroad Pension Forum, Inc.
P. S.—As we understand the only favorable legislation we can expect at this session of Congress is the enactment of H. R. 6766 introduced by the Chairman, I support H. R. 6766. WILLIAM E. YOUNG.
To the Honorable Committee on Interstate and Foreign Commerce:
My name is Walt Sands, I reside at 1429 East Marquette Road, Chicago, Ill. As public relations director of the National Railroad Pension Forum, Inc. (a voluntary organization of union and nonunion rail workers who are opposed to their E. pension law), I am also editor of Rail Pension News, published by the Orun).
I have worked over 25 years for the railroads. For the past 20 years, I have been employed as a freight inspector with the Eastern Weighing & Inspection Bureau, in Chicago. My duties (at various railroads) keep me in steady contact with white-collar workers, freight handlers, yardmen, switchmen, engineers, conductors, shop mechanics, and others. A composite picture of their reactions to the Crosser amendments convinced me to safely assume that the vast majority of those people are bitterly opposed to their present high tax rate in comparison to the low benefits received. Thus, Rail Pension News was born and it will keep going forever, unless you gentlemen do something to correct this unjust situation. At this point, I want to emphasize for the benefit of the brotherhood leaders, the Rail Labor Executives Association, and the brotherhood weekly newspaper Labor, that any of my activities have never been influenced one iota by management.
... wish to emphasize one feature in connection with H. R. 6397. Section 3, in toto, would eliminate the formula of “monthly compensation” based in the period of 1924 to 1931, a fixed period, a nonproportional period, and unrelated period and substitute in lieu thereof a “highest paid 5 years of earnings not exceeding $300 per month” period.
When the Retirement Act went into effect in 1937, any basis, at that time was reasonably fair and very welcome to a retired rail worker who had paid nothing into the fund. However, with 11 years experience rating, including the fact that the majority of future annuitants have paid taxes during those 11 years, why not apply “the highest paid 5 years of earnings not exceeding $300 per month” during the first 11 years, 1937 to 1948, as a base in a flexible period, where earnings have proportional relation to the pension fund, wherein a proportional unit based on those earnings would be used to measure out justice to all?
A unit based on the related earnings of the period of 1937 to date of retirement will give a unit that has a proportional relation to the pension fund. Thereby eliminating the discrimination and unfairness that now exists by using a nonproportional unit.