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Our sole purpose is to work for improvement of the Railroad Retirement Act of 1937. Our association has been represented at every public hearing on railroad retirement legislation in Congress for the past 18 years.

The forum supports H.R. 3157 as passed by the House of Representatives on June 7. We hope that Congress will remove an unjust feature now in the Railroad Retirement Act. I refer to section 2(e) wherein spouses of retired railroad employees are deprived of annuities they might be entitled to receive under the social security system.

Public Law 234, 82d Congress, 1951, added three restrictionsinvolving dual benefits with social security to the Railroad Retirement Act. One of these restrictions, affecting railroad employees, was repealed in 1955. The final restriction, denying a retired railroader's spouse the social security annuity she earned during her own employment, will be eliminated by passage of this bill, H.R. 3157.

Restrictions on dual benefits brings about a state of real privation among many families living on low pension incomes. When one knows the scant knowledge most employed railroaders have of retirement law it is understandable that many of those now in distress did not know, before their retirement, that the spouse's social security pension would not be part of the family income when both reached retirement age.

Wives write to the forum to say that when they worked and paid social security taxes they were confident they were investing in security for their old age. Now, when faced with reality and the knowledge that their Government does not intend to fulfill its promise they write to us for an explanation. All that we can say in reply is that efforts are being made to bring this injustice to the attention of Congress so that the inequity may be removed.

More than 40,000 aged couples are striving to stay alive on reduced incomes because of the provision of section 2(e). This has been going on for 14 years. In all that time the cost of living has been going up so that many of the families affected live in dire poverty, such as they never expected their retirement to be.

Railroaders know that enactment of H.R. 3157 will add an expense to the cost of railroad retirement. We do not feel that this small increase in cost will seriously endanger the financial soundness of the railroad retirement system.

Last September when this subcommittee held hearings on H.R. 12362, after that bill had passed in the House, many retired couples hoped that their pension incomes would increase. There was great disappointment when they learned that the Senate had adjourned before final action could be taken on the bill.

Many of those who will benefit when this bill is passed now have very small incomes and have had to deny themselves many necessities. Therefore, enactment of this bill into law will bring more money into their homes. Not only would this be an aid to the President's war on poverty, it will also stimulate the national economy.

Speaking for the American railroaders, pullman, express, and bureau employees, working as well as retired, the National Railroad Pension Forum urges your affirmative action on H.R. 3157.

Thank you, Mr. Chairman, and members of the subcommittee.
Senator Pell. Thank you.

Mr. Finnigan, do you have a prepared statement there.

Mr. FINNIGAN. I have, and, of course, it was prepared without the knowledge of your amendment. Of course, it will not fit the existing situation. My name is George W. Finnigan. I reside

I reside at 2832 East 78th Street, Chicago, and am president of the National Railroad Pension Forum, Inc., Chicago, Ill.

I appear today to lend unqualified support to H.R. 3157, which has for its purpose, the revision of section 2(e) of the Railroad Retirement Act of 1937 to eliminate the reduction in spouse benefits payable to the wife of a railroad retirement annuity, by the amount of any annuity or monthly insurance benefit to which such wife would be entitled under the Railroad Retirement Act or the Social Security Act.

The legislative history of the spouse benefits and the restrictions thereon are a well-known matter of record and are amply reviewed in other testimony offered at this hearing, and I shall not labor that point.

Opinions that spouse benefits were not paid for and that need or lack of need has any place in deliberations on the proposal at hand should be rejected on the basis, that

(1) All spouse benefits are paid from funds accumulated through tax assessments on the covered earnings of all railworkers, without consideration for sex, marital status or whether the wife is employed. The worker whose wife is employed pays his proportionate share of every benefit dispensed under the act.

(2) While the primary purpose for the establishment of a spouse benefit may have been to supply additional funds to married couples, there is no stipulation or machinery for elimination of those who could get along without the additional income.

One cannot label the coffers plentifully supplied, simply because the wife worked. More often she worked of necessity, to supplement low earnings, to offset reverses of one kind or another, to educate their offspring or for some other compelling reason. Examples of a lack of need in households where the wife did not work could run into the thousands, all the way from the financial advantages of a childless marriage, for whatever reason, to the $40,000 a year executive whose wife's personal income dwarfs his salary.

Yet we would not condone the application of a means test in order to deprive them of benefits for which the worker has paid.

Let me point out that the working wife of a retired railroad employee, upon fulfillment of the age and marriage requirements, is certified for spouse annuity before the provisions to disenfranchise her are applied. When action is taken to disqualify her, the action serves to nullify the social security monthly insurance benefits, guaranteed by our Government at the time the worker was enrolled under social security and which were purchased through dual tax payments.

Withholding of the spouse benefit has the effect of a 10- to 15-year retroactive wage reduction in amounts up to $69.90 month, notwithstanding that social security tax, as well as Federal and perhaps State income taxes were paid on the earnings. I cannot believe a provision of that nature to be constitutional nor proper.

In the case of the wife who worked in employment covered by the Ralroad Retirement Act, the Board becomes the villian. Ironically,



she contributes to the operating expenses of the Board and helps provide the funds for payment of spouse benefits to wives who did not work and to those who worked in self-employment, civil service or other areas not covered by social security.

The indefensible character of the discriminatory provision is borne out in the action taken by the House of Representatives in the 88th Congress and again on June 7 of this session of the 89th Congress. Further, the proposed elimination of the restriction has been urged by distinguished members of both bodies who are considered expert on matters pertaining to railroad retirement.

The cost of this change is estimated at $14 million, which we are told will effect a deficit of $33 million or 0.71 percent on a level basis. This is well within the figure of 1 percent which has for many years been represented as a satisfactory tolerance for a financially sound system.

A figure of one-half of 1 percent has recently come on the scene. A deficit of $33 million is minute, when compared with prevoius deficits ranging to 213 million.

The thought of new additional taxes to cover the cost of the measure is out of the question, so closely on the heels of a 26.1 percent increase in railroad retirement taxes in the 14-month period, November 1963 to January 1, 1965.

Any good estimator will pad his figures with a contingency item to cover unforseen expense or miscalculations and it is therefore possible that the present estimated dificit of $19 million might possibly be no deficit at all.

I do not want to leave the impression that the financial condition of the system is of no concern to me or the railroad workers. Every one with whom I have discussed the subject is of the opinion the finances could be vastly improved through the formation of a study committee, as outlined in petition No. 106 entered in the record for February 22, 1965, and referred to the appropriate committee.

In an effort to be of service to all present and retired rail employees, members of the forum or not, I respectfully request the prompt approval and passage of H.R. 3157.

If I may, I would like to add with respect to your amendment, Senator, I very much agree with it. However, I do think that it would be wise to wait until we see the outcome of the social security legislation and what the base would be. And it is my impression that the base on railroad retirement should be the same, not more or less, than social security.

Therefore, we could hardly establish just now what point to set it.

Aside from that, if there is any point that it would delay adoption of this bill during this session, I would very strongly urge that the amendment be set aside until it can be determined what the proper base should be and also let it be taken up at a later date so as not to delay adoption of this measure.

Senator PELL. The amendment does just exactly what you suggested—ties it directly in with social security. But it does not give a numerical figure. It says the amount will be the equivalent of one-twelfth of the maximum yearly wage paid into the social security system.

Mr. FINNIGAN. I see. That would establish it and tie it directly to social security.

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Senator PELL. Exactly even, yes.

Mr. FINNIGAN. I think the amendment then is warranted and I am in accord with it. I think it should be that way.

Senator PELL. Thank you, sir. Another question. In your testimony you referred to petition 106 entered in the record of February 22, 1965. Is that a petition to this subcommittee? I am not aware of it.

Mr. FINNIGAN. That is a petition that was dispatched from my office to both the House and the Senate, and in the Congressional Record for February 22 I see that it was referred to the House Interstate and Foreign Commerce Committee. I have not seen reference that it went to your subcommittee or the full committee, but I suspect that it would be.

I have a copy with me today which I shall be glad to leave with you.

Senator PELL. I am wondering what happened to it. It may have gone to the Commerce Committee which normally has jurisdiction of some railroad matters. But I do not recall seeing this petition.

Mr. FINNIGAN. It definitely referred to railroad retirement so I thought perhaps you would have received it.

Senator PELL. I would like you to leave a copy here so we can study it.

Mr. FINNIGAN. Thank you, I will be glad to.

Senator PELL. I gather what you would like to do is somewhat along the lines of what Mr. Finney suggested, sit down and try and see if you can come up with your own solutions. Is that correct?

Mr. FINNIGAN. I do think it could be accomplished, sir.

I have no qualms about some amount of deficit financing because our whole economy is based on deficit financing and credit, one thing and another, and I do believe that as the railroad retirement features progress and the present number of annuitants and beneficiaries begin to decline as they will with age, that things will balance out and we will again be in good stead.

In the meantime, if we are carrying a deficit, in this case it is not a great amount, I do not believe it is detrimental and I think it will heal in time with the proper attention from the Congress and other interested persons.

Senator PELL. What would be your reaction if there is ever an amalgamation of the railroad retirement system into the social security system with the railroad retirement system phased out of existence?

Mr. FINNIGAN. It seems like an almost impossible thing to accomplish in less than a 50-year period because we have taken large amounts and promised large amounts of benefits and one thing and another to the employees who have worked over the past 5, 10, or 30 years, and to restrict them would be unthinkable.

The only solution to this seems to be to increase social security provisions to equal railroad retirement rather than take benefits from the railroad retirement workers. And I believe also that is probably out of the question.

Senator PELL. Thank you very much, indeed.

I must add for the record that I do support the general concept of the bill passed by the House and, as you pointed out, I am still inclined to the view that the approach I have offered has merit.



We will discuss this within the committee, taking into account the testimony offered today.

The record will remain open for any additional views or ideas from anybody in this room until 1 week from today because of the Fourth of July intervening. If these ideas can be passed and management and labor get together and come up with a better idea, we can then proceed to adopt it.

But it would seem to me that to link railroad retirement to social security as we would be doing, and bringing the spouses in under it are both in order. By this, I do not necessarily mean that a better system that can be evolved from labor and management would not be accepted.

I would be interested in any ideas Mr. Finney has as to how we could do what we are proposing now.

Mr. FINNEY. I will be glad to, Senator.

Senator Pell. If there is nothing further, this concludes the hearings on these bills.

At this point I will insert in the record additional statements and communications received.



Mr. Chairman and members of the committee, the bill before you is one which will correct an obvious inequity in the present law. am in support of its passage and urge upon, this committee the desirability of recommending H.R. 3157 to the Senate for its favorable action.

I received a letter from a woman who is a victim of the inequities of the present law, a law under which it is not only possible for an individual to pay into the social security old-age and survivors insurance system for years only to be denied its benefits, but which even makes such an injustice mandatory.

You are of course familiar with the situation. Under present law, the wife of a worker under the Railroad Retirement Act of 1937 upon attaining age 65 is entitled to a spouse's benefit equal to onehalf of the retired husband's benefit.

But the law also forbids her to receive whatever portion of that spouse's benefit equals benefits she may receive under social securitybenefits to which she is entitled otherwise by virtue of her own payments during her own working life in any employment subject to social security.

In other words, if her own social security credits have entitled her to old-age benefits of $40 per month and if her spouse's benefits under railroad retirement entitle her to $60 per month, the latter is reduced to $20 so that she in effect receives no benefit whatsoever from her social security premiums over the years. Yet her husband's entitlement to her spouse's benefits has also been earned without regard to her additional sources of retirement income.

This, I am convinced, is injustice. It is payment to the retirement fund of money for which there is no retirement benefit allowed. The bill for correction of this unjust state of affairs, which in effect deprives a woman of the retirement payments she has personally earned

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