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HEARING

BEFORE THE

SUBCOMMITTEE ON RAILROAD RETIREMENT

OF THE

COMMITTEE ON
LABOR AND PUBLIC WELFARE

UNITED STATES SENATE

EIGHTY-NINTH CONGRESS

FIRST SESSION

ON

S. 3157

TO AMEND THE RAILROAD RETIREMENT ACT OF 1937; ELIM-
INATE THE PROVISIONS WHICH REDUCE THE ANNUITIES OF
THE SPOUSES OF RETIRED EMPLOYEES BY THE AMOUNT OF

CERTAIN MONTHLY BENEFITS

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COMMITTEE ON LABOR AND PUBLIC WELFARE

LISTER HILL, Alabama, Chairman PAT MCNAMARA, Michigan

JACOB K. JAVITS, New York WAYNE MORSE, Oregon

WINSTON L. PROUTY, Vermont RALPH YARBOROUGH, Texas

PETER H. DOMINICK, Colorado JOSEPH S. CLARK, Pennsylvania

GEORGE MURPHY, California JENNINGS RANDOLPH, West Virginia

PAUL J. FANNIN, Arizona
HARRISON A. WILLIAMS, JR., New Jersey
CLAIBORNE PELL, Rhode Island
EDWARD M. KENNEDY, Massachusetts
GAYLORD NELSON, Wisconsin
ROBERT F. KENNEDY, New York

STEWART E. MCCLURE, Chief Clerk
JOHN 8. FORSYTHE, General Counsel
STEPHEN KURZMAN, Minority Counsel

SUBCOMMITTEE ON RAILROAD RETIREMENT

CLAIBORNE PELL, Rhode Island, Chairman WAYNE MORSE, Oregon

PAUL J. FANNIN, Arizona JOSEPH S. CLARK, Pennsylvania

PETER H. DOMINICK, Colorado HARRISON A. WILLIAMS, JR., New Jersey

E. GEORGE PAZIANOS, Counsel
FRANK CUMMINGS, Minority Labor Counsel

II

89-1-5
L 123757a

CONTENTS

Pago

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III

AMENDING THE RAILROAD RETIREMENT ACT OF 1937

TUESDAY, JUNE 29, 1965

U.S. SENATE
SUBCOMMITTEE ON RAILROAD RETIREMENT OF THE
COMMITTEE ON LABOR AND PUBLIC WELFARE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to call, in room 4200, Senate Office Building, Senator Claiborne Pell (chairman of the subcommittee) presiding.

Present: Senators Pell (presiding) and Fannin.

Committee staff members present: Stewart E. McClure, chief clerk; E. George Pazianos, counsel to the Subcommittee on Railroad Retirement; and Frank Cummings, minority labor counsel.

Senator Pell. The Subcommittee on Railroad Retirement opens its hearings on H.R. 3157. The provisions of this bill before us today are substantially the same as the provisions of the bill H.R. 12362, 88th Congress, 2d session.

That bill was not acted upon by this subcommittee last year because of the limitation of time during the last days of the session. That bill was opposed by the Railroad Retirement Board and the Association of American Railroads because the railroad retirement system had at that time an actuarial deficit of close to $19.5 million a year, and the enactment of that bill would have increased that deficit by $14 million a year to a total of about $33.5 million a year,

Today, however, the picture is considerably worse. The social security amendments bill, H.R. 6675, was passed by the House and approved by the Senate Finance Committee with certain amendments. As so amended, the social security maximum tax base would be increased, beginning January 1966 from the present $4,800 a year to $6,600. The maximum taxable monthly compensation under the Railroad Retirement Tax Act is now $450 or $5,400 a year. If the $6,600 a year should be adopted for the social security system, and this bill is enacted, the acturial deficit of the railroad retirement system would be increased, according to the actuary of the Railroad Retirement Board, to about $61.1 million a year.

The additional increase in the deficit would result from increases in maximum annuities to spouses and in annuities computed under the overall social security minimum provision of the Railroad Retirement Act. It follows that any increase in the railroad retirement monthly taxable base would reduce this deficit. Without such increase the railroad retirement system would be confronted with serious financial problems.

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