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RAILROAD RETIREMENT AND RAILROAD UNEMPLOY

MENT INSURANCE LEGISLATION

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THURSDAY, MARCH 14, 1957

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The committee met, pursuant to call, in room 1334, New House Office Building, Hon. Oren Harris (chairman) presiding.

The CHAIRMAN. The committee will come to order. '

Last Monday, the Subcommittee on Commerce and Finance began hearings on all pending bills to amend the Railroad Retirement Act, the Railroad Retirement Act and the Railroad Unemployment Insurance Act.

That session was called to permit Members of Congress who had introduced bills in the House of Representatives an opportunity to be heard and express their interest.

We had a number of Members of the House of Representatives appear before the committee at that time expressing their interest.

In advising the committee of the introduction of various and sundry bills, I think it would be well for the record to state that this is the most important legislation that could be referred to as unfinished business from the last Congress. Most everyone who is familiar with the retirement program and the problems understands why.

In an effort to give some relief to the retired employees of the railroad industry in the last Congress, legislation was adopted granting generally a 10-percent increase but not as much as had been hoped for when the legislation was started.

It was recognized at the time when the legislation was adopted that additional legislation would be necessary during the 85th Congress. If I remember correctly the committee promised the House that at this session, the railroad retirement program would be taken up again and reviewed again.

One of the objectives that I have had uppermost in my mind in · connection with the railroad retirement program, in the years that

I have had some experience with the problem—which is also in the mind of every member of this committee, as well as the members of the Railroad Retirement Board; and the employees and the employee representatives themselves, is to have a good program that is financially sound—and it must be maintained on a sound basis.

There are many of us who would like to see increased benefits. There are many demands that have been made on this fund and on this program. We have them every day. Unfortunately, in my opinion, there are too many demands, that I fear, have not been given the consideration that they should have been given.

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If all of the demands that are made on this committee were to be approved, the Railroad Retirement Account on which several hundred thousands of railroad retired employees and their families depend, would be completely bankrupt and destroyed.

I make this statement because I think it is important. Every one of us who has anything to do with it, and the beneficiaries who are recipients of this fund, should pause and consider that the railroad retirement system is the best retirement system that has been devised. It provides greater benefits than any other system that I know. It is a system that has been developed over a long period of years and in most instances worked out between representatives of the railroad labor organizations and the railroad employers themselves.

So, I want to caution that before we make too much demandrealizing the importance of this fund—I think that those who are interested better see if they have the same feelings that most of us have that this fund must be maintained on a financially sound basis.

We have, of course, many pending bills. They were noted for the record beginning Monday morning.

The staff prepared a table grouping these bills according to certain categories. This table will be included in the record at this point.

(The matter referred to follows:)

BILLS AMENDING RAILROAD RETIREMENT ACT AND RAILROAD UNEMPLOYMENT IN

SURANCE ACT, PENDING BEFORE HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, 85TH CONGRESS

I. Fifteen identical bills, viz:

H. R. 4353 by Mr. Harris
H. R. 4354 by Mr. Wolverton
H. R. 4530 by Mr. Van Zandt
H. R. 4620 by Mr. Tollefson
H. R. 4817 by Mr. Perkins
H. R. 4914 by Mr. George
H. R. 4926 by Mr. Loser
H. R. 5057 by Mr. Rhodes of Pennsylvania
H. R. 5255 by Mr. Withrow
H. R. 5338 by Mr. Teller
H. R. 5456 by Mr. Blatnik
H. R. 5672 by Mr. Macdonald
H. R. 5681 by Mr. Moore
H. R. 5731 by Mr. Celler

H. R. 5772 by Mr. Staggers Provide 10-percent increase in retirement and survivor benefits, including social security minimum amounts, and maximum amount on spouses annuities; increase limit on monthly taxable compensation to $400; provide insurance lump sum with respect to all insured deaths; liberalize disability work clause; provide reduced annuities to women employees and wives at age 62; provide an increase in tax rate on employer and employee alike from 644 percent to 712 percent, with additional taxes after 1969. Also provide liberalizations in Unemployment Insurance Act.

Estimated cost of benefit provisions: Amendments to Railroad Retirement Act, $2.81 percent of payroll taxable up to $400 a month, or $162 million annually. Amendments to Railroad Unemployment Insurance Act, $100 million annually.

BILLS LOWERING AGE OR SURVIVOR REQUIREMENTS FOR ANNUITY

II. Five identical bills, viz:

H. R. 880 by Mr. Poff
H. R. 3755 by Mr. Cunningham of Iowa
H. R. 3974 by Mr. Dorn of South Carolina
H. R. 4312 by Mr. Vursell
H. R. 4676 by Mr. Byrd

Provide retirement on a full annuity at age 60 with 30 years of service, or after 35 years of service, regardless of age; prior service to be computed on 5 highest years of earnings; raise limit on creditable compensation to $350 a month retroactively.

Estimated cost of benefit provisions : 2.25 percent of payroll, or $120 million annually. III. Three identical bills, viz. :

H. R. 2033 by Mrs. St. George
H. R. 2166 by Mr. Powell

H. R. 3115 by Mr. Van Zandt Provide retirement on a full annuity at age 60, or after 30 years of service regardless of age; such annuity shall not be less than half of the employe's creditable monthly compensation during his 5 consecutive years of highest earnings.

Estimated cost of benefit provisions : 3.75 percent of payroll, or $200 million annually. IV. Other bills lowering age or service requirements for retirement annuity :

H. R. 2165 by Mr. Powell Provides retirement on a full annuity after 30 years of service, regardless of age; such annuity shall not be less than half of the employee's creditable monthly compensation during his 5 years of highest earnings; raises taxable ceiling to $400 a month.

Estimated cost of benefit provisions.—3 percent of payroll, or $170 million. annually.

H. R. 3116 by Mr. Van Zandt Provides retirement on a full annuity at age 60 or after 35 years of service regardless of age; such annuity shall not be less than half of the employee's creditable monthly compensation during his five years of highest earnings.

Estimated cost of benefit provisions: 2.50 percent of payroll, or $130 million annually.

H. R. 3545 by Mr. Zelenko Provides retirement on a full annuity at age 60 with 30 years of service; re-tirement on a reduced annuity at age 55 with 30 years of service; and for such retirements the annuity shall not be less than half of the employee's average monthly compensation during his 5 years of highest earnings.

Estimated cost of benefit provisions.-1.70 percent of payroll, or $90 million annually.

H. R. 5022 by Mr. Hyde Provides for retirement on a full annuity after 40 years of service regardless of age; alternate method for computing “prior service".

Estimated cost of benefit provisions.-0.3 percent of payroll, or $16 million annually.

H. R. 4195 by Mr. Davis, of Georgia Provides for occupational disability retirement at age 50 with 10 years of service.

Estimated cost of benefit provisions.—0.11 percent of payroll, or $6 million annually. V. Repealing dual benefit restrictions on spouses and survivor annuities :

H. R. 1008 by Mr. Williams of Mississippi Estimated cost of benefit provision: 0.19 percent of payroll, or $10 million annually. VI. Repealing dual benefit restrictions on spouses :

H. R. 3420 by Mr. Van Zandt
Estimated cost of benefit provisions : 0.18 percent of payroll, or $10 million
annually.
VII. Repealing “last person" employer clause:

H. R. 3421 by Mr. Van Zandt
H. R. 3756 by Mr. Cunningham of Iowa

H. R. 4523 by Mr. Poff Estimated cost of benefit provisions : 0.19 percent of payroll, or $10 million annually.

pony OTHER BILLS .

. . ... H. R: 583 by Mr. Celler " ... .. . ." is ' H. R. 850 by Mr. O'Brien of New York

H. R. 2164 by Mr. Powell These 3 bills are identical to H. R. 9065, 84th Congress, as introduced. Technically, they provide for a 15-percent increase in benefits starting with the level of benefits existing prior to enactment of Public Law 1013, 84th Congress. Actually, the increases provided for in these bills are approximately 5 percent. Bills also provide for increases in tax rate from 644 percent tó 744 percent, and exempt employee's retirement taxes from both withholding tax and taxable income,

Estimated cost of benefit provisions; No cost furnished by Railroad Retirement Board.

H. R. 3855 by Mr. O'Konski and H. R. 4677 by Mr. Byrd Increase retirement annuities and survivor benefits by 10 percent.

Estimated cost of benefit provisions: 1.53 percent of payroll, or $81 million annually.

H. R. 3422 by Mr. Van Zandt Increases widow's benefits by 25 percent.

Estimated cost of benefit provisions": 0.85 percent of payroll, or $45 million annually.

H. R. 900 by Mr. Rabaut Refund of railroad retirement taxes upon termination of railroad employment, if less than 10 years. Estimated cost of benefit provisions : Negligible.

H, R. 2233 by Mr. O'Konski Average monthly compensation would be based on 5 highest years of earnings up to $350 per month; repeals dual benefit restriction on spouses annuities..

Estimated cost of benefit provisions ; 1.83 percent of payroll, or $97 million annually.

H. R. 4187 by Mr. Burdick Minimum annuities not to be affected by entitlement to social security benefits. Estimated cost of benefit provisions : Negligible.

H. R. 4194 by Mr. Davis of Georgia Repeals all restrictions on payment of dual benefits to spouses and would allow survivor benefits under both the Railroad Retirement and Social Security Acts on basis of same employee's earnings.

Estimated cost of benefit provisions: 0.65 percent of payroll, or $34 million annually.

H. R. 4760 by Mr. Cole Grants completely insured status to individuals whose annuities began to accrue in 1948. Estimated cost of benefit provisions : Negligible.

H. R. 5803 by Mr. Bennett of Florida Provides for retirement on a full annuity at age 60 after 30 years of service, or after 35 years of service, regardless of age, at an annuity of not less than half of the employee's monthly compensation during his 5 years of highest earnings; reduces eligibility age for spouse's benefit from 65 to 60 years; amends provision for crediting prior service; increases annuities, pensions and survivor benefits by various amounts, repeals the dual benefit restriction on spouses annuities and provides that a widow may be eligible for a survivor benefit under the Railroad Retirement Act and under the Social Security Act.

The CHAIRMAN. The Office of Directive Research of the Railroad Retirement Board has prepared a convenient summary of these bills showing the principal provisions and the cost of benefits which, without objection, will be inserted in the record at this point.

I think it will be very helpful to the members. (The document referred to is as follows:)

Principal provisions and level costs of bills to amend the Railroad Retirement, P. Railroad Retirement Tax, and Railroad Unemployment Insurance Acts pending

before the House of Representatives, 85th Cong , as of Mar, 5, 1957;

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H. R. 583, by Mr. Celler... Virtually identical to H. R. 9065, 84th]Cong., which No cost furnished.

was passed in modified form and enacted as Pub

·lic Law 1013.
H. R. 850, by Mr. O'Brien of Virtually same as H. R. 583.

New York.
H. R. 880, by Mr. Poff..------ (a) Full retirement annuities at age 60 with 30 years 2.25 $120

of service, or after 35 years of service regardless

of age.
Replaces the 1924-31 base period for determin-

ing the prior service average monthly compen-
sation by the 5 years of highest earnings before

1937.
) Raises the limit on creditable compensation to

$350 a month retroactively. H. R. 900, by Mr. Rabaut. Employee with less than 10 years of service may Additional cost

elect to receive a refund of his retirement taxes largely offset by with 6 percent interest. Service for which a financial interrefund had been made would not be creditable change. 2

under either the Railroad Retirement or Social

. Security Acts. H. R. 1008, by Mr. Williams | Repeals the dual-benefit restriction on spouses' . 19

10 of Mississippi.

annuities retroactively to Oct. 31, 1951. H. R. 2033, by Mrs. St. George. (a) Full retirement annuities at age 60 or after 30 3.75

200 years of service regardless of age. (6) Adds a minimum for annuitants retiring under

(a) in the amount of 42 the average monthly

compensation, H. R. 2164, by Mr. Powell..-- | Identical to H. R. 850. H. R. 2165, by Mr. Powell... (a) Full retirement annuities after 30 years of service 33.00

$170 regardless of age. (6) Adds a new minimum for individuals with 30

years of service in the amount of 12 of their

earnings in the 5 highest years.

(c) Raises the taxable ceiling to $400 amonth. H. R. 2166, by Mr. Powell.... | Identical to H, R. 2033. H. R. 2233, by Mr. O'Konski. (a) Average monthly compensation would be based

on the 5 highest years of earnings up to $350 a

month.
(6) Repeals the dual-benefit restriction on spouses'

annuities.
H.R. 3115, by Mr. Van Zandt. Identical to H. R. 2033.
H. R. 3116, by Mr. Van Zandt. (a) Full annuities at age 60 or after 35 years of service

130 . regardless of age. Adds a new minimum for individuals retiring

under (a) in the amount of 22 their earnings in

5 highest years. H. R. 3117, by Mr. Van Zandt. Repeals the dual-benefit restriction on spouses'

annuities. H. R. 3118, by Mr. Van Zandt. (a) Repeals requirements for relinquishment of

rights and cessation of work for an employer

other than a railroad.
(6) Permits work after retirement for last employer

10 if not a railroad. H. R. 3420, by Mr. Van Zandt. Identical to H. R. 3117. H. R. 3421, by Mr. Van Zandt | Identical to H. R. 3118. H. R. 3422, by Mr. Van Zandt. Increases widows' benefits by 25 percent including

those computed as social security minimums. H. R. 3545, by Mr. Zelenko... (a) Full annuities at age 60 with 30 years of service..

(6) Reduced annuities at age 55 with 30 years of

service.
) Adds a new minimum for employees, with 30
. years of service in the amount of 22 the average

monthly earnings in the 5 highest years. H. R. 3665, by Mr. McCarthy. Excludes railroad retirement taxes paid by the em. Does not effect

ployee from his gross income for purposes of the actuarial costs

Federal income tax.
H. R. 3755, by Mr. Cunning. Identical to H. R. 880.

ham of Iowa.
H. R. 3756, by Mr. Cunning. Identical to H. R. 3118.
ham of Iowa.
See footnotes at end of table.

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