Page images

I was talking a few weeks ago with a switchman of the Pennsylvania Railroad at Harrisburg, Pa., where 200 switchmen were employed. Now, with the new retarder system for operating the hump at that point the work is done by two operators from a tower. It is to help these employees in the high age bracket that we want earlier retirement.

The average age of retirement on the rails today is 68 years. No one who is able to work would exchange a paycheck for a retirement check. Hence, I would question the cost estimate of such a provision. But those who are unable to continue work would have a cushion to meet the hazards of the industry.

The bill provides in substance that the present test period before 1936, when in most cases the average earnings from 1924 to 1931 are used to determine average earnings during this period, be substituted by the average earnings for the 5 highest years, either prior or subsequent to 1937.

While this was the highest rate period prior to our 1934 act, 11 rounds of wage increases given since 1937 make this period highly undesirable as it has no relation with our present economy and accounts for the reason why less than 1 percent of our people retiring today under our present retirement system receive the maximum benefits.

In this bill we are using, in lieu of this period, the highest rated period which our original act tried to provide, namely, the 5 highest years.

In the cost element of this provision the actuaries have given you the cost of annuities based on the 5 highest years' average monthly earnings instead of a substitution of the test period for this basis prior to 1937.

You have before your committee H. R. 4677, sponsored by your colleague, Representative Byrd from West Virginia, another gentleman who has many railroad constituents.

This bill provides for a 10-percent increase in all rail pensions and annuities. I covered 11 of our southern States last fall and talked with many retired people and not one advised that he was satisfied with his rail pension or annuity.

Eleven rounds of wave increases in the aggregate of 234 percent have increased the economy of our country so that those living on a pegged income have a plight that is more than tragic to meet the everincreasing living costs. Many live on one meal a day; many have no money for their medical needs, and while 10-percent increase in their benefits will not alleviate the present suffering, it will help those poor souls to have a little sunshine in their declining years, at least they will recognize that someone thinks of them. They are today the forgotten men in our inflated economy.

H. R. 4523 is another bill sponsored by your colleague, Representative Richard Poff of Virginia. This bill proposes to eliminate the “last employer” clause, other than a railroad, from our act.

In the 83d Congress, Hon. John Bennett, a member of the House Interstate Committee, sponsored a similar bill and at one time it was accepted by the committee only to be weeded out in the closing days to adopt legislation favorable to all groups with a master bill on railroad retirement sent to the floor for action.


It might be well at this time to reflect on the merits of this bill.

The "last employer” clause-other than a railroad—was written into our 1934 act. At that time we had come out of the 1929–30 depression and it was our intention that no employee would hold two jobs as we were interested in creating employment to get a greater number on the labor payrolls. It was never intended that we should later be exploited on this provision, so that now employees holding jobs with fraternal groups, building and loan associations, credit unions and insurance bodies, should be forced to resign from those side jobs, where the earnings were meager, to qualify for retirement benefits under our act.

We agree that an employee must sever connections with railroad employment to qualify for benefits, but it is grave injustice to force him to leave employment unrelated to railroad work to qualify for benefits under railroad retirement.

Representative Poff has as constituents some nine thousand rail employees in the Roanoke and Carbon Cliff districts and knows the desires of rail employees to eliminate this restriction.

H. R. 1008 is a bill sponsored by a prominent member of this committee, Honorable John Bell Williams. It eliminates the spouse restriction from our act. Where a wife helps in the family budget and works for industry covered by social security her benefits are deducted from her spouse benefits under railroad retirement under the present law, and in the majority of cases it wipes out entirely her spouse benefits, her own social security benefit being greater than the spouse benefit.

In the 84th Congress we had eliminated the so-called “dual restriction provision” so that if rail employees work after retirement for industry covered by social security they can, if they qualify for those benefits, receive same in addition to the railroad retirement check.

Also, by act of Congress, this same provision was extended to widows who now benefit by the application of both acts; hence the dual restriction today applies only to railroad spouses and it is really penalizing thrift. They should be extended the same privilege as widows under our act.

Today, if a retired employee on the rails qualifies for social security benefits, his wife, as a spouse, receives half of his social security benefits, plus her spouse benefits under railroad retirement, but if she works under social security, then she is penalized, which to say the least is very unjust. They should be allowed spouse benefits in full under railroad retirement, plus any social security they have earned in their own right.

Now, in regard to H. R. 4353, sponsored by our good chairman, which adds considerable fringe benefits to our act, that will add materially to the operating costs of the system, but will receive some support from those affected, or, should we say, those who would benefit at the expense of others paying the costs. It provides that female employees can retire at the age of 62 with less than 30 years of service and suffer a reduction of one one-hundred-and-eightieth for each month they are under the age of 65 years.

This is approximately an 80 percent basis, similar to provisions carried in the Social Security Act.

The disability annuitants who are now restricted to earnings of $100 each calendar month will have the privilege of earning up to $1,200 per annum before they lose any part of their annuity. This provision is also carried in the Social Security Act today, where for every $80 they earn over the $1,200 each year, they lose 1 month's benefits.

The bill provides that spouses’ benefits are payable at age 62 on a reduced basis of one one-hundred-and-eightieth for each month they are under the age of 65 years, while this provision was also patterned after social security it only provides a reduction of 20 percent of what said spouse would receive at age 65, whereas social security provides a reduction of 25 percent in spouse benefits under similar cases, where they want to secure retirement at the age of 62 years.

The insurance lump sum known as the burial fund is under this bill frozen at $750, whereas under our present act it is much more liberal, and as the years roll by under the present act without such an amendment employees' survivors can get several thousand dollars under this lump-sum insurance provision.

Section 5 of the act is amended to permit widows living outside the corporate limits of the United States, whose husbands were employees of our American railroads, and paid the taxes into our retirement system, to be placed on the same basis as their counterparts in the United States and be permitted to earn up to $1,200 per annum before they were deprived of benefits.

Under the present law they are restricted to 7 working days per month when living outside the country. This restriction was never intended to apply on railroad retirement; it is fully covered in House Report 1698 of the 83d Congress, 2d session, in connection with H. R. 9366, of May 28, 1954.

The amendments were made in the Social Security Act and were made applicable to widows of rail employees living outside the United States.

We were very much in favor of having section 5 (i) (1) (11) of our Retirement Act amended so that those widows living outside the corporate limits of the United States be treated the same as their counterparts in the United States.

In this connection I had a lot of correspondence with some of our Canadian people. We have a large membership in Canada, in the various Provinces of Canada.

I would like to insert in the record at this time a report on this particular feature by the Honorable F. Keith Higginbottom, who is a barrister and Queen's counselor in Toronto, Ontario, in support of having this provision of the Railroad Retirement Act amended so that the widows of American railworkers in Canada will get the same benefits as their counterparts do on this side of the border.

Mr. MacK. Is that the statement you have?

Mr. STACK. It is on his own stationery. I would like to have it made a part of the record at this time.

Mr. MACK. It may be included in the record at this point.

(The information referred to is as follows:)


TORONTO 1, CANADA, March 8, 1957. Re amendment to Railroad Retirement Act re working restrictions of Canadian

widows. THOMAS STACK, Esq. President, National Railroad Pension Forum Inc.,

Ambassador Hotel, Washington 5, D. C. DEAR MR. STACK: I have had an opportunity of seeing some of the correspondence between you and Mr. Robert S. Moore of Toronto and am pleased to note the efficient manner in which your pension forum has brought to the attention of the interstate and foreign commerce committee the unjust situation which has developed for Canadian widows by reason of the application of certain provisions of the Railroad Retirement Act.

I happen to have personal knowledge of the manner in which the present law works to the prejudice of Canadian survivors whose husbands had been employed by American railroads. My father was the Canadian passenger agent for the Lehigh Valley Railroad for over 30 years. He lived for 512 years after his retirement. My stepmother, who married my father in 1923, is now in receipt of a pension of $65.70 per month which, obviously, without other help, would be entirely inadequate for her support. To supplement this income and so as to be engaged in worthwhile activity, she obtained part-time work in a doctor's office. She was not immediately aware of the restrictions which prevented her from working more than 6 calendar days per month. In the aggregate she only worked a few hours per month but found when she reported the nature of her employment that she would have to refund the payments received during the time she was working.

The ridiculous effect of the present law is that even if a widow works for 1 hour in 1 day and works for more than 6 such days, even though only for an hour or two, she is deemed to have worked for over 6 days. When this matter was drawn to my attention and the situation looked into I was, of course, amazed that such a situation could exist and although in the case of my stepmother it represented a hardship, it would be practically a denial of a pension for those unable to obtain assistance through other sources in order to obtain sufficient money to live. Since going into the matter with Mr. Moore, we have found many similar cases and we are quite sure there are many more that have not been brought to our attention, and it is obvious that so long as the present act remains, there will be increasing numbers of Canadian widows subjected to this unfair discrimination.

Insofar as Canadian and American economies are concerned, there is no significant difference between the respective costs of living and wage scales, and any limitation of earnings should be the same. It is obvious that there are practically no jobs that a widow can obtain where she can only work 6 days per month. . I would earnestly urge that this situation be changed forthwith. It would appear to serve no useful purpose to allow this to continue and make it necessary that appeals be made to the Canadian Government at Ottawa and to generally publicize this injustice throughout Canada, as I am sure that it was never intended by your American lawmakers that the act should work such unfair discrimination. I am sure that the good relations between Canada and the United States are such that this discrimination should not continue. The problem is, of course, aggravated by the fact that not only is there discrimination, but the regulations are such as to practically bar the Canadian widow from obtaining employment or can even have the effect of preventing her from enjoying the pension to which her husband had contributed in the same manner and to the same extent as his American counterpart.

If there is anything I can do to help the good work which you are doing, please let me know. This matter, although relatively small compared to many of the problems which concern the Interstate and Foreign Commerce Committee, is of great importance to the individuals now concerned and will be to many more in the future. Yours very truly,


Mr. STACK. If the committee wishes other information on that, I have some 12 cases that have been submitted to me by the head of the agencies in Toronto and some that we have developed ourselves that I will be glad to give the committee showing where som'of these ladies had to pay the Retirement Board back as much as $800 for payments which they thought they had a right to and which they found out they should not have received under the 7-day clause..

Mr. MACK. That may be left with the committee for their information.

Mr. STACK. There is a clause on pages 8 and 9 of H. R. 4353 that, if enacted, will materially reflect on the taxing provision of the bill.

As you know, social security has always increased benefits under that system and many increased benefits are planned for the future in connection with this act. When benefits are increased it usually calls for additional taxes to defray the costs of such benefits.

This bill provides that any increase in the tax rate by social security would be added to the taxes paid by the rail employees. In other words, if taxes are increased say 3 percent under social security this 3 percent would be added to the present high supporting tax under railroad retirement.

I might indulge a few minutes in connection with that particular provision, also.

Many of you elder statesmen on this committee recall back in the forties when the President of the United States and leaders in Congress had sharp disagreement regarding increasing the social security levy which was then 1 percent tax on the employee and employer. In fact, there was a breakup between the President and some of his leaders in Congress on account of that feature. But Congress did control and the tax was frozen at that particular time and it remained so for several years before it was increased.

Today this bill, H. R. 4353, is predicated on the assumption that the social security taxes will go up to 8 percent in 1970 and to a total of 812 percent in 1975 and that the tax on the employer and employee will approximately be 9 percent when these taxes are raised.

Now, if these increases are not allowed there is no reason to believe that the bill, H. R. 4353, is actuarially sound, based on future assumptions because we do not know what those future assumptions are going to be.

Nor do we know whether taxes under social security are going to be increased in the next few years to meet added benefits.

There have been several provisions today that have been worked on in the House to increase social security benefits. In each case it would require that the social security tax base be increased.

Therefore, I don't think that provision should be considered in connection with any pending legislation that this committee considers.

Because rail employees pay no part of the unemployment insurance taxes we have heretofore not commented on this application. However, H. R. 4353 on page 12, provides that employees with 20 years of service will in addition to the 13 2-week periods—26 weeks—receive an additional 117 2-week periods of unemployment which totals 5 years benefits.

The bill further provides that those who earn $4,000 per annum shall receive $10.20 per day unemployment benefits and those under this amount shall receive 60 percent of their daily rate, whereas retired rail

« PreviousContinue »