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Bill H. R. 5803, would most $12 million monthly, or $144 million annually added to our present cost, which is $55 million monthly, making a total cost of $67 million monthly, or $804 million annually. Our annual income would be --

-- $1, 138, 000, 000 Deduct cost of bill (H. R.5803)---

804, 000, 000

-------

Surplus annually.

334, 000,000 This surplus would be ample to insure care of employees who retire in the future.

Our organization wishes to go on record as endorsing and supporting provision in H. R. 5803, to reduce the age of wives from 65 to 60 years for eligibility for annuities. In many cases the husband, being 6 or 8 years senior to his wife, tries to work until the wife is eligible for her annuity.

It is necessary for both the employee and his wife, to draw their annuities in order to maintain any semblance of the standard of living to which they are accustomed. And with annuities figured under the present computation law, based on the 1924–31 depression years, it is only by strict curtailment of expenses that they are able to manage at all under our present economy, and be able to buy the necessities they need at the present-day inflated prices. We also endorse and support the provision, that employees who have worked for a period of 30 years or have reached age 60, be eligible for their annuity. Employees who have worked 30 years or have reached age 60 should be retired in accordance with other retirement systems.

Civil service employees retire at 30 years service at age 55, under civil service, the employee pays 342 percent, and the Goverment pays 312 percent.

Municipal employees usually pay from 342 to 5 percent. They are eligible to retire after 20 years service, at 50 percent of their salary, and after 25 years, their annuity is increased to 60 percent of their salary.

Under social security, who has the lowest tax rate, and pays the highest benefits, the employee and employer are taxed 212 percent, and women under social security are eligible for retirement at age 62. Railway employees receive less than 1 percent in benefits as compared with the social security pensions.

Why are railway employees who pay the highest taxes of any pension group, 614 percent by employee, and 644 by employer, receive the lowest benefits? Certainly railway employees are due some adjustment in their retirement annuity. Our tax rate is excessive, and should be reduced rather than increased, in accordance with other pension plans.

In conclusion, it is a known fact that the rank and file, working railway employees have not been consulted or considered in legislation for increased benefits. A group of top officials of railway brotherhoods have dominated the legislation on railroad retirement regardless of the desires of their membership, and for each small favor gained through efforts of the Brotherhoods, through their compromises the workingman has been penalized with additional taxes, which further decreases their take-home pay.

Our organization is on the ground-floor level with the rank and file employee men who are not high-salaried officials or top labor representatives, but the working man who is trying to live and support his family on a five-day nominal salary of approximately $400 per month, less retirement tax, $22.85, less brotherhood dues, $25, less withholding tax, less hospitalization, etc., so you can see what their take-home pay amounts to, and each additional assessment through legislation or otherwise, works an additional hardship on them.

The rank and file employes are for the amendments as outlined in H. R. 5803, and the financial status of our railroad retirement fund is sound, and surplus sufficient to take care of the cost involved with some left over. This fund be longs to the working men and women, who have paid their money in good faith into the fund, for the benefit of themselves and their dependents when they have reached the age of retirement.

Speaking for and in behalf of our membership, and for the average rank and file employee, who has endorsed and is supporting H. R. 5803, we wish to thank your honorable committees for this opportunity to present our views on this subject. We know that as fair-minded men, you will give our views your consideration. You are the men we are looking to for relief. You are in position to relieve the burden of the railway employees, as there are many inequities in our retirement act that needs correcting.

Instead of allowing our fund to build up to enormous proportions, it should be distributed in part by increased annuities to the employees who have contributed to it and are responsible for the present large surplus now on hand.

We urge that this committee take into consideration all petitions and letters received, relative to H. R. 5803, sent in by railway employees and their families. This is the only way they have of letting you known their desires, and their expression of confidence in your efforts in their behalf.

Again thanking your honorable committees for your consideration and efforts in behalf of our membership and railway employees, both active and retired, and assuring you of our cooperation and support in future legislation, I remain Very truly yours,

J. R. TAYLOR.

UNITED STATES OF AMERICA,
RAILROAD RETIREMENT BOARD,

Chicago, Ill., April 30, 1957.
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,

House Office Building, Washington, D. C. DEAR MR. HARRIS: You recently requested that the Board furnish you with copies of a statement which it was preparing for Senator Morse on the provisions and benefits of pension plans in the transportation industry other than railroads. Unfortunately data on such plans apparently has not been collected by any agency, except in part. It was, therefore, necessary to secure such information as was available in other agencies and to secure some of its from the industry directly. Because of the shortness of time to secure such information, the table may not be as complete as it might be.

I am enclosing a chart showing the provisions of 11 plans in the 4 other major segments of the transportation industry. These probably cover the majority of all employees in the transportation industry other than railroads, and the plans given are believed to be typical of all plans in the industry. There is also enclosed a table showing illustrative retirement benefits under these 11 plans and under the railroad retirement system.

A brief statement concerning supplementary unemployment benefit plans in other segments of the transportation industry is also enclosed. Sincerely yours,

HOWARD W. HABERMEYER, Chairman.

RETIREMENT BENEFITS FOR EMPLOYEES IN INTERSTATE TRANSPORTATION The Subcommittee on Railroad Retirement of the Senate Committee on Labor and Public Welfare has requested the Board to obtain data showing how retirement benefits available to employees engaged in segments of the transportation industry, other than railroads, compare with benefits provided under the Railroad Retirement Act. To that end, Board personnel have made a quick survey of the available data on pension plans for transportation employees which provide benefits supplementing those under the general Social Security System.

This statement does not duplicate any part of the ground covered by the Subcommittee on Welfare and Pension Funds of the Senate Committee on Labor and Public Welfare in its report of its study and investigations of welfare and pension plans dated April 16, 1956, except to some slight extent in connection with pension plans in the trucking industry. Even in that area, there have been a number of changes in the plans covering that industry, so that this statement will bring up to date some of the plans described in the report. .

NUMBER OF COVERED EMPLOYEES Precise information on the number of employees currently engaged in interstate transportation is apparently not available. The Bureau of Labor Statistics has information indicating that the total number of employees in interstate transportation (other than those for railroads and airlines), under labormanagement agreements covering 1,000 or more, is well under 500,000. This figure excludes, as far as they could be identified, employees of companies engaged solely in intrastate operations. Another source indicates that the average

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number of domestic airline employees in 1956 was about 130,000. From these two sources, then, it would appear that the total number of nonrailroad employees in interstate transportation is not less than 600,000, distributed by type of transportation as follows: Trucking

310, 000 Airlines-------

130, 000 Maritime

75,000 Longshore..

75, 000 Buslines-----

20,000 Of the above figures, the one for buslines is probably the least accurate. There are several interstate buslines employing fewer than 1,000 employees each. In submitting a copy of its pension plan to the Bureau of Labor Statistics, the Greyhound Lines reported its plan covered from 15,000 to 20,000 employees, including employees of its subsidiary lines.

Probably the great majority of employees in each branch of interstate transportation is covered by supplementary pension plans. Although the total number of individual pension plans could not be ascertained, copies of 11 plans were obtained and summarized. These include 5 covering water transportation and related operations, 3 for the trucking industry, 2 for airlines, and 1 for buslines. Collectively, these 11 plans appear to cover more than half of all employees in nonrailroad interstate transportation and, for the most part, appear to be fairly typical of the segment of the transportation industry to which they apply.

COMPARISON WITH RAILROAD RETIREMENT SYSTEM

One distinctive feature of the railroad retirement system, as compared with supplemental pension plans in other segments of the transportation industry, is its provision for nationwide coverage of railroad employment. Private pension plans generally cover a single employer only, and an employee transferring to another employer loses his pension rights. In some plans, employees may transfer to jobs with other employers participating in the plan without loss of service credits.

The normal retirement age under the supplementary plans is usually 65; some plans provide for normal retirement at age 60 for employees in relatively hazardous occupations, or for women. About one-half of the plans provide for prenormal retirement, usually at age 60 at a reduced rate, as in the railroad system. Disability retirement is provided in about one-half of the plans but, except for the Greyhound plan, only on the basis of total and permanent disability. The railroad retirement system provision for occupational disability is found only in the Greyhound plan. In comparing the disability provisions of the railroad retirement system with those of the supplemental plans, it should be borne in mind that the railroad retirement system has provided for both total and occupational disability for many years, while the plan provisions are relatively new and the Social Security System will only begin to pay such benefits in July 1957, and then only on the basis of total and permanent disability.

About half of the supplemental plans provide for flat amounts of pension, while in the remainder the pension varies with length of service. The Greyhound plan is the only one providing for both a varying pension and for a minimum pension. The Central States Trucking plan is unique in that it provides for a relatively high amount ($90 per month) for the first 5 years after retirement and for a substantially smaller amount thereafter.

Under all plans, the amount of pension is supplemental to and is not affected by the amount of benefit under the Social Security System. The Greyhound plan provides for a higher prenormal benefit at the option of the employee, with a reduction when social security benefits become available. Similarly, there is no restriction in the railroad system on the simultaneous receipt of retirement benefits under the Social Security System based on nonrailroad credits, as long as the “overall social security minimum guaranty” does not apply.

Very few of the plans provide for vested rights to retirement benefits, and these are for the most part the contributory plans. Generally, under the plans, rights to pensions vest only after retirement, and only to the extent that funds are available to pay them. Rights to pensions are usually based on continuous

1 Monthly Labor Review, March 1957, table A-2, p. 381. Air transportation (common carrier) annual average number of employees for 1956, 128,600.

or near-continuous service; breaks in service almost invariably result in loss of service credits. In contrast, under the railroad plan, rights to retirement annuities vest permanently after 10 years of service, and continuity of service is not a requirement for eligibility.

Only 3 of the 11 plans (the airline plans and that of the Greyhound Lines) are fully contributory, in contrast with the railroad retirement system in which both employers and employees contribute equal amounts. One plan provides for employee contributions only for the first 2 years of the plan. Employer contributions are usually on the basis of a fixed amount per unit of covered service. Eight of the plans are of that type, while for the remaining three, employers contribute only the amounts necessary to maintain the plan funds on a sound actuarial basis. For the three plans in which employees contribute, comparison with the railroad retirement system is difficult because of the makeup of the contributions formula.

All plans are subject to termination, either on a fixed future date or at the discretion of the trustees or company, as the case may be, while the railroad retirement system may be modified only by law. Invariably, each plan provides that, in the event of termination, amounts remaining in the trust fund are to be distributed solely to present or future pensioners. None of the plans has a provision similar to the residual guaranty of the railroad retirement system, and none has the same degree of assurance of permanent life as does the railroad system.

The principal features of the 11 plans are outlined in an attached tabular summary which includes, for convenient comparison, comparable information on the railroad retirement system. Except for contribution rates, no information on costs was readily available. An illustrative table showing monthly retirement benefits (including social security benefits) is also attached.

Monthly retirement benefits payable under plans of selected companies (includ

ing social security benefits) in interstate transportation and to railroad employees with specified earnings and services

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NOTE.- For purposes of computing benefits, retirement was assumed to take place on January 1, 1957. Benefits include the amount payable under social security to employee, but do not include the wife's annuity. The wife's benefit under social security would be $44.30 in the case of employees with average wages of $250, $49.30 for wages of $300, and $54.30 for wages of $350. Under RRA the wife's annuity would be 22 of amount shown with a maximum of $54.30.

1 Annuity for first 5 years of retirement; it is reduced by $67.50 thereafter.
2 Benefits were calculated on the assumption of 160 average hours per month.

3 As of Jan. 1, 1957, maximum years of service for Greyhound Lines' plan was 1722 years; minimum annuity is 50 percent of average wage.

4 Maximum creditable compensation under Railroad Retirement Act was raised from $300 to $350 July 1, 1954; annuity was computed using $350 average for 242 years and $300 average for remainder of service.

6 Beneficiaries under the Railroad Retirement Act may in addition receive benefits under Social Security Act if qualified under that act.

[graphic]

Summary and comparison of selecteil pension plans in interstate transportation and the railroad retirement system

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$100 or $5 per year of $34; amount varies ac- | Monthly rate equal to per-
service up to 20.

cording to balance in centages of aggregate
pension fund.

creditable earnings as
follows: From July 1,
1941, to June 30, 1949,
1.00 percent; July 1, 1949,
to June 30, 1953, 1.23 per-
cent; July 1, 1953, and
subsequent 1.50 percent
(percentage for service
after June 30, 1953, ranges,
from 1.35 to 1.50 percent
for drivers and women
retiring at ages 60-64)

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