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adequately on a very small income. Today that income must be increased.
This amendment to the act would allow a physically disqualified railroad employee with 10 years service to receive his full pension at the age of 50 years whereas now he must wait until he reaches the age of 60. . .
Here again, I would point out that I have many people in my district that are adversely affected by the present restriction and I would seriously urge favorable action upon this bill so that the Gove ernment might do economic justice to these worthy individuals.
Finally, Mr. Chairman, I would urge your approval of these bills in fairness and equity for these people who have to bear the burdens of inflation and decreased earning power in a period that has seen the cost of living persistently increase month after month until pensions and annuities that in the past provided a decent living today hardly provides a subsistence level.
Mr. MacK. Are there any questions? If not, we thank you, Mr, Davis.
Mr. Davis. Thank you, Mr. Chairman.
Mr. Mack. The next witness is the gentleman from the State of Washington, the Honorable Thor C. Tollefson. STATEMENT OF HON. THOR C. TOLLEFSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON Mr. TOLLEFSON. Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you in support of the several bills now under consideration by you which are designed to amend the Railroad Retirement Act so as to liberalize retirement benefits. I have particular reference to the Harris-Wolverton bill and similar measures, such as my own bill, H. R. 4620. - These generally provide for a 10-percent increase in benefits, and should apply to all annuitants, pensioners, and their survivors.
There are many railroad employees in my congressional district. A great number of them have written to me and have urged that I support the pending measures. I am happy to do so because I sincerely believe these bills to be meritorious and necessary. Those who have communicated with me say that present payments under the act are insufficient to meet the rising costs of living. Recipients are having a difficult, if not impossible, time making ends meet. Expenses exceed income and some relief is required. An increase in the amount of annuities seems to be the best answer to the situation.
Mr. Chairman, railroad workers who have written to me are aware of the need for maintaining a solvent retirement fund. They appreciate the problem of this committee in that regard. They know that if more money is paid out of the fund in benefits than comes into it through employee-employer contributions the fund will eventually be exhausted, and there will remain nothing to be paid to future recipients. But they are hopeful that the committee in its wisdom will find some solution to that problem.
Perhaps new sources of revenue for the retirement fund must be found. It has been suggested that payroll contributions should be increased, and that the employer be permitted to take credit for the
increase on his income tax return. Other means may occur to the committee as hearings on these measures proceed.
In addition to increasing the amount of benefits, some measures pending before the committee seek to liberalize the Railroad Retirement Act in other ways. Some would permit retirement after 30 or 35 years of service, with the annuity to be computed on the 5 years of highest earnings. Other measures would repeal the prohibition against the payment of dual benefits to spouses thereby making them, eligible to receive spouse benefits under the Railroad Retirement Act and earned benefits under social security. I trust that the committee will give consideration to all of them.
Railroad employees and employers each presently are taxed 674 percent of the employees earnings up to $350 per month. Under, social security the rates are 214 percent on similar earnings. A comparison of the benefits paid under both systems is interesting. The Railroad Retirement Board has made available such a comparison and I include it herewith.
(The matter referred to was inserted in the record by Mr. Van Zandt, and appears on p. 73.)
Mr. Mack. We thank you for your statement, Mr. Tollefson.
Mr. Mack. The next witness is the gentleman from New York,
. CONGRESS FROM THE STATE OF NEW YORK Mr. COLE. Mr. Chairman and members of the subcommittee, I have asked to appear before the subcommittee to explain my reasons for introducing H. R. 4760.
This bill was prompted by a case which was brought to my attention by a constituent residing in Hornell, N. Y., a sizable center of railroading in my district. The constituent's mother, a widow of a retired railroad employee, had applied for a widow's annuity and her claim had been denied by the Railroad Retirement Board. The denial was based on the ground that the retiree's annuity had not been approved prior to January 1, 1948, nor had he ceased to render compensated service to any person prior to that date.
On the surface, the denial of widow's annuity to this woman would seem perfectly proper and, in fact, it is perfectly legal as the Railroad Retirement Act as amended now stands; but I submit that the decision is inequitable and that H. R. 4760 or some similar legislation should be passed to amend the act in cases such as this.
The railroad retiree in this case last performed compensated service, for the Erie Railroad Co. in 1931. He was employed in another industry from 1935 to 1948. On April 30, 1947, the retiree applied to the Railroad Retirement Board for an annuity based on his earlier railroad service. In order to have some income until the annuity was granted, he continued working for a private party. It took the Railroad Retirement Board from May 1947 until January 23, 1948, to investigate this case and determine that the applicant was eligible. The Board then wrote to him on that latter date stating that he would have to cease employment in order to begin receiving the annuity. The retiree ceased his employment on January 31, 1948, and was awarded an annuity effective February 1, 1948, based on 25 years of railroad service rendered prior to January 1, 1937. . So far, so good, but when the retiree died on January 1, 1955, his widow applied for a widow's insurance annuity and her application was denied by the Board because her husband's annuity had not been awarded prior to January 1, 1948, nor had he ceased employment before that date.
I submit that a widow in this position should not be denied her pension because of the excessive length of time it took the Railroad Retirement Board to investigate and grant her husband's original application for annuity. In this case, the application was made on April 30, 1947, and was not tentatively approved until January 23, 1948. The reasons for this are unimportant, I believe. It may have been due to a shortage of investigative personnel or because of some other factor which was not completely within the control of the Railroad Retirement Board, but when an application takes nearly 9 months to be processed it is only reasonable to expect that the applicant will have to continue his employment in order to have income during that period. It is unreasonable to penalize the applicant's widow at a later date because of the excessive delay in the processing of the original application.
Admittedly, the case which I cite is only one such incident, but that is because it is the only one which has been brought to my attention, I dare say there are many other cases where widows are not now receiving annuities to which they would otherwise be entitled purely because their late husbands' applications for railroad retirement annuity were not granted in a reasonable time, even though the application was made many months prior to January 1, 1948. It is to give relief to the windows in these cases that I have introduced H. R. 4760 and I sincerely hope that this subcommittee will recognize the need for equity in situations which it covers, one of which I have outlined above.
Mr. Mack. We thank you for your testimony, Mr. Cole.
Mr. MACK. The next witness is our colleague and a member of the Committee on Interstate and Foreign Commerce, Mr. Rhodes of Pennsylvania
STATEMENT OF HON. GEORGE M. RHODES, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF PENNSYLVANIA Mr. RHODES. Mr. Chairman, members of the committee, I am pleased to have this opportunity of presenting my views favoring the enactment of H. R. 4353 and similar bills, including my own bill, H. R. 5057, providing for a modest 10-percent increase in pensions and annuities under the Railroad Retirement Act and also making liberalizing changes in the Railroad Unemployment Insurance Act. · It is well known that in periods of rising prices such as we are now experiencing, those persons on fixed incomes-pensions, annuities, and the like-are most severely hurt. Retired persons, widows and children under the Railroad Retirement Act and similar types of retirement programs are being forced to make drastic cuts in their stand
ards of living because of the reduced purchasing power of each pension dollar.
The 10-percent increase voted in the last Congress did not nearly meet the rise in the cost of living which took place since the last previous increase in railroad retirement benefits in 1951. The consumer's price index has risen to record levels each month following the most recent increase. Since the signing of Public Law 1013, 84th Congress, the medical care index has risen by 2 points, transportation by 5 points, housing by 1.6 points, and the index of all items by 1.4 points. · I feel that H. R. 4353 and similar measures being considered by this committee are sound and necessary. Our chairman, Mr. Harris, the ranking Republican member, Mr. Wolverton, and the entire membership of the committee has a splendid record in matters affecting the Railroad Retirement Act. I trust that the committee will see fit to give its prompt approval to this legislation so that it may be acted upon during this session.
Mr. MacK. Thank you for your testimony, Mr. Rhodes.
Mr. Mack. The next witness on the schedule is Hon. Charles W. Vursell of Illinois.
STATEMENT OF HON. CHARLES W. VURSELL, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. VURSELL. Mr. Chairman and members of the subcommittee, I desire today to submit for the record in your hearings brief testimony in support of H. R. 4312 which I introduced in the House of Representatives on February 4, 1957.
I know you have had several bills before you for consideration all of them designed by the Members introducing them to correct some inadequacies in the present law providing for railroad retirement.
H. R. 4312 generally carries the provisions of H. R. 3974 introduced by Representative Bryan Dorn of South Carolina.
The purpose of such legislation is to correct inadequacies and give a fuller measure of railroad retirement in order to keep pace with the constant rise in the cost of living, and the constant change and, I might say, diminution of railroad employment due to improvements in mechanization in the evolution and progress of the railway industry.
My bill, H. R. 4312, makes two important changes in the present act, which provides retirement at age of 60 with 30 years of service, or 35 years of service regardless of age:
(1) It would seem that since female employees under the present law are prorided full retirement at age 60 with 30 years of service that male employees should be accorded the same treatment. My bill provides that male employees, many working at the same type job, receiving the same pay, under present law would, if they retired at the age of 60 with 30 years of service, no longer lose one-third of the small annuity for retirement at age 60. This small increase in retirement which would result from amending the present act would give some small benefits to those who were forced to retire in many instances because of the changing conditions in railway employment. For instance, there are a great many workers in the shops who have been and will continue to be laid off in the change from steam to diesel
power and there are many that automation has made necessary for retirement from railroad work.
Diesel power pulling longer trains at a higher rate of speed reduces, to an extent, employees in all categories such as engineers, firemen, switchmen, brakemen, and conductors as well as having an impact on railway shop employees throughout the Nation.
(2) Another change this bill provides, as does others which have come before you for consideration, has reference to the basis of computing pension retirements for railway employees. The bill provides in substance that the present test period before 1936 be substituted by the average earning for the 5 highest years prior to the year 1937.
There are some railroad shops that are closing down throwing many men over 60 years of age out of jobs, and we all know that it is almost impossible for a man over 60 years of age to get new employment. If the age was reduced to 60 years rather than the 65-year limit, it would be most helpful to such men who are losing their jobs through no fault of their own.
Mr. Chairman, I believe that with the changes referred to in this bill that it would bring to past, present and future railroad retirees a reasonable increase in retirement benefits which will keep pace more nearly with the changing conditions of employment and railway service and the economy of the Nation which affect living standards of every citizen.
Mr. Mack. Thank you for your statement, Mr. Vursell.
Mr. Mack. We will now hear our colleague from Kansas, the Honorable Myron V. George. STATEMENT OF HON. MYRON V. GEORGE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF KANSAS · Mr. GEORGE. Mr. Chairman, last year, I introduced H. R. 9334, a companion bill to H. R. 9065, introduced by Congressman Harris. I thoroughly approved of the bill as introduced and regretted that the benefits were reduced and that the tax-offset provision was eliminated. On February 18, 1957, I introduced H. R. 4914, which contains the same provisions as H. R. 4353 by Congressman Harris, and H. R. 4354 by Congressman Wolverton.
The proposed amendments would effect the following changes in the Railroad Retirement Act, the Railroad Retirement Tax Act, and the Railroad Unemployment Insurance Act:
(1) For Financing of the Benefits, the bills. (a) would increase the tax base under the Railroad Retire
ment Tax Act from the present maximum of $350 a month to $400;
(6) would increase the present tax rates on employers and employees from 61/4 percent to 712 percent; and
(c) would provide an additional increase of tax rates on employers and employees with respect to compensation for services
after 1969 provided there are increases in certain social security ..tax rates.
These provisions will continue the railroad retirement system on a sound financial basis.