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(2) For the Railroad Retirement Act, the bills—
(a) would increase all benefits by 10 percent;
(c) would reduce the age requirement for annuities for women employees with less than 30 years of service from 65 to 62, but such, annuity would be on a reduced basis;
(d) would reduce the age requirement for annuities for spouses from 65 to 62, but such annuity would be on a reduced basis;
(e) would authorize the payment of insurance lump sums (commonly considered as funeral expenses) up to a maximum of $750, even if monthly survivor annuities are payable in the month: of the employee's death; and
(f) would increase the maximum creditable monthly compenrsation from $350 to $400. (3) For the Railroad Unemployment Insurance Act, the bills
(a) would increase the daily benefit rate from the present 50 percent of the employee's wage rate in his last job up to a maximum of $8.50, to 60 percent of his wage rate up to a maximum of $10.20;
(6) would increase from 7 to 10 the number of days for which: unemployment benefits may be paid in the first registration period;
(c) would extend for a career railroad employee the period during which he may receive benefits (these extended periods would vary in accordance with the length of the beneficiary's previous employment); and
(d) would provide funds for these proposed increases in benefits, with a maximum tax rate of 4 percent up to $400 a month, all
of which is paid by employers. There are a large number of railroad and express employees in my district that will be affected by these amendments which would aug-ment the benefits under these laws and provide adequate taxation to support the continued payment of benefits and it is hoped that this committee will favorably consider these provisions and recommend their passage to the House. Mr. Mack. We appreciate your appearance, Mr. George. Mr. GEORGE. Thank you, Mr. Chairman.
Mr. Mack. The next witness is our colleague from North Dakota, the Honorable Usher L. Burdick.
STATEMENT OF HON. USHER L. BURDICK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NORTH DAKOTA
Mr. BURDICK. Section 3 (e) of the Railroad Retirement Act of 1937 provides in substance that a railroad retirement annuity will never be less in amount than the corresponding monthly benefit which would be payable under the Social Security Act if the wage record in question were a social security wage record instead of a railroad wage record. This provision is designed to put a “floor" under the railroad retirement benefits by increasing a railroad retirement or survivor: annuity to the social-security level if the latter is higher.
A constituent's railroad annuity, as computed under the regular: formula in the Railroad Retirement Act, was lower than the corresponding (widow's) benefit would be under the Social Security Act, so it was increased under section 3 (e) to the amount of the latter benefit. However, she subsequently became entitled under the Social Security Act to an old-age benefit in her own right, and under that act a widow's benefit is considerably reduced if the widow is also entitled to an old-age benefit; so that the provisions of section 3 (e) no longer served to increase her railroad annuity and it reverted to the some'what lower amount computed under the regular Railroad Retirement Act formula.
H. R. 4187 would provide that, for purposes of determining the minimum railroad annuity of any individual under section 3 (e), the fact that such individual may actually be entitled to a social-security benefit will be disregarded. The individual could therefore obtain the benefits of the floor provisions without the reduction which would otherwise result from his entitlement to more than one social-security benefit. The bill has been made retroactive to October 1, 1955, so as to apply to my constituent.
I hope the subcommittee will give favorable consideration to H. R. -4187.
Mr. Mack. Thank you for your testimony, Mr. Burdick.
Mr. Mack. The next witness is another member of our Committee on Interstate and Foreign Commerce, Mr. Staggers, of West Virginia. STATEMENT OF HON. HARLEY O. STAGGERS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF WEST VIRGINIA Mr. STAGGERS. Mr. Chairman, it has always been very gratifying to me that I have supported all amendments to the Railroad Retirement :and Railroad Unemployment Insurance Acts which have been supported by the railroad labor organizations. I have voted in favor of their legislation not only on the floor but in committee when it was in executive session.
I heartily approve of the Harris-Wolverton bills, H. R. 4353 and H. R. 4354, and introduced on March 7, 1957, a companion bill, H. R. -5772. Last year, I introduced H. R. 9190 which was the same as Congressman Harris' bill, H. R. 9065. I have regretted that the legislation before the 84th Congress was not enacted as introduced. The increases in benefits were inadequate and the tax-exempt provision applicable to taxes paid under the act died a lingering death in the Ways and Means Committee. H. R. 5772 would increase all benefits under the act by 10 percent. It would liberalize the Railroad Retirement Act in many other ways and provide the necessary increase in taxation to meet the future demands on the railroad retirement trust fund. I earnestly request this committee to favorably consider the provisions of this legislation and recommend their passage to the House.
It is my hope too that the Ways and Means Committee will act favorably and expeditiously on Congressman McCarthy's bill, H. R. -5551, to eliminate from gross income all taxes paid by employees, not only under the Railroad Retirement Tax Act, but also under the Social Security Act and the civil-service retirement system.
Mr. MACK. We thank you for the information you have given the committee, Mr. Staggers.
Mr. STAGGERS. Thank you, Mr. Chairman.
Mr. MACK. The next witness is our colleague from New York, Hon. Herbert Zelenko.
STATEMENT OF HON. HERBERT ZELENKO, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW YORK Mr. ZELENKO. Mr. Chairman, I welcome this opportunity of presenting my statement in support of the bill I have introduced, H. R. 3545, to amend the Railroad Retirement Act of 1937 to provide full annuities for all individuals who have completed 30 years of service at age 60 and reduced annuities for individuals who have completed 30 years of service at age 55, and to increase the maximum annuity payable to an individual with 30 years of service.
Our citizens who have worked long and faithfully in the service of the railroad industry, which is so essential to the welfare of the United States, are entitled to a more liberal schedule for the computation of retirement age, and to greater financial security upon their retirement.
Studies have shown that these benefits can be provided under the railroad retirement fund without an increase in taxes.
I hope that the members of this committee will look favorably upon this legislation, which provides a more adequate retirement system, and will recommend the enactment of same to the House of Representatives.
Mr. Mack. Thank you, Mr. Zelenko, for your appearance and the information you have given the committee.
Mr. ZELENKO. Thank you, Mr. Chairman.
Mr. Mack. We will now hear from the gentleman from Michigan, Mr. Rabaut.
STATEMENT OF HON. LOUIS C. RABAUT, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN Mr. RABAUT. Mr. Chairman and members of the committee, thank you for the opportunity to express my views in behalf of my bill, H. R. 900. First, I would like to point out that, inadvertently, a very important section of my bill was deleted; my original desire was to allow former railroad employees not covered by social security to withdraw their retirement deductions if their tenure of service was less than 10 years. In this connection, I am submitting an amendment to H. R. 900 to clarify this point and will discuss my bill as it contains the amendment.
My bill would permit an employee with less than 10 years of service under the Railroad Retirement Act to receive a refund of all the payments contributed to the system plus 6 percent interest from time of such payments. Persons who leave railroad employment with less than 10 years' service are not now entitled to any railroad retirement benefits during life. Persons who enter an industry other than railroad which is covered by the provisions of the Social Security Act will receive appropriate social-security benefits at age 65. However, those taking employment elsewhere now suffer a total loss of the money paid into the railroad retirement fund and will probably have to be content with the knowledge that their estate may eventually get their railroad retirement contribution. This is most unfair when one considers the vast number of workers adversely affected. As of the end of 1951, there were about 5.5 million living persons, who at one time or other, had some but less than 10 years of railroad service. It should also be mentioned that, of those who entered railroad service in 1938, less than 13 percent were still in service in 1950.
Women railroad workers who get married and become housewives, Federal workers under the Civil Service Retirement Act, and policemen, firemen, and other municipal employees under certain State re: tirement systems make up the bulk of those who suffer from this characteristic of the railroad retirement law. Incidentally, it should be mentioned that even if a worker does happen to be covered by social security at retirement age, he will not receive a fair return for his years on the railroad. He has paid into the railroad retirement fund at the rate of 6 percent and will draw the same benefits for his years of railroad service as those individuals who paid only 2 percent of their salary through the years.
Gentlemen, in view of the fact that a short-term worker's payments are not now being used for his own benefit but are being used to pay "benefits of career employees, I feel the aforementioned retirement deductions should be returned to their rightful owners. Six percent of a man's salary is a great deal and under proposed legislation, the amount deducted for retirement purposes would be increased to 712 percent. In this day of rising costs and sporadic unemployment, the sums retained by the Retirement Board could be of tremendous assistance to a family having difficulty“making ends meet." (Thé amendment referred to above follows:)
AMENDMENT TO H. R. 900 On page 2, strike out the period in line 6 and insert the following : ", if (A) such employee, after terminating his railroad employment, enters upon the performance of service (other than railroad employment) which is excluded from 'employment' as defined in section 210(a) of the Social Security Act, and (B) such employee files his resignation and affidavit with the Board, as provided in the succeeding sentences of this paragraph, while he is performing such excluded service." .: Mr. Mack. Thank you for your appearance, Mr. Rabaut. · Mr. RABAUT. Thank you, Mr. Chairman.
Mr. Mack. The next witness is Hon. Richard H. Poff, our colleague from Virginia. I believe, Mr. Poff, you wish to testify on H. R. 4523 and also on H. R. 880; is that correct ?
Mr. POFF. That is correct, Mr. Chairman.
STATEMENT OF HON. RICHARD H. POFF, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA
Mr. POFF. Mr. Chairman, I am pleased to have an opportunity to testify in support of my bill H. R. 2523 which I introduced on February 6, 1957. Briefly, the purpose of this bill is to amend the Railroad Retirement Act of 1937 to permit a retired railroad worker to receive his benefits even though he may have rendered compensated service to an outside employer by whom he was last employed before his benefits began to accrue. Stated differently and still more simply,
H. R. 4523 would repeal the so-called last employer clause of the act.
As the members of this subcommittee know, many railroad workers, faced with today's high cost of living and sometimes unique mortgage, hospital, medical and other domestic financial burdens, are compelled to do something in their off-duty hours to supplement their railroad wages. Sometimes at a very nominal monthly or annual salary, they serve as executive secretaries or treasurers of church, civic, fraternal or social organizations. Under sections 2 (a) and 2 (b) of the Railroad Retirement Act, as now written, when such railroad workers become eligible for retirement under the act, they are refused their retirement benefits unless first they resign from their side job. Recently several specific cases of this nature have come to my attention. One concerns a man who had worked on one of our southern railroads for over 40 years and who, as an ordained Baptist minister, filled the pulpit in two local churches each Sunday, for which he received a small salary which hardly covered his personal expense. When he applied for railroad retirement benefits, he was told that before he would be eligible, he would have to resign as minister to these two churches. Another railroad worker had been serving as treasurer of a small local credit unit before he retired from the railroad. Uno aware of the effects of the last employer clause, he continued working for the credit union after he retired. When the Railroad Retirement Board learned this, his pension was stopped and he was told that he would have to resign this little job before his pension could be restored. In still another case, a retired woman railroad worker was asked to refund the retirement benefits she had already been paid when the Railroad Retirement Board learned the she had been working as a part time stenographer while she was still working for the railroad.
As I understand it, the original purpose of the last employer clause was to deny benefits to those railroad workers who left the railroad industry before retirement age after only a few years' or a few months' service and engaged in other employment which was covered by a different retirement plan. However, the legal effect of the language of this clause was to deny benefits even to those employees who were still working for the railroad when they reached retirement age simply because they had another “employer." Personally, I do not believe that the authors of the last employer clause foresaw or intended any such effect.
I am told that the argument against this bill is that it would increase the operating cost of the program. Assuming for the sake of discussion that this is a fact, still it seems to me that the argument has no equitable validity because it is based upon the unfair premise that the railroad retirement fund should be unjustly enriched at the expense of the railroad worker who has for perhaps 30 or more years paid into the fund with the reasonable expectation that he would upon retirement be entitled to the benefits which he had purchased. What justice can there be in the contention that he should be required in his declining years to forfeit these benefits simply because he was compelled by financial necessity to supplement his railroad wages in some small off-duty side job? What he gets for what he pays is little enough anyway.
Further demonstrating the unfairness of the last-employer clause, the railroad worker who is fortunate enough to own a few shares of