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Dennis, C. L., international president, Brotherhood of Railway and Air-
line Clerks, in behalf of the Congress of Railway Cnions and Railway
House Report 93-1345 to accompans H.R. 15301.-
AUGUST 29, 1974.-Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1974
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
HARLEY 0. STAGGERS, West Virginia, Chairman TORBERT H. MACDONALD, Massachusetts SAMUEL L. DEVINE, Ohio JOHN JARMAN, Oklahoma
ANCHER NELSEN, Minnesota JOHN E. MOSS, Callfornia
JAMES T. BROYHILL, North Carolina JOHN D. DINGELL, Michigan
TIM LEE CARTER, Kentucky PAUL G. ROGERS, Florida
CLARENCE J. BROWN, Ohio LIONEL VAN DEERLIN, California
DAN KUYKENDALL, Tennessee J.J. PICKLE, Texas
JOE SKUBITZ, Kansas FRED B. ROONEY, Pennsylvania
JAMES F. HASTINGS, New York JOHN M. MURPHY, New York
JAMES M. COLLINS, Texas DAVID E. SATTERFIELD III, Virginia LOUIS FREY, JR., Florida BROCK ADAMS, Washington
JOHN WARE, Pennsylvania W. S. (BILL) STUCKEY, JR., Georgla JOHN Y. MCCOLLISTER, Nebraska PETER N. KYROS, Malde
RICHARD G. SHOUP, Montana BOB ECKHARDT, Texas
BARRY M. GOLDWATER, JR., California RICHARDSON PREYER, North Carolina NORMAN F. LENT, New York BERTRAM L. PODELL, New York
H. JOHN HEINZ III, Pennsylvania HENRY HELSTOSKI, New Jersey
WILLIAM H. HUDNUT III, Indiana JAMES W. SYMINGTON, Missouri
SAMUEL H. YOUNG, Illinois
EDWARD R. MADIGAN, Illinois
W. E. WILLIAMSON, Clerk
CHARLES B. CURTIS
LEE 8. HIDE
Calendar No. 636
98D CONGRESS | HOUSE OF REPRESENTATIVES ( REPORT ed Session
1 No. 93-1345
RESTRUCTURING OF THE RAILROAD
Arerst 29, 1974.-Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. STAGGERS, from the Committee on Interstate and Foreign
Commerce, submitted the following
together with MINORITY VIEWS
(To accompany H.R. 16801]
The Committee on Interstate and Foreign Commerce, to whom was referred the bill (H.R. 15301) to amend the Railroad Retirement Act of 1937 to revise the retirement system for employees of employers covered thereunder, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass.
The amendment strikes out all after the enacting clause and inserts & new text which is set forth in the reported bill in italic type. The bill was ordered reported by a voice vote.
PRINCIPAL PURPOSE OF THE BILL The bill provides for a complete restructuring of the Railroad Retirement Act of 1937, and will place it on a sound financial basis. Railroad Retirement benefits will hereafter consist of two components the first tier will be a benefit computed under the Social Security Act, counting all railroad employment as Social Security covered employment, and combining that service with all Social Security covered employment; and a second tier of benefits based on railroad service alone computed under the Railroad Retirement Act.
This new technique of computing benefits will bring about more adequate coordination between the Railroad Retirement Act and the Social Security Act, thereby preventing future losses to the Railroad
Retirement System under the financial interchange program. It is these losses that threaten the existing system with bankruptcy.
Persons in receipt of both Railroad Retirement and Social Security benefits as of December 31, 1974 will continue to receive benefits under both systems without any reduction in those benefits. Persons who already have vested rights under both the Railroad Retirement and the Social Security systems will in the future be permitted to receive benefits computed under both systems just as is true under existing law. The excess costs of paying benefits to persons described in this paragraph will be met through appropriations approximating $285 million per year through the year 2000. No other costs to the United States are involved in the bill.
Persons not yet retired (other than those with vested rights) will have their benefits computed under the new “two tier" system described in the first paragraph above.
JUSTIFICATION FOR APPROPRIATIONS The Railroad Retirement System is today operating at a serious actuarial deficit, amounting to over 9 percent of taxable payroll. 7.72 percent of this deficit arises because of inadequate coordination between the Railroad Retirement Act and the Social Security Act.
In 1951 the Congress created a program known as financial interchange, under which the Railroad Retirement System was reinsured with the Social Security System. Under this program, the Railroad Retirement System pays to the Social Security System each year an amount equal to the taxes which would have been paid by all railroad employees, and by the railroads, if railroad service were service covered under the Social Security Act. The Social Security System, on the other hand, transfers to the Railroad Retirement System each year an amount equal to the total of Social Security benefits which would have been paid to all retired railroad employees, their dependents, and survivors if all railroad service of the employees since 1936 had been service covered under the Social Security Act. The net result of the financial interchange program has been a transfer over the years of $8.2 billion from the Social Security System to the Railroad Retirement System.
The Social Security Act prohibits payment of multiple benefits to any individual under that Act. For this reason, whenever an individual receiving Railroad Retirement benefits qualifies for Social Security benefits, the amounts credited to the Railroad Retirement system under financial interchange on account of that individual are reduced by the total of the Social Security benefits which that individual receives. The lost reimbursement to the Railroad Retirement System over the years arising out of this situation is in excess of $4 billion, and it is timated that the present value of the future lost