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Shortly after the Commission issued its report Congress enacted Public Law 92–460, which contained a provision instructing representatives of railrod labor and management to enter into negotiations that would take into consideration the Commission's specific recommendations and to submit a report containing their mutual recommendations as to what measures should be taken to assure the receipt of sufficient revenues to finance the benefits provided by the Railroad Retirement Act. Pursuant to that directive, the representatives submitted a report, dated February 27, 1973, calling attention to the complex issues involved and stating that substantial progress had been made in shaping mutually agreeable recommendations. Subsequently, Public Law 93–69 was enacted, a provision of which directed the representatives of labor and management to present to Congress their joint recommendations, in the form of a draft bill, for restructuring the railroad retirement system in a manner which will insure its long-range actuarial soundness. This bill implemented the recommendations submitted by the Joint Labor-Management Railroad Retirement Negotiating Committee in accordance with the directive contained in Public Law 93-69.


Title 1-The Railroad Retirement Act of 1974

Title I of the bill amends the Railroad Retirement Act of 1937, in its entirety, and replaces it with a new Railroad Retirement Act, the Railroad Retirement Act of 1974. An analysis of the individual sections of the new Act follows. Section 1

As in the Railroad Retirement Act of 1937 (which will hereinafter be referred to as “the 1937 Act”), the first section of the new Act contains definitions of terms, retaining, for the most part, the substance of the definitions set forth in the 1937 Act. In many instances, however, the format of the subsection defining a particular term in the new Act is different from the format of the subsection of the 1937 Act defining that same term. Such changes in format were made with respect to the terms "employer” (section 1(a) of each Act); "employee" and "employee representative” (section 1(b) of the 1937 Act-sections 1(b) and 1(c) of the new Act); “in the service of an employer"

(section 1(c) of the 1937 Act-section 1(d) of the new Act); "employment relation to an employer” on August 29, 1935 (section 1(d) of the 1937 Act-section 1(e) of the new Act); "years of service" (section 1(f) of each Act); and "compensation” (section 1(h) of each Act). None of these format changes make any substantive changes in the definitions of the terms involved.

In addition to the above-mentioned format changes, several changes of a technical nature are contained in the definitions set forth in the new Act. The definition of the term "employer" set forth in section 1(a) of the 1937 Act contains a proviso excluding street, interurban, or suburban electric railways from such definition unless the electric railway is operating as a part of a "general steam-railroad system of transportation". The comparable provision of the new Act, which is section 1(a) (2) (ii), substitutes the word “diesel” for the word "steam"

Railroad herever be that the the definitie 1937 Burke : new Act changed in secvernment. D.C.65); Dave

since steam is no longer the motive power utilized. The word “diesel" in the new Act is intended to have the same meaning and effect as the word "steam" had when the 1937 Act was enacted in 1937.

The definition of the term "carrier”, which is defined in section 1 (m) of the 1937 Act to mean "an express company, sleeping-car company, or carrier by railroad, subject to part I of the Interstate Commerce Act", was not included in the new Act. Instead, section 1(a) (1) (i) of the new Act expressly provides that such a company is an "employer” and, wherever pertinent, a reference to "an employer as defined in paragraph (i) of section 1(a) (1)” is used in the new Act rather than The term "carrier". Similarly, the term "enactment date”, which is defined in section 1() of the 1937 Act to mean August 29, 1935 (the date on which the Railroad Retirement Act of 1935 was enacted), is not used in the new Act. Wherever pertinent, the date August 29, 1935, is used in the new Act in place of that term.

A further technical change concerns the definition of the term "person". That term, as defined in section 1(n) of the 1937 Act, has been consistently held to include a governmental body. See Burke v. Railroad Retirement Board, 165 F. 2d 24 (C.A. D.C., 1947); Ruhl v. Railroad Retirement Board, 342 F. 2d 662 (C.A. 7, 1965); Davenport v. Railroad Retirement Board, 453 F. 2d 185 (C.A. 5, 1972). In order to avoid future questions on this point, the term "person" as defined in section 1(1) of the new Act has been expanded to include the United States or any other governmental body.

The final technical change appearing in the definitions section of the new Act relates to the crediting of military service. Provisions defining terms pertinent to a determination as to whether an individual's military service is creditable for railroad retirement purposes are transferred without substantive change, from section 4 of the 1937 Act to section 1(g) of the 1974 Act.

Four substantive changes are made by the definitions section of the new Act. Pursuant to the first of these changes, the compensation attributable to an individual's military service creditable under the Act for months after 1974 will be the amount reported as “wages" for such military service under section 209 of the Social Security Act rather than the previous flat $260 a month. A second amendment to the term "compensation", which is made by section 1(h) (6) (iv) of the new Act, provides that remuneration of less than $25 a month, rather than the $3 a month provided in the 1937 Act, paid to an individual in the services of a local lodge or division of a railway-labororganization employer will not be creditable as compensation under the Act. Also, as a result of this provision, an annuitant will be able to engage in such service without affecting his annuity entitlement so long as his monthly remuneration is less than $25.

l'nder the new Act, as well as under the 1937 Act, an employee must have had a "current connection with the railroad industry” in order to be eligible for an occupational disability annuity or a supplemental annuity and in order for his survivors to be eligible for survivor annuities. The current connection definition, which is contained in section 1(0) of the new Act, is amended to provide that an individual will not lose his current connection if his only employment after leaving railroad employment is with certain governmental agencies (the De

partment of Transportation, the Interstate Commerce Commission, the National Mediation Board, and the Railroad Retirement Board) which perform functions involving the railroad industry. The major purpose of this amendment is to provide benefits under the Railroad Retirement Act, rather than under the Social Security Act, for the survivors of individuals who leave the railroad industry to engage in employment with the agencies specified and will apply only in cases where the individual retires or dies on or after January 1, 1975.

The new section 1(r) of the Railroad Retirement Act specifies the conditions under which a person will be considered to be "permanently insured under the Social Security Act” on December 31, 1974. A person is so permanently insured if he or she would be fully insured under the Social Security Act when he or she attains age 62 solely on the basis of his or her quarters of coverage under that Act prior to January 1, 1975. Such a permanently insured status will be necessary in order for a person to be eligible for the dual benefits provided employees, spouse, and survivors who qualified therefor prior to January 1, 1975. Section 2

The second section of the new Act provides the eligibility requirements for employee, spouse, and survivor annuities. Section 2 also sets forth the work and earnings restrictions placed on annuitants and the restrictions placed on the receipt of more than one annuity under this section.

Subdivision (1) of section 2(a) sets forth the eligibility requirements for employee annuities, which are the same as those provided by section 2(a) of the 1937 Act. Subdivision (2) of subsection (a) provides the standards contained in section 2(a) 4 of the 1937 Act for determining entitlement to occupational disability annuities, and subdivision (3) sets forth the requirements as to proof of disability contained in the last paragraph of section 2(a) of the 1937 Act.

The eligibility conditions for an employee's entitlement to a supplemental annuity are set forth in subsection (b) and differ from those contained in section 3(j) of the 1937 Act only in that under the new Act an employee who has completed 30 years of service will be eligible for a supplemental annuity at age 60 rather than at age 65. Generally speaking, an employee is entitled to a supplemental annuity if he has attained age 65 or has attained age 60 with 30 years of service, has completed at least 25 years of service, is entitled to the payment of a regular annuity under subsection (a) (1), and had a current connection with the railroad industry at the time his regular annuity began.

The liberalization in the supplemental annuity eligibility age requirement will be applicable only to employees age 60 with 30 years of seryice whose regular annuities first begin to accrue on or after July 1, 1974.

Spouses and survivors are provided annuities under subsections (c) and (d), respectively. The eligibility requirements for survivor annuities are the same as those contained in the 1937 Act. In the case of spouses, however, section 2(e) of the 1937 Act provides that a spouse of an employee can be eligible for a spouse's annuity only if the employee has attained age 65. Furthermore, a spouse who does not have a child of the employee in her care can receive an unreduced spouse's annuity only if she has attained age 65 or a reduced annuity if she has attamed age 62. These eligibility requirements are liberalized in the ** W Art which provides (1) that a spouse of an employee who has

dirty years of service will be eligible for an unreduced annuity when millo he and the employee have attained age 60 (this liberalization 111 by appliable only in cases where the employee's annuity first

run to accrue on or after July 1, 1974- no annuity will be payable :i result of this liberalization for months prior to January 1975) All 12) that a spouse of an employee who has less than thirty years 50f wrice can reine an unreduced spouse's annuity when the empolos papo has attained age 62 and the spouse has either attained age 65 ar las auld of the employee in her care or a reduced spouse's annuity ubren the emplovee and the spouse have both attained age 62 (this 1.- ralization will be applicable only in cases where the employee's alty is first awarded on or after January 1, 1975).

Srilarition (c) sets forth ork restrictions applicable to employee penular and supplemental amuties and to spouses' annuities which, Path one proeption, are the same as those contained in section of the 19:37 Art. Briefly stated, pursuant to these restrictions an employee, or 2 01754", must cease rendering compensated service to any person, or brother or not an employer" covered under the Act, and must relin

1. an rights that he might have to return to such service as conditexts of eligibility for an annnits: Thereafter no annuity is payable for any month in which the annuitant renders compensated service as .1!1mploire of an employer" covered inder the Act or of the last perwon by whom he was employed prior to his annuity beginning date. The 5) torption referred to above is that under the new Act the work Irrtions will not be applicable to an elected public officer, regardless of the amount of his remuneration, since section 2(e)(1) expressly provides that the term "compensated service" will not include service as wch a public officer. It should be noted that, because this exception is contined to elected public officials, the work restrictions of the new Act will be applicable to appointed publie officials in the same manner as those contained in the 1937 Act. It may further be noted that although i disabled employee need not relinquish rights before he attains age 63 m order to be entitled to a disability annuity, he will, pursuant to subdivision (2) of section 2(e), be required to relinquish rights before tip can become entitled to a supplemental annuity or his spouse can 1xcome entitled to an annuity. Subdivision (4) of this subsection sets forth earnings limitations imposed on disability annuities identical to Those contained in section 2(0) of the 1937 Act. In general, pursuant to thesp earnings limitations, a disability annutant will lose one montli's annuity for each $200 of annual carnings which he receives in Peps of $100, treating the last $100 or more of earnings as $200.

Subsction (f) provides that that portion of an employee's annuity which is calculated under the provisions of section 3(a) of the new Act on the basis of his railroad earnings after 1974 and his career social fi'unty earnings, and that portion of the spouse's annuity which is arrivent there from, will, if the employee would be fully insured under thr Sixial Security Act on the basis of such railroad and social security paruings, be subject to the social security earnings limitations in addition to the work restrictions prescribed in subsection (e). The so-called windfall dual benefits provided employees and spouses under section 31 and 4(e), respectively. of the Act will also be subject to the social security carning: limitations as well as the railroad retirement work restrictions. These earnings limitations provide, in general, that for 1974 the benefits subject thereto will be reduced $1 for each $2 of annual earnings which the beneficiary receives, prior to the time he attains age 72, in excess of $2100 (such amount may be higher in the future as the result of the automatic-adjustment provisions in the Social Security Act).

Survivor annuities will, under the provisions of subsection (g), be subject to the social security earnings limitations and, in addition, will not be payable for any month in which the survivor engages in service for compensation as an employee of an employer covered under the Act. Both of these restrictions were applicable to survivor annuities payable under the 1937 Act as provided in section 5(i) of that Act.

Subdivision (1) of subsection (h) contains the provisions of section 4(h) of the 1937 Act, which provide that an employee's annuity based in part on military service which has been credited under the Railroad Retirement Act will be reduced if the individual is receiving a gratuitous benefit under any other Act of Congress, disability compensation, or any other pension based in whole or in part on the same military service. The reduction is equal to the smaller of (A) the proportion which the individual's military service bears to his total years of service, or (B) the aniount of the other pension or benefit payable to the individual. The proviso in subdivision (1) (which, while not expressly included in section 4(h) of the 1937 Act, was applied in determining reductions under that section) assures that any reduction thereunder will not cause the individual's annuity to be smaller than it would have been if military service had not been included in his years of service. Finally, if an individual's annuity is reduced under this subdivision, any annuity payable to his spouse will also be proportionately reduced.

Subdivision (2) of this subsection provides, as did section 3(j) (2) of the 1937 Act, that an employee's supplemental annuity will be reduced by the amount of any private pension which he is receiving to the extent that such pension is attributable to his railroad employer's contributions. Any such reduction, however, will be lessened, or eliminated entirely, if the private pension is reduced because of the supplemental annuity.

Under subdivision (3) a spouse's or a survivor's annuity under section 2 will be reduced by the amount of any emplovee annuity to which the spouse or survivor is entitled under the Act. The provisions of this subdivision are applicable only if both the husband and wife first entered railroad service after December 31, 1974. Also, if as is provided in subdivision (4), a spouse or a survivor is entitled to more than one annuity under section 2(c) or 2(d) of the new Act as a spouse or surrivor, he or she will receive only the larger, or, at his or her election, the smaller, of the two such annuities. Section 3

This section contains the computation provisions for employee annuities and supplemental annuities under sections 2(a) and 2(b) of the new Act and also provides the method for computing an employee's total vears of service and compensation for annuity purposes.

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