approximate the reductions required by the offset provisions contained in that Act.

These offset provisions are discussed in the explanation of section 3(b). Also, increases in amounts computed under the so-called social security minimum guaranty provision contained in section 3(e) of the 1937 Act (which amounts are automatically increased whenever social security benefits are increased) which become effective after December 31, 1974, are disregarded in computing the amount guaranteed pursuant to the provisions of section 3(f) (2) of the new Act. Thus, the guaranty amount derived from the provisions of the 1937 Act is confined to the amount that would have been payable under that Act as of December 31, 1974, except that additional service and earnings would be taken into account up to the date that the employee's annuity under the new Act began to accrue.

Subdivision (3) of subsection (f) contains a provision similar, in pertinent respects, to the so-called social security minimum guaranty provision contained in section 3(e) of the 1937 Act. Generally speaking, this provision assures that the total monthly benefits to a retired employee and his spouse will not be less than 100 percent (under the 1937 Act the guaranty was 110 percent) of the amount, or the amount additional to that actually paid under the Social Security Act, that would have been payable to the employee's family under the Social Security Act, on the basis of his combined railroad and nonrailroad earnings, if his railroad earnings after December 31, 1936, had been covered under the Social Security Act. Any exceptions to this general statement (see clauses (i) and (ii) of subdivision (3)) are identical to exceptions contained in the comparable provision of the 1937 Act. In view of the nature of the provisions of the new Act concerning the computation of survivor annuities, it is no longer necessary to cover survivors under the guaranty provision in question.

Subsection (g) of section 3 provides for cost-of-living adjustments in the annuity components determined under subsections (b) and (d) for employees whose annuities had begun to accrue on or before the effective date of a particular increase. The effective dates of these increases will be June 1, 1977, June 1, 1978, June 1, 1979, and June 1, 1980, the dates on which social security cost-of-living increases may become effective. Each such increase will be by 32.5 percent of the increase in the unadjusted Consumer Price Index which is used, or which would have been used had there been no general benefit increase under the Social Security Act, in increasing social security benefits for the years in question pursuant to the automatic cost-of-living provisions of section 215(i) of the Social Security Act. Unlike section 215(i) of the Social Security Act, however, section 3(g) of the new Railroad Retirement Act will provide a cost-of-living adjustment for a particular year even if the increase in the unadjusted Consumer Price Index on which the adjustment is based is less than 3 percent. The dual benefits for employees who had ten years of service under the 1937 Act prior to the effective date of the new Act, January 1, 1975, and who were also fully insured under the Social Security Act on December 31, 1974, or, in certain cases, as of the end of the year prior to 1974 in which the employee last engaged in railroad service, are provided by subsection (h) of section 3. Subdivision (1) provides that if

the employee (A) had engaged in railroad service during 1974, or (B) had a current connection with the railroad industry either on December 31, 1974, or at the time his annuity began to accrue, or (C) had 25 years of service prior to January 1, 1975, he will be entitled to a dual benefit if he had ten years of service on December 31. 1974, and was permanently insured under the Social Security Act on that date.

The amount of the dual benefit for such an employee will be equal to the difference between (D) the sum of (i) a social security benefit based on the employee's railroad earnings after December 31, 1936, and before January 1, 1975, and (ii) a social security benefit based on his social security earnings prior to January 1, 1975, minus (E) a social security benefit based on his combined railroad and social security earnings after December 31, 1936, and before January 1, 1975. For purposes of this subdivision and subdivision (2), all social security benefits will be in the amount that the employee would have received when he attained age 65, or, if the employee attained age 65 prior to January 1, 1975, the amount which he would have received for the month of January 1975, under the provisions of the Social Security Act as in effect on December 31, 1974.

Subdivision (2) provides a dual benefit for employees who did not engage in railroad service during 1974, did not have a current connetion with the railroad industry either on December 31, 1974, or at the time their annuities began to accrue, and did not have 25 years of Service prior to January 1, 1975, but did have ten years of service prior to January 1, 1975, and were permanently insured under the Social Security Act at the end of the year prior to 1975 in which they last engaged in railroad service. The dual benefit for such employees will be determined in the same manner as the benefit provided by subdiVision (1), except that only the employee's social security earnings up to the end of the year in which he last engaged in railroad service Crather than all his social security earnings prior to January 1, 1975) will be used in computing the amount of the dual benefit.

Subdivisions (3) and (4) of section 3(h) provide dual benefits for employees who had ten years of service under the 1937 Act prior to January 1, 1975, and who are wives, husbands, widows, or widowers of persons who are fully insured under the Social Security Act prior to that date. Subdivision (3) provides that if the employee (A) had engaged in railroad service during 1974, or (B) had a current connection with the railroad industry either on December 31, 1974, or at the time her or his annuity began to accrue, or (C) had 25 years of service prior to January 1, 1975, she or he will be entitled to a dual benefit if he had ten years of service on December 31, 1974, and his or her wife or husband was permanently insured under the Social Security Act on that date. The amount of the dual benefit will be equal to the smaller of (D) a social security wife's, husband's, widow's, or widower's benefit, whichever is applicable in a particular employee's case, based on her or his spouse's social security earnings prior to January 1, 1975 or (E) a social security benefit based on the employee's combined railroad and social security earnings after December 31, 1936, and before January 1, 1975. Of course, because of the dual benefit restrictions contained in the Social Security Act, if the employee is also permanently insured under the Social Security

Act on the basis of social security earnings prior to January 1, 1975, the amount computed under clause (D) of the preceding sentence will be reduced by the amount of a social security benefit based on the employee's own social security earnings prior to January 1, 1975.

Subdivision (4) provides the windfall dual benefit where the employee did not meet the conditions specified in clause (A), (B), or (C) of the preceding paragraph, but did have ten years of service prior to January 1, 1975, and his or her wife or husband was permanently insured under the Social Security Act as of the end of the year prior to 1975 in which the employee last engaged in railroad service. The dual benefit in such a case will be determined in the same manner as the dual benefit provided by subdivision (3), except that the amounts of the social security benefits computed in making such determination will be based only on social security earnings as of the end of the year prior to 1975 in which the employee last engaged in railroad service.

The amount of a dual benefit provided under subdivision (1). (2). (3), or (4) of subsection (h) will be increased, as is provided under subdivision (5), by the percentages of any cost-of-living increases in social security primary insurance amounts pursuant to the automatic cost-of-living provisions of section 215 (i) of the Social Security Act between December 31, 1974, and the date on which the employee's annuity began to accrue, or by the percentages of any such increases which would have been provided during that period under those provisions if no social security general benefit increases had been provided.

The dual benefit provided by section 3(h) is the sixth component of an employee's total benefits under the new Act, provided, of course, that the employee is eligible for such a dual benefit. As a part of the annuity provided by section 2(a) (1) of the Act. the dual benefit. component is subject to the work restrictions prescribed in section 2(e) of the Act in the same manner as all other components of the employee's annuity, and such component will be considered in determining whether the guaranty provision in section 3 (f) (3) of the Act would provide a larger benefit amount than the annuity components provided by sections 3(a),3(b),3(c).3(d), and 3(h).

Subsection (i) of section 3 sets forth the method for determining an employee's "years of service" which are to be used in computing the annuity to which he is entitled under section 2(a)(1). An employee's railroad service, including service prior to 1937. is credited on a monthly basis in the same manner, and subject to the same limitations, as under section 3(b) of the 1937 Act. Subdivision (1) provides credit for all service performed after 1936, and subdivision (3) provides credit for service prior to 1937 if the employee was an employee on August 29, 1935 (the date on which the Railroad Retirement Act of 1935 was enacted); as in the 1937 Act, however, service rendered prior to 1937 cannot operate to increase an employee's total years of service above 30. An employee's military service which was rendered during a war service period as defined in section 1(g) of the Act will be included in his years of service, in accordance with subdivision (2), subject to the same requirements as under the 1937 Act. One of these requirements is that the military service must have been preceded in the year of entry into military service, or the year prior thereto, by creditable railroad service.

The "average monthly compensation" upon which an employee's annuity will be computed under section 3 is determined in the manner provided in subsection (j) of section 3, which is identical to section. 3(e) of the 1937 Act. The method of determining the average monthly compensation for a particular employee and the limitations on the amount of compensation creditable for a particular month remain the same as under the 1937 Act.

The provisions of subsection (k) are the same as those contained. in section 3(d) of the 1937 Act and provide merely that an employee. representative's annuity is determined in the same manner as if the employee organization by which he was employed were an employer. Subsection (1), which is substantively identical to section 2(j) of the 1937 act. provides that any age reduction applicable to an increase in a reduced-age annuity awarded under paragraph (iii) of section 2(a) (1) or under section 2(c) (2) will be made on the basis of the annuitant's age at the time the increase becomes effective, not on the basis of his or her age at the time his or her reduced-age annuity first began to accrue.

A maior purpose of the new Railroad Retirement Act is to eliminate, with respect to future service, the "windfall" element in cases where benefits are payable to a single individual under both the Railroad Retirement Act and the Social Security Act. To accomplish this purpose, subsection (m) of section 3 provides that the social security level, component of an employee's annuity (which is provided by subsection (a) of section 3) will be reduced by the amount of any monthly insurance benefit which the employee actually receives under the Social Security Act. Thus railroad employees, like employees in other major private industries, will, in the future receive retirement benefits which are supplemental to, rather than additional to, social security benefits. As discussed above, rights of employees to amounts which accrued prior to the effective date of the new Act are preserved by subsection (h) of section 3.

Section 4

Section 4 of the new Act contains the computation provisions for spouse and survivor annuities under sections 2(e) and 2(d) of the Act. Subsection (a) provides that a spouse will receive an amount equal to the amount that would have been payable to him or her under the Social Security Act-without regard to the age reductions and work deductions contained in that Act-if the railroad service after 1936 of the employee upon whose earnings his or her spouse's annuity is based were included in the term employment as defined in that Act. This amount is, pursuant to the provisions of subsection (i), reduced by the amount of any wife's or husband's insurance benefit which the spouse receives under the Social Security Act. Since the new Act, unlike the Social Security Act, provides unreduced age annuities for spouses who have attained age 60 if the employee has also attained age 60 and has 30 years of service, subdivision (2) of subsection (a) provides that in such a case the spouse will be deemed to have attained age 65 for the purpose of determining his or her social security level benefit amount pursuant to the provisions of this subsection.

Subsection (b) provides a second component of the spouse's annuity, which will be equal to 50 percent of that portion of the employee's

annuity as is computed under subsections (b), (c), and (d) of section 3, except this amount will be reduced pursuant to the first proviso if the spouse is entitled to a dual benefit provided by section 4(e) of the Act. This reduction corresponds to the reduction required by the so-called "offset provisions" contained in the 1937 Act (which are discussed in the explanation of section 3(b) of the new Act). The total of the amount of the spouse's annuity provided by this subsection plus the amount provided under subsection (a) (or the amount which would have been payable to the spouse under subsection (a) if the spouse were not receiving either a benefit on the basis of her or his own earnings record or a social security wife's or husband's insurance benefit) cannot exceed the so-called spouse maximum which is carried over from the 1937 Act. This spouse maximum provision specifies that the maximum payable under the Act to a spouse cannot exceed 110 percent of the maximum possible wife's insurance benefit payable to any wife under the Social Security Act. If the spouse's combined annuity amounts would exceed this maximum, her or his annuity amount as computed under this subsection will be reduced until her or his total spouse's annuity amounts equals that maximum.

Although section 4(1) (2) of the new Act provides that the social security level component of a railroad retirement spouse's annuity will be reduced by the social security level component of the spouse's employee annuity, it was not intended that the total amount of a spouses railroad retirement annuity be reduced because of her entitlement to an employee annuity based on her own railroad service unless, as is provided by section 2(b) (3) of the new Act, both the husband and wife first entered railroad service subsequent to December 31, 1974. Accordingly, the sound proviso of section 4(b) increases the staff component of the spouse annuity by the amount of any such reduction in the social security level component of her annuity.

The maximum annuity amounts which can be paid to an employee and his spouse combined are prescribed by subsection (c) of section 4. If the amount of the spouse's annuity as computed under subsections (a) and (b) (before any reduction because of the spouse's receipt of a social security wife's or husband's insurance benefit) as of the date on which the employee's annuity under section 2(a) (1) began to accrue plus those portions of the employee's annuity and supplemental annuity which are subject to the maximum prescribed in section 3(f) (1) would, before any age reductions, exceed the maximum amount determined under section 3(f) (1), first the spouse's annuity as computed under subsection (b) as of the date on which the employee's annuity began to accrue, then, if necessary, the employee's supplemental annuity, and finally, if necessary, the employee's annuity as computed under subsections (b), (c), and (d) of section 3 at the time his annuity began to accrue will be reduced until the total of such amounts equals the maximum amount or until such amounts are reduced to zero, whichever occurs first. As under the maximum provisions prescribed in section 3(f) (1), the provisions of this subsection are not applicable with respect to any increases in the amounts subject thereto which become effective after the date on which the employee's annuity began to accrue. Furthermore, the maximum prescribed by this subsection, like the maximum prescribed by section