MINORITY VIEWS OF CONGRESSMAN JAMES M. COLLINS This bill's financial revisions in the Railroad Retirement Act will place a tremendous burden on the general treasury of the United States. With the Country trying to curtail government spending, this mvolves another large outlay of cash. Even more, it starts a precedent of having the government enter in directly with money out of the general revenue to fund deficient retirement reserves. There is no justification for the United States government providing special retirement fund benefits for the sole benefit of railroad em ployees. Congress does not do the same thing for a retired employee who was a carpenter, an electrician, a plumber, dress factory workers, a lumberjack or a painter. The general retirement system that is provided by the government is our broad Social Security plan. Social Security is providing an equitable base of retirement for all employees and it does it across the board. Basic retirement through Social Security is planned at age 65, but the railroad retirement has the extra burden of beginning at age 60 with full benefits. A part of this railroad retirement financial deficiency has been caused by the special raises that have been given by Congress to the pensioners in the past 5 years. During the past five years the compound raises total 68.5%. Here was a deficient Pension Plan and we have increased the outlay by two-thirds over what they were receiving before. During this period we have had no increases in payments into the fund. Discussions in Committee of this railroad plan outlined the complicating features of the plan. Some men have worked for longer periods in the railroad. Some employees have also worked in outside. employment and have been covered under Social Security. In some cases, the wife is covered by Social Security in her own right. Some are single, some are married. In the course of the Hearings in committee, I offered a substitute amendment. I proposed that each annuitant be given credit for all of the money that had been paid into his account. This would include all that he had paid in, all the railroad had paid in, all that Social Security Board had paid in, and all that he had paid Social Security. It would include everything his wife paid. I would take all of this and add 5% compound interest to it. Then this would establish a base on which his retirement would be paid. What this is saying is that we would compound all of the money that had accumulated plus interest and would establish this as a base on which to pay his annuity. This amendment lost. Let us review what he receives in the way of an annuity. It differs with individuals but I took a 35 year service man, age 60. It showed a man got $604 a month plus $70 supplement plus $258 for his wife or (211) he gets a total of $932 a month. This totals $10.184 a year. We could find other men getting smaller pensions totaling $600 a month or a total of $7.200 a year. Keep this in mind and let us look at the Life Expectancy. A man at retirement age 60 has a life expectancy of 16.01 years while a female has a life expectancy of 19.69 years. Looking later at age 65, if we had deferred and begun his annuity at this later date, a male would have had a life expectancy of 12.97 while a female would have had a life expectancy of 15.88. This indicates that the plan would be on a sounder actuarial basis if it had deferred entry date to age 65. If a man began his pension at age 65, it would mean the life expectancy would be 3 years less or there would be 3 years less to pay. And by the same token he would have paid in and there would have been 5 years more income paid into the plan. But as the plan now exists we review the present accumulation available for Pension payment. Back during the 30's and 40's low payments were contributed to the plan. During the 50's payments were larger and during the 60's still more. But if you take all of this money and add it together, the sum will equal about 211⁄2 times an annual pensioner's annuity. Take the man who received $10.184 as his annual retirement annuity. The total contributions over his entire lifetime probably would total around $25,000. We have seen that his life expectancy in 16 years. It might be that he will live 25 years or it might be that he will live 11. But we know that on the average he will live 16 years. The financial deficiency with this plan is the fact that he has paid in less than 3 years of money to provide for 16 years of receiving it. Simple arithmetic shows that we have 5 times the outgo that we have in funds available to pay it. The railroad pension fund is further complicated by the fact that more people are drawing Pension than there are workers in the Railroad industry that are paying into it. The current figures show that for every one person working for the railroads, there are 1.7 people that are drawing pensions. A healthy retirement fund would find 4 people working for only 1 person drawing pension and would be even more desirable if we had 5 people working for one person drawing pension. Go back and think about this reverse situation where 1.7 people are drawing retirement for every 1 person who is at present contributing to the retirement fund. In prior years, railroad employees contributed about twice as much. as the average American worker did in his Social Security. But at this time the railroad employee is back on the same level of contribution as the regular Social Security contribution. The government is in no position to take on the funding of pension plans which have been accelerated in benefits beyond their reserve commitments. If this bill passes and we establish a precedent of paying out 5 times as much as the reserve would justify, we are going to be moving into a complete across the board financial catastrophe for the U.S. Treasury. I summarize the way I began. How can you do this for railroad men when you have not done it for every other neighbor and every other good citizen in your community? How can you pick this one group of people and give them a special pension plan? From a logical actuarial basis we could do several things to improve the situation. We could move retirement age up from age 60 to age 65. We could go back to the original basis that we had 5 years ago and remove these temporary advances of 681% that have been provided in the past 5 years. We have the pressures of responding to the railroaders in November. But we must all remember that we will have the pressures in future years of explaining to the rest of America why they should not receive an equal pension as these railroad men. Today with Inflation the major issue in America, how can you justify this new burden on an already overspent Treasury? 213 JAMES M. COLLINS. 93D CONGRESS H. R. 15301 IN THE SENATE OF THE UNITED STATES SEPTEMBER 16, 1974 Read twice and referred to the Committee on Labor and Public Welfare AN ACT To amend the Railroad Retirement Act of 1937 to revise the retirement system for employees of employers covered thereunder, and for other purposes. 1 Be it enacted by the Senate and House of Representa 2 tives of the United States of America in Congress assembled, 3 TITLE I-THE RAILROAD RETIREMENT ACT 2 "(a) (1) The term 'employer' shall include “(i) any express company, sleeping-car company, and carrier by railroad, subject to part I of the Interstate Commerce Act: "(ii) any company which is directly or indirectly owned or controlled by, or under common control with, one or more employers as defined in paragraph (i) of this subdivision, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad; "(iii) any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of the property or operating all or any part of the business of any employer as defined in paragraph (i) or (ii) of this subdivision: "(iv) any railroad association, traffic association, tariff bureau, demurrage bureau, weighing and inspec tion bureau, collection agency, and any other association, bureau, agency, or organization which is controlled and maintained wholly or principally by two or more employ ers as defined in paragraph (i), (ii), or (iii) of this |