Page images
PDF
EPUB

21

COMPONENTS OF AN ANNUITY COMPUTED UNDER THE PROVISIONS

OF H.R. 15301

[blocks in formation]

1 The bill provides that this portion of an individual's benefit shall not hereafter be subject to cost-of-living increases, although Tier 1 and Tier 2 will be.

ANNUITY ELIGIBILITY CONDITIONS UNDER THE PROPOSED RAILROAD

RETIREMENT ACT

The eligibility requirements for regular employee age and disability annuities under the proposed Railroad Retirement Act would remain the same as under present law. The eligibility conditions for an employee's entitlement to a supplemental annuity would differ from those contained in the present law only in that under the new Act an employee who has completed 30 years of service would be eligible for a supplemental annuity at age 60 rather than at age 65; the applicability of this liberalization, however, would be confined to employees whose regular annuities first began to accrue on or after July 1,

increases in the Act which the Co porary basis per tem. Those tem and 20% of the unless new legis 52% on a cumu count under th component bas of the "grand ary 1, 1975 wi member 31, 19 also will in et is enacted.

The new b other feature adjustments of the forn under the creased at security b automatic cial Secu the level der the ployees Securit

In ac escalat formu the si the re

as of

the i

the 1

wou For WO wo SU

T

PIIT**

2 te

:פזמון

FPT -

VOU

Pr!!!11** T!

additionat empre

road annuities.

[ocr errors]

wa RITO DE I 2 ev
Tez De sa ar En ISS JĖ
in muHT Drei nier me rrr Jurrau Je

1 SS I DEI aris TDTLT enver
'mçini FIIT JT AC I m. ji

TO :SL UT '1 #ins TSI - T7 Pri rur 127 Tear of je 21:27 mu ar prer » Ives i rus amount torud 21 o'y siano na msur. Tie II

of ze gores af fra venit FLIJE me-14. get it he does harice necer &Snopies y empresa 134 30 seits dies ji ne angis Fr nt ani ze zre semprnenc

v24 ving a sonents tie a mes ne 1 min e fides in de perre som secco.cee siis earier of decemcer i 2e rear prie par e emganes 17T7 jerns r September on to as ruaz unit. 12 - riie erziere waarom plendent. 10117 121 Lide coscenia pat * tafe 1 10 en 15eant in 13.4. F... yeri este neces the Railroat Reiserere the sur ified date: Decer.ber 3.

ute of empat aber 31 of the year in the move isst perler Price in iece of cter er crees woud mereau lefit amount tasei caseromert prior to 197. This intended to preserve ancie emprovee's "rightto such -fits as had a crued prior to the exactive date of the new Retirement Act. yee annuitants currect's receiving arruities would continue he same amounts they were receiving before the effative deces w Act, but their annuities would be divided into social **** I components and staff components. I'p to four automatie iving adjustments in the stad level annuity components would ded for employees whose annuities began to acerie on or before tive date of any particular increase these increases which e 32.5 percent of the applicable annual increase in the u 1 Consumer Price Index. would become efective June 1, 1977, 1978. June 1, 1979, and June 1,1950, respectively. „ses' annuities, like employee annuities, would consist of a sorial

level component plus a staff level component. Generally ig, the amount of each component would be equal to one-half employee's corresponding component (exclusive of the em's supplemental annuity), subject to the same spouse maximum ontained in present law. The social security level component be reduced if the spouse is entitled to a social security benefit on either the employee's earnings or her own earnings. The 3 would, however, received an additional benefit amount if she Vested rights” to benefits under the Railroad Retirement Act and

22

In the case of spouses, the present law 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 attained age 62. These eligibility requirements would be liberalized under the proposed Act to provide: (1) that a spouse of an employee who has 30 years of service would be eligible for an unreduced annuity when both she and the employee have attained age 60 (this liberalization would be applicable only in cases where the employee's annuity first began to accrue on or after July 1, 1974) and (2) that a spouse of an employee who has less than 30 years of service can receive an unreduced spouse's annuity when the employee has attained age 62 and the spouse has either attained age 65 or has a child of the employee in her care or a reduced spouse's annuity when the employee and the spouse have both attained age 62 [this liberalization would be applicable only in cases where the employee's annuity first begins to accrue on or after January 1, 1975).

The eligibility requirements for survivor annuities under the proposed Act would be the same as those set forth in the present Act.

Finally, the proposed Act contains a provision which would provide automatic adjustments in the eligibility requirements for social security level annuity amounts or health care benefits provided under the Act whenever amendments to the Social Security Act become effective after December 31, 1974, to liberalize the eligibility requirements for similar benefits under that Act. No person can become entitled to an annuity under the Railroad Retirement Act by reason of this provision if: (1) the Social Security Act provided benefits for such a person prior to 1975 but the Railroad Retirement Act did not (examples of such persons would be divorced wives and children of living employees) or (2) the person does not satisfy a requirement contained in the proposed Railroad Retirement Act of a kind which was either not imposed by the Social Security Act on December 31, 1974, or was not liberalized by the amending legislation. Furthermore, the provision in question would not operate to provide annui. ties to an employee, and those deriving from him, who has less than 10 years of railroad service or to survivors in a case where the employee did not have a current connection with the railroad industry at the time of his death.

COMPUTATION OF ANNUITIES UNDER THE PROPOSED RAILROAD RETIREMENT

ACT

An employee's regular annuity under the proposed Railroad Retire. ment Act would consist of two basic components—a social security level component computed under the social security benefit formulas on the basis of the employee's combined railroad and nonrailroad earnings (this component would be reduced by the amount of any monthly social security benefit actually paid to the employee) and a staff level component based on railroad service only. The staff level component would be composed of subcomponents based on past service

of the employeould be reduced to the emple staff leve earnings (this security benefit acailroad service insen

23

of th years of 31, 1974. a

(service prior to January 1, 1975, the effective date of the new Act) and future service. The past service subcomponent would consist of two pieces: (1) an amount computed under the present Railroad Retirement Act on the basis of railroad service through December 31, 1974, less an imputed social security benefit amount based only on railroad service through December 31, 1974; and (2) $1.50 for each of the employee's first 10 years of railroad service prior to 1975 plus $1.00 for each year of the employee's railroad service prior to 1975 in excess of 10 years of service this amount would be provided only for employees who engage in railroad service after 1974. The future service portion of the employee's staff level benefit would be equal to the sum of one-half percent of the employee's average monthly compensation after 1974 plus $4.00 multiplied by the employee's years of service after 1974. Both the first piece of the employee's past service subcomponent and the future service subcomponent would be subject to cost-of-living adjustments due to increases in the unadjusted Consumer Price Index during the period from September 30, 1976, through the earlier of September 30 of the year preceding the year in which the employee's annuity begins or September 30, 1980.

In addition to his regular annuity, an eligible employee would receive a supplemental annuity (which would be considered a part of his total staff level annuity component) ranging in amount from $23.00 to $43.00. Finally, an employee with "vested rights” to benefits under both the Railroad Retirement Act and the Social Security Act as of a specified date (December 31, 1974, in the case of some employees and December 31 of the year in which the employee last performed railroad service in the case of other employees) would receive an additional benefit amount based on his employment prior to 1975. This amount is intended to preserve an eligible employee's "right" to such dual benefits as had accrued prior to the effective date of the new Railroad Retirement Act.

Employee annuitants currently receiving annuities would continue to draw the same amounts they were receiving before the effective date of the new Act, but their annuities would be divided into social security level components and staff components. Up to four automatic cost-of-living adjustments in the staff level annuity components would be provided for employees whose annuities began to accrue on or before the effective date of any particular increase--these increases, which would be 32.5 percent of the applicable annual increase in the unadjusted Consumer Price Index, would become effective June 1, 1977, June 1, 1978, June 1, 1979, and June 1, 1980, respectively.

Spouses' annuities, like employee annuities, would consist of a social security level component plus a staff level component. Generally speaking, the amount of each component would be equal to one-half of the employee's corresponding component (exclusive of the employee's supplemental annuity), subject to the same spouse maximum as is contained in present law. The social security level component would be reduced if the spouse is entitled to a social security benefit based on either the employee's earnings or her own earnings. The spouse would, however, received an additional benefit amount if she had “vested rights” to benefits under the Railroad Retirement Act and

« PreviousContinue »