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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.
Under 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(o) 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 Department 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 service 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 attained age 62. These eligibility requirements are liberalized in the new Act which provides (1) that a spouse of an employee who has thirty years of service will be eligible for an unreduced annuity when both she and the employee have attained age 60 [this liberalization will be applicable only in cases where the employee's annuity first began to accrue on or after July 1, 1974—no annuity will be payable as a result of this liberalization for months prior to January 1975] and (2) that a spouse of an employee who has less than thirty 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 will be applicable only in cases where the employee's annuity is first awarded on or after January 1, 1975).
Subsection (e) sets forth work restrictions applicable to employee regular and supplemental annuities and to spouses' annuities which, with one exception, are the same as those contained in section 2 of the 1937 Act. Briefly stated, pursuant to these restrictions an employee, or a spouse, must cease rendering compensated service to any person, whether or not an "employer" covered under the Act, and must relinquish any rights that he might have to return to such service as conditions of eligibility for an annuity. Thereafter no annuity is payable 31 for any month in which the annuitant renders compensated service as an employee of an "employer” covered under the Act or of the last person by whom he was employed prior to his annuity beginning date. The one exception referred to above is that under the new Act the work restrictions 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 such a public officer. It should be noted that, because this exception is confined to elected public officials, the work restrictions of the new Act will be applicable to appointed public officials in the same manner as those contained in the 1937 Act. It may further be noted that although a disabled employee need not relinquish rights before he attains age 65 in order to be entitled to a disability annuity, he will, pursuant to subdivision (2) of section 2(e), be required to relinquish rights before he can become entitled to a supplemental annuity or his spouse can become entitled to an annuity. Subdivision (4) of this subsection sets forth earnings limitations imposed on disability annuities identical to those contained in section 2(d) of the 1937 Act. In general, pursuant to these earnings limitations, a disability annuitant will lose one month's annuity for each $200 of annual earnings which he receives in excess of $2400, treating the last $100 or more of earnings as $200.
Subsection (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 security carnings, and that portion of the spouse's annuity which is derived therefrom, will, if the employee would be fully insured under the Social Security Act on the basis of such railroad and social security earnings, 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 3(h) and 4(e), respectively, of the Act will also be subject to the social security earning; 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 $2400 (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 serv
ice, or (B) the amount 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 employee 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 survivor, 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 years of service and compensation for annuity purposes.
An employee's total benefits under the new Act will be the sum of up to six components, each of which is explained below. In general, however, the first component-provided by subsection (a)—will be the equivalent of the benefit that would be paid under the Social Security Act on the basic of the employee's combined railroad and nonrailroad service, and the sixth component-provided by subsection (h)-preserves the amount, for employees who qualify therefore, resulting from previous entitlement to both railroad retirement and social security benefits. The remaining components—provided by subsection (b). (c), (d), and (e)-in combination comprise the “staff” component of the employer's annuity, i.e., the annuity amount to which the employee will be entitled under the new Act over and above the amount equivalent to that provided non railroad employees under the Social Security Act plus, in some instances, the additional amount under subsection (h).
The first component is provided by subsection (a), pursuant to which an employee will receive an amount equal to the amount that would have been payable to him under the Social Security Act-without regard to the age reduction and work deductions contained in that Actif his service as a railroad employee after December 31, 1936, were included in the term employment as defined in that Act. This amount, as is provided by subsection (m), will be reduced by the
amount of any monthly insurance benefit actually payable to an employee for a particular month under the Social Security Act. Since both the new Act and the 1937 Act, unlike the Social Security Act, provide un reduced age annuities for employees who have attained age 60 and have performed at least 30 years of service and disability annuities for employees who are disabled only for work in their last railroad occupations, subdivision (2) of subsection (a) provides that, for purposes of determining the amount of the social security level component, an individual age 60 with 30 years of service is deemed to have attained age 65 (except for purposes of work recomputations made in accordance with the provisions of section 215(f) of the Social Security Act--the work recomputations will thus be made on the basis of the annuitant's actual age) and an individual entitled to a disability annuity under section 2 of the 1974 Act is deemed to meet the eligibility requirements for social security disability benefits.
The above-mentioned deeming provision in cases involving railroad retirement disability annuitants would also have an effect on those entitled to such annuities based on total disability. The Social Security Act, unlike either the 1937 Act or the 1974 Act, requires that a disabled individual have a specified number of quarters of coverage (in most cases 20) during a specified period (in most cases a 40-quarter period) prior to the time his disability is determined to have begun and also provides that disability benefits can begin only after a five-month waiting period following the date of disability. The deeming provision in question will operate to make the social security level component payable without regard to these two requirements.
Subsection (b) provides the second component of the employee's annuity and relates solely to service performed prior to January 1, 1975. This component, as is provided in subdivision (1), is determined by computing an annuity under the 1937 Act as in effect prior to January 1, 1975, on the basis of the employee's years of service and compensation credited prior to that date. In this regard, it should be noted that since section 3(b) (1) expressly provides that the 1937 Act computation will be based only on the employee's railroad service and compensation prior to January 1, 1975, an amount computed for purposes of that section under the so-called social security minimum guaranty provision contained in section 3(e) of the 1937 Act will also be based solely on the employee's railroad service and compensation prior to that date-without this limitation, a computation under the guaranty provision would be based on the employee's combined railroad and nonroalroad service and earnings. In addition, since social security earnings will be excluded in computing the amount under the guaranty provision of the 1937 Act, any social security benefit to which the employee might have been entitled on the basis of such earnings will also be disregarded in making this computation.
For the purpose of computing an annuity under the 1937 Act, it is assumed that the individual met the eligibility requirements for an annuity under that Act-in this regard, it is specifically provided that an annuity will be computed under the 1937 Act even if the employee did not have ten years of service on January 1, 1975--and it is further assumed that the employee was not entitled to any other benefit under either that Act or the Social Security Act except in cases where