Page images
PDF
EPUB
[ocr errors]

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 (rather 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

[ocr errors]

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 vears 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(c) 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() 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 major 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

[ocr errors]

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(c) 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 un reduced 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 točal spouse's annuity amounts equals that maximum.

Although section 4(i) (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 conponent 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 3(f) (1), cannot operate to reduce the combined monthly benefit subject thereto below $1200 nor can it operate to reduce the social security level component of the spouse's annuity as computed under section 4(a).

Subsection (d) of section 4 provides cost-of-living increases in the spouse's annuity component determined under section 4(b). Any such increases will be by the same percentage, or percentages, as the employee's annuity was increased under the provisions of section 3(g) after such annuity became effective. Through the operation of section 4(b), the spouse's annuity when computed reflected any cost-of-living increases in the employee's annuity prior to its effective date, subject to the limitation on the total amount of a spouse's annuity as provided under the second proviso of section 4(b). Thus, this component of the spouse's annuity will be increased whenever the comparable component of the employee's annuity is increased, even if the spouse was not receiving an annuity at the time a particular increase became effective.

The dual benefits for spouses of employees, in cases where either the employee was "qualified" under both the Social Security Act and the Railroad Retirement Act or the employee was "qualified" under the Railroad Retirement Act and the spouse was "qualified” under the Social Security Act, are provided by subsection (e) of section 4. Subdivision (1) provides that if (A) the employee had engaged in railroad service during 1974, or had a current connection with the railroad industry on December 31, 1974, or at the time his annuity began to accrue, or had 25 years of service prior to January 1, 1975, and (B) the employee had 10 years of service on December 31, 1974, and the spouse was permanently insured under the Social Se

[ocr errors]

curity Act on that date, the spouse will be entitled to a dual benefit equal to the smaller of a social security benefit based on her own earnings prior to January 1, 1975, or a social security wife's or husband's benefit based on the employee's railroad earnings after December 31, 1936, and before January 1, 1975, but not less than 50 percent of the employee's dual benefit, if any, under section 3(h) (1) without regard to any increases under section 3(h) (5).

For the purposes of the computations under this subdivision and subdivision (2), the hypothetical social security benefits will be in the amount that the spouse would have received at age 65, or, if the spouse attained age 65 prior to January 1, 1975, the amount which she 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 the dual benefit where the employee did not meet the conditions specified in clause (A) of the preceding paragraph, but where the employee did have 10 years of service prior to January 1, 1975, and the spouse 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 (1), except that only the spouse's social security earnings as of the end of the year in which the employee last engaged in railroad service will be used in determining the amount of the social security benefit to which the spouse would have been entitled on the basis of her own earnings.

The dual benefit for the spouse of an employee, in a case where the employee is entitled to a dual benefit under section 3(h) (1) or 3(h)(3) but the spouse is not entitled to a dual benefit under subdivision (1) or (2) of section 4(e), will, as is provided by subdivision (3) of section 4(e), be equal to 50 percent of the employee's dual benefit under section 3(h)(i) or 3(h) (2) prior to any increases under subdivision (5) of section 3(h).

The amount of a dual benefit provided under the first three subdivisions of section 4(e) will be increased, under subdivision (4), by the percentages of any cost-of-living increases in social security wife's or husband's insurance benefits pursuant to the automatic cost-ofliving provisions of section 215(i) of the Social Security Act which became effective after December 31, 1974, and before the date on which the employee's annuity under section 2(a) (1) 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 amounts of the annuities awarded to survivors of deceased employees under section 2(d) is determined under the provisions of subsections (f), (g), and (h) of section 4. Subsection (f) provides that a survivor (i.e., a qualified widow, widower, parent, or child) will receive an amount equal to the amount that would have been payable to her or him, as a survivor, under the Social Security Act if the railroad service after 1936 of the employee upon whose earnings her or his survivor's annuity is based were included in the term employment as defined in that Act.

As in the case of a disabled employee annuitant, a child or a widow or widower who is entitled to an annuity as such based on disability

40-330 (Pt. 2) 0 - 74 - 27

« PreviousContinue »