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ing officers are not to be held personally liable for erroneous payments if they made such erroneous payments in good faith. Section 11
Under the provisions of this section an annuitant may, if he or she chooses, waive payment of all or any part of the annuity. The waiver may be revoked at any time; however, the portion of the annuity waived will not, despite any revocation, be paid for the period during which the waiver was in effect. A waiver of a particular annuity, or any portion thereof, will not affect entitlement to, or the amount of, any other annuity or benefit. Section 12
This section contains the same provisions as section 19 of the 1937 Act regarding the competence of a beneficiary and the Board's authority in cases where a beneficiary is incompetent. Under these provisions any claimant or recipient of benefits is presumed to be competent until the Board receives written notice to the contrary. If a claimant or beneficiary is incompetent the Board may make payments to, or conduct transactions with, any legally appointed guardian on behalf of the claimant or beneficiary. Furthermore, the proviso of subsection (a) expressly authorizes the Board to make payments, or conduct transactions, directly with the claimant or beneficiary, or with any other person on his behalf, even though he is an incompetent for whom a guardian is acting In such cases, the Board may conduct such transactions without regard to whether or not the incompetent is represented by legal counsel. The provisions of this section are applicable to benefits claimed or paid under any Act administered in whole or part by the Board, including any payment of social security benefits made by the Board pursuant to section 7(b)(2) of this Act. Section 13
Section 13 of this Act sets forth the penalty provisions, consisting of a fine or imprisonment or both, for knowingly failing to furnish information required in the administration of the Act or for knowingly furnishing false information. The maximum fine under this section is $10,000, and the maximum prison term is one year. Any fines and penalties imposed by a court pursuant to the Act are to be credited to the Railroad Retirement Account. Section 14
As under section 12 of the 1937 Act, section 14 of this Act exempts annuity payments from taxation, garnishment, attachment, or other legal process. As was also true under the 1937 Act, however, a supplemental annuity, while exempt from State taxation, is subject to taxation under the Federal income tax provisions of the Internal Revenue Code. Section 15
The Railroad Retirement Account and the Railroad Retirement Supplemental Account established by sections 15(a) and 15(b) of the 1937 Act are continued in effect, pursuant to subsections (a) and (c) of this section, and the funds contained therein will be available for the payment of all benefits administered by the Board and the expenses incurred in the administaration of all provisions of this Act.
As was explained previously, a portion of these benefit costs and administrative expenses will be reimbursed in accordance with the financial interchange provisions of section 7(c)(2). The funds credited to the Accounts will be derived largely from the taxes levied by the Railroad Retirement Tax Act.
Under sections 15(a) and 15(b) of the 1937 Act, taxes levied under the Railroad Retirement Tax Act for supplemental annuity purposes are appropriated to the Railroad Retirement Supplemental Account, with the remaining taxes levied under the Tax Act being appropriated to the Railroad Retirement Account. For reasons which will be set forth in discussing the amendment to the Tax Act made by section 501 (a) (2) of this Act, the taxes imposed by the Tax Act for supplemental annuity purposes will continue to be levied at rates necessary to support supplemental annuities at the level provided under the 1937 Act (which provided supplemental annuities in amounts ranging from $45 to $70) even though the 1974 Act provides smaller supplemental annuities (in amounts ranging from $23 to $43— persons receiving supplemental annuities under the 1937 Act on January 1, 1975, however, will, pursuant to the provisions of section 205 (a) of title II of this Act, continue to receive such annuities in the amounts provided by the 1937 Act). Accordingly, pursuant to section 15(a) of the 1974 Act, the appropriation provisions of which are modeled after those contained in section 15(b) of the 1937 Act (which provided appropriations to the Supplemental Account), only that portion of the supplemental annuity taxes levied by the Tax Act which is necessary to provide sufficient funds to pay supplemental annuities at the level provided by the 1974 Act will be appropriated to the Railroad Retirement Supplemental Account. The remaining portion of such taxes will be appropriated to the Railroad Retirement Account.
At the same time as the Board establishes, pursuant to section 3221 (c) of the Tax Act, the rate of the supplemental annuity tax for a particular calendar quarter, the Board will also, as is provided in section 15(a) of the 1974 Act, determine what portion of that tax is to be appropriated to each of the Accounts pursuant to the provisions of sections 15(a) and 15(c) of the 1974 Act. The Secretary of the Treasury will then credit the amounts of the supplemental annuity taxes collected to the two Accounts in such proportions as the Board has determined.
Subsection (b) of section 15 provides for the reimbursement of the Railroad Retirement Account for the costs incurred by reason of crediting military service under this Act, as is provided by section 3(c)(2), for purposes of determining entitlement to, and the amounts of, benefits under section 2 of the Act. The amounts of such costs will be determined annually by the Board on the basis of the additional benefits paid under section 2 (but only to the extent that such benefit costs are not reimbursed under the financial interchange), the additional administrative expenses incurred, and the interest lost to the Railroad Retirement Account, by reason of the crediting of military service under the Act. Unlike the 1937 Act, which provided in section 4(e) that the cost resulting from the crediting of military service would be determined on an actuarial basis at the time a particular annuity based, in part, on military service is awarded, the 1974 Act provides that such cost will be determined on the basis of the additional amount of each
annuity actually paid in a particular year because military service was included in computing the amount of the annuity.
An actual cost basis is now used to determine amounts which will be appropriated to the social security trust funds for the cost of crediting military service prior to 1956 under the Social Security Act; military service pay after 1956 is taxable as wages for employment under the Federal Insurance Contributions Act. In making the determination of the costs resulting from the crediting of military service for a particular year, the Board will not consider any such costs for which the Railroad Retirement Account has already received appropriations under section 4(1) of the 1937 Act; the costs which will not be considered include all costs for military service rendered after December 31, 1936, and before July 1, 1963. The amount of such costs for a particular fiscal year will be determined by the Board as soon as practicable after the end of the fiscal year, and the amount so determined will be certified to the Secretary of the Treasury. Upon receipt of a certified report of the Board's determination under this subsection, and when authorized in an appropriation act, the Secretary of the Treasury is directed to transfer that amount from the general funds in the United tSates Treasury to the Railroad Retirement Account.
Subsection (d) of section 15 authorizes annual appropriations to the Railroad Retirement Account for the fiscal years 1976-2000 to reimburse the Account for the costs incurred because of the payment of vested dual benefits to employees under section 3(h), to spouses under section 4(e), to survivors under section 4(h), and to beneficiaries on the rolls under the transitional provisions in Title II. The amount of each such appropriation would be determined as follows: The Railroad Retirement Board would make a determination as to the amount which, if paid into the Account in 25 equal payments, would be sufficient to meet the total costs incurred due to the payment of vested dual benefits-current estimates are that appropriations at the level of $285 million a year for the 25 year period would be sufficient for this purpose; however, under the provisions of section 15(d) the Board would re-evaluate the yearly amount required every three years, that is, at the time of each actuarial valuation. The amount so determined would, each year, be reduced by an amount equal to 12 of the estimated total increase in the interest income which the Railroad Retirement Account is expected to realize during the 25 fiscal years 1976 through 2000 as a result of the new investment policy provisions contained in section 15(e) of the proposed Act. Thus, this increase in interest income would be utilized to reduce the Treasury liability for the financing of vested dual benefits. As with the cost of vested dual benefits, the Board would determine the amount of the increased interest income which the Account is expected to earn because of the new investment policy provisions and would re-evaluate this determination every three years.
Subsection (e) of section 15 provides for the investment of the funds of the Railroad Retirement Account. The sixth sentence of section 15(c) of the 1937 Act provides that the Secretary of the Treasury may purchase interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the l'nited States other than the special obligations issued exclusively to the Railroad Retirement Accounts if the Secretary determines that such purchases are in the public interest, provided that the interest yield of
such obligations is not less than the interest rate determined in accordance with the fifth sentence of section 15(c). Section 15(c) of the 1974 Act differs from the present section 15(c), after the fifth sentence, in several respects: (1) it confers upon the Railroad Retirement Board the authority to request the Secretary of the Treasury to purchase such other obligations; (2) it provides specific statutory authority permitting funds in the Railroad Retirement Account to be invested in obligations which are lawful investments for trust funds of the United States; and (3) it makes mandatory upon the Secretary all requests of the Board to the Secretary that are provided for in section 15(e). In addition, the bill places upon the Board the duty of determining what proportion of the Account shall be invested in other than special obligations of the Account and which of such obligations will provide the greatest rate of return on the funds invested. Section 15(e) also permits the Board to direct the redemption of special obligations for the purpose of investing the proceeds in other special obligations if the applicable interest as determined under the provisions of that section is higher than the rate in the special obligations to be redeemed.
The remaining subsections of this section are virtually identical to provisions contained in section 15 of the 1937 Act. Subsection (f) provides for the selection of an Actuarial Advisory Committee to review the Board's actuarial reports and estimates, and subsection (g) directs the Board to include data concerning the status of the Railroad Retirement and Railroad Retirement Supplemental Accounts in its annual reports to the President and Congress. It should be noted that, unlike the comparable provisions of the 1937 Act, section 15(f) of the 1974 Act requires that new members of the Actuarial Advisory Committee hold membership in the American Academy of Actuaries and be qualified in the evaluation of pension plans. Section 16
This section, as did section 7 of the 1937 Act, assures that the provisions of this Act will not be construed as restricting or discouraging the payment of private pensions by employers. Benefits paid under this Act, other than a supplemental annuity, will not be affected by the beneficiary's receipt of a private pension. Section 17
The provisions of section 17 of this Act, as did section 18 of the 1937 Act, permit employers to furnish free railroad transportation to annuitants. Section 18
Under subdivision (1) of this section, service covered under this Act is specifically excluded from the term employment as defined in the Social Security Act except under the circumstances described in subdivision (2).
Subdivision (2) contains provisions similar to those set forth in section 5(k) (1) of the 1937 Act relating to the crediting of railroad service under the Social Security Act in certain cases. If an employee has not, at the time of his retirement or death, performed at least 10 years of creditable railroad service, and is thus not eligible for benefits under this Act, all of his railroad retirement credits will be transferred to the social security system where they will be treated
as, and combined with, social security credits to determine eligibility for, and the amount of, social security benefits payable to the employee, his family, and his survivors. Railroad retirement credits are also transferred to the social security system for survivor benefit purposes where the employee did not have a current connection with the railroad industry at the time of his death. Section 19
Section 19 of the new Act is intended to provide automatic adjustments in the eligibility requirements for certain benefits whenever amendments to the Social Security Act become effective after December 31, 1974, to liberalize the eligibility requirements for, or the nature of, monthly insurance benefits and health care benefits under that Act. Any such adjustments under this Act will be provided in accordance with regulations prescribed by the Board.
Subsection (a) of section 19 provides that reductions in the social security eligibility requirements for old-age insurance benefits or disability insurance benefits will also be applicable to employees under this Act; that reductions in such requirements for a wife's or husband's insurance benefits will also be applicable to spouses under this Act; that reductions in such requirements for a widow's, widower's, or mother's insurance benefit will also be applicable to a widows or widowers, as the case may be, under this Act; that reductions in such requirements for a child's insurance benefit will also be applicable to children of deceased employees under this Act; and that reductions in such requirements for a parent's insurance benefit will also be applicable to parents under this Act. In all cases, however, any reductions in social security benefit eligibilty requirements would be applicable to a person covered under this Act only if such reductions would benefit that person. Furthermore, reductions in the social security benefit eligibility requirements applicable to divorced wives, surviving divorced wives, surviving divorced mothers, and children of living employees would have no effect on benefit entitlement under this Act since such persons are not provided annuities under the Railroad Retirement Act. Nor will a person be entitled to an annuity by reason of subsection (a) if he does not satisfy a requirement contained in the 1974 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. Thus, for example, a dependent parent who is not eligible for an annuity because some other survivor is receiving an annuity (the Social Security Act contains no such restriction) would not become entitled to an annuity merely because of an amendment to the Social Security Act reducing the eligibility requirements for parent's insurance benefits under that Act.
Finally, under the second proviso of subsection (a), the annuity amounts which would be payable under the Railroad Retirement Act by reason of the provisions of this subsection would be only those amounts as are determined under section 3(a), with respect to employees, section 4(a), with respect to spouses, and section 4(f), with respect to survivors. These amounts are the amounts which would have been payable to the respective beneficiaries under the Social Security Act if railroad service after 1936 had been covered under that Act.
Pursuant to the provisions of subsection (b) of section 19, if monthly insurance benefits are provided under the Social Security Act to a