Railroad Retirement benefits not in danger

April 19, 2012

Railroad retirees and current rail workers should not be losing sleep over the much-hyped rumor that Congress is going to abolish Railroad Retirement, cut Railroad Retirement benefits or otherwise do harm to a system supported financially entirely by carriers and labor since its inception during the 1930s.

Recent language in a House Budget Committee report — “Conform Railroad Retirement Tier 1 benefits to Social Security benefits” — suggested an imminent congressional assault on Railroad Retirement by House Republicans.

But as the UTU and SMWIA legislative departments canvassed Capitol Hill, it became clear that the authors, who were drafting a roadmap for future federal spending cuts, did not understand how Railroad Retirement is funded.

UTU National Legislative Director James Stem, SMWIA Director of Government Affairs Jay Potesta, others in rail labor, carriers and the Railroad Retirement Board, began delivering the factual message to congressional offices:

“There are no public funds or general tax revenue used to pay the additional benefits provided by Tier 1 that exceed Social Security benefits. These additional benefits are fully funded by payroll taxes paid by rail labor and the carriers and are held in the Railroad Retirement account. Social Security does not reimburse Railroad Retirement for benefits that are not available under Social Security.”

Thus, there would be no savings to the federal government by tinkering with the Railroad Retirement system.

“Rail labor, carriers and the Railroad Retirement Board will continue delivering that message on Capitol Hill,” Stem said. “We are all confident that when the dust settles, this unfortunate draft language will disappear from consideration in Congress.”