SEATTLE — SMART Transportation Division National Legislative Director John Risch gave attendees a broad overview of the landscape of the transit industry on the third day of the TD regional meeting.
Among the topics covered: how to grow support for transportation-related bills in Washington, D.C., train automation, operator safety, stock buybacks and the potential threat politicians pose to what they describe as “entitlements.”
“If you see something, do something,” Risch told the crowd, encouraging them to get involved by running for public office, engaging government officials face-to-face to educate them about the issues important to the transportation industry and being more visible at public meetings and in the media.
“It’s not me or our small office in D.C. that passes a crew bill,” Risch said. “That’s not the most effective way. The most effective way is when constituents contact them.”
He praised the grassroots efforts of Socorro Cisneros-Hernandez, a bus member out of Local 1607 in Los Angeles, who took it upon herself to meet Republican U.S. Rep. Paul Cook at a town hall meeting. After the discussion, Cook signed on to the Safe Freight Act (H.R. 233) as one of the 112 bipartisan members in the U.S. House who support the two-person crew bill.
General Chairperson Steve Simpson (GO 489) met with U.S. Rep. Louie Gohmert, a Texas Republican and one of the most conservative congressmen, and also was able to get Gohmert to sign on in support of H.R. 233 and to advocate for funding for the National Mediation Board, Risch said.
“This is a political year — they’re all ears. They’re all ears in the political years,” Risch said. “Once they get elected, they’re not quite as attentive.”
Risch said the responses received by the Federal Railroad Administration in a request for comments on automation in the rail industry largely agreed with rail labor’s approach — that all trains should have two-person crews.
“The vast majority, with a handful of exceptions from railroads, of the comments were comments saying the only safe way to be allowed to run a train through America is with two crewmembers — a certified conductor and a certified locomotive engineer,” Risch said. “It’s a safety issue — it’s an issue to where you need two people to get the job done.”
Two safety bills have been introduced in Congress — one to protect passenger rail workers in the Senate and one to protect bus operators in the House.
The House bill, introduced by U.S. Rep. Grace Napolitano of California and U.S. Rep. John Katko of New York, is a strong bill and if passed, would protect our bus members.
“It will require that bus companies develop risk-reduction programs, and not only do they have to develop them, they have to do it with their bus drivers and union representatives,” Risch said.
The programs would target areas on bus properties where safety could be improved, such as fixes for the vehicles, and de-escalation training, Risch said.
“Too often, the fare is a dollar-and-a-half and the guy’s only got a dollar getting on the bus and then the bus driver tells him it’s a dollar-and-a-half…and this 50-cent issue turns into something terrible,” Risch said.
Class I railroads received millions, if not billions of dollars back when the Tax Cut and Jobs Act cut the U.S. corporate tax rate last year. Risch reminded attendees what the railroads are using the money for rather than infrastructure and maintenance.
“They’re using it to buy back stock — elevate the stock price. Who are the biggest stockholders? — Top officers of the railroads and the hedge funds,” Risch said. “Those are the guys that are profiting. Union Pacific will spend twice as much money these next three years buying back stock than they will in investing in the railroad.”
The runaway debt that has been created by spending increases also has politicians eyeing what they describe as “entitlements” — among them Social Security, Medicare, Medicaid and Railroad Retirement. Politicians want to get their hands on the money that fund these “entitlements” – money that we’ve put in for our retirements – and bankrupt these programs.
“That’s the deal we’ve made — we’re going to pay in for 30, 40 years and then we would have a few years to enjoy retirement because we invested,” Risch said. “That was the deal — it was a pension plan. You can’t change that. We’re not going to stand idly by if they try to change that deal.”
Tag: retirement
As I prepare for retirement, there are many things on my mind about the future of our industry and transportation workers that I have had the honor to represent during my career.
The most important item on my agenda today, and every day during the past 31 years that I have been a legislative officer, is that our members are treated fairly when decisions are being made concerning safety, job security, health care and pensions.
Looking back on my career that started in 1966, change is the only constant thing I’ve witnessed.
The hours of service law was reduced from 16 hours to the present 12. We went from 48 Class I railroads to the present seven. There has been a dramatic expansion of public transportation around the country, and the best news of all is that there has been a significant reduction in injuries and fatalities of transportation workers.
Our union has worked hard on improving safety and expanding passenger rail and that focus will continue long after I’m gone. Just as there have been constant changes in our industry over the past 31 years, constant changes will continue for the next 31 years and beyond.
The good news is the vast majority of rail and transit workers in America are organized and because they have a union, they can demand that future changes benefit them as well as the CEO and company investors.
Perhaps the most significant advances we have seen in the past decade are that of communications. When I hired out, they hooped up manually-typed train orders to passing trains and you stuck your arm out the locomotive window at 60 mph to grab them.
Today, information is instantaneous and constantly being updated. I’m convinced that as communication and information technology improves, our rail members will all have predictable work schedules and our transit members will have more appropriate work schedules that include frequent bathroom breaks.
With improvements in information technology, there is no excuse for our members to be uninformed about what is taking place in our industry and in our union. But it’s up to you as a member to make some effort at staying informed.
How you and our union react to future changes will directly impact your safety, your work environment and your paychecks. I’m convinced that when our members are involved and work with other members through our union, we are up for the challenge.
The good news is we already have a strong legislative presence in Washington and in every state capital and capable contract-negotiation teams on our general committees and at the national level.
In closing, I believe “knowledge is power.” I urge you all to stay informed and participate in your union by attending meetings and running for elected office. By hanging together and working through our union, you and your co-workers can benefit as well as the CEO and corporate investors when changes do occur.
I’m “pulling the pin” and I’m able to retire because of our union’s efforts to establish and maintain the best pension in America, Railroad Retirement. While I will be retired, I will be paying close attention from the sidelines.
Thanks to all of you who have made my career so enjoyable. Farewell.
James A. Stem Jr.
National Legislative Director
SMART?Transportation Division
Railroad employees who are planning to retire should be aware of what steps to take and what documents are required when applying for an annuity from the Railroad Retirement Board (RRB). Being prepared can prevent needless delays and ensure that payments from the RRB begin as soon as possible after retirement.
The following questions and answers describe the application process and other related items that retiring employees, as well as their spouses or survivors, should be aware of.
1. How are railroad retirement annuity applications filed?
Applications are filed through the RRB’s field offices. Applicants may file in person or by telephone and mail. Those filing in person may do so at any RRB office or at one of the office’s customer outreach program service locations. Applicants filing by telephone receive the same information and instructions that are provided to those filing in person; forms requiring signatures and other documents are then handled by mail.
The addresses of all the RRB’s field offices are available on the agency’s website at www.rrb.gov, or by calling the RRB’s toll-free number at (877) 772-5772. This number, which provides access to the agency’s field office representatives, also provides automated menus 24 hours a day, seven days a week. RRB field offices are open to the public from 9 a.m. to 3:30 p.m., Monday through Friday, except on federal holidays.
2. Can an application be filed prior to a person’s actual retirement date?
The RRB accepts annuity applications up to three months in advance of an annuity beginning date, which allows the RRB to complete the processing of most new claims by a person’s retirement date. An employee can be in compensated service while filing a disability application provided that the compensated service is not active service and terminates within 90 days from the date of filing. When an employee files a disability application while still in compensated service, it will be necessary to provide a specific ending date of the compensation. Compensated service includes not only compensation with respect to active service performed by an employee for an employer, but also includes pay for time lost, wage continuation payments, certain employee protection payments and any other payment for which the employee will receive additional creditable service.
To expedite the filing process, applicants should contact their local RRB field office to schedule time for a pre-retirement consultation and also to confirm their eligibility and be advised as to the required documents. The consultation can be conducted in person, or by telephone, with an RRB representative who will provide an annuity estimate, explain a retiree’s benefit rights and responsibilities, and answer related questions.
Railroad employees can also get estimates of their future annuities over the Internet by visiting the RRB’s website. To do so, employees must first establish an RRB online account at www.rrb.gov. For security purposes, first-time users must apply for a Password Request Code (PRC), which they will receive by regular mail in about 10 business days. To do this, they should click on “Request Password Request Code (PRC) be mailed to your home address” in the “Benefit Online Services Login” section on the home page. Once they establish their online accounts, they will be able to get an estimate of their annuities, as well as conduct other business with the RRB, over the Internet. Railroad workers are encouraged to establish online accounts while still employed so the accounts are ready when needed. Employees who have already established online accounts do not need to do so again.
3. What are some of the documents required with an application?
- All applicants have to furnish proof of their age.
- All applicants should be prepared to furnish the notice of any social security benefit award or other social security claim determination.
- An employee may be required to submit information regarding any other federal, state or local government pension for which he or she also qualifies, as well as certain other payments not covered by railroad retirement or social security, such as from a non-profit organization or from a foreign government or a foreign employer.
- An employee or survivor filing for a disability annuity is required to submit supporting medical information from his or her treating physician, as well as any reports or records from recent hospitalizations. He or she may also be asked to go for one or more specialized medical examinations given by a doctor named by the RRB. If an employee disability applicant is receiving workers’ compensation or public disability benefits, notice of the amount and beginning date of such payments must be submitted.
- An employee will have to furnish proof of any military service claimed.
- A spouse, divorced spouse or widow(er) applying for a railroad retirement annuity must furnish proof of marriage to the employee. A divorced spouse must furnish proof of a final divorce from the employee, as well as proof that any subsequent marriages have terminated.
- A spouse, divorced spouse or survivor also qualified to receive a pension from a federal, state or local government must submit information regarding that pension.
- All applicants have to provide banking information necessary for their enrollment in direct deposit.
A booklet, “Furnishing Evidence to Support Your Claim” (Form RB-3), gives detailed information as to the types of proofs that are required when filing for an annuity, as well as sources from which these documents can be obtained. The booklet is available free of charge at any RRB office or at www.rrb.gov.
4. Can proofs be filed in advance of retirement?
Railroad employees are encouraged to file proofs of their correct birth date and their military service well in advance of retirement. The information will be recorded and stored electronically until they actually retire. This will expedite the annuity application process and avoid any delays resulting from inadequate proofs.
If employees do not have an official record of their birth or military service, their local RRB office will explain how to get acceptable evidence. All evidence brought or mailed to an RRB office will be handled carefully and returned promptly.
5. What is the retroactivity of a railroad retirement application?
The retroactivity of a railroad retirement annuity application is limited to one year for disability annuities and six months for full age annuities. There is generally no retroactivity for reduced age annuities.
Retroactivity of a survivor annuity application is one year for disabled widow(er)s and six months for full retirement age widow(er)s, mothers (fathers), children and parents. Retroactivity for widow(er)s ages 60-61 is six months if it does not increase the age reduction (this does not apply to surviving divorced spouses or remarried widow(er)s). Otherwise, there is generally no retroactivity for reduced age widow(er)s’ annuities.
6. Are retiring railroad employees required to relinquish their rights to their railroad jobs?
An employee annuity based on age cannot be paid until the employee stops railroad employment and gives up any rights to return to work for a railroad employer. While an annuity based on disability is not paid until an employee has stopped working for a railroad, employment rights need not be relinquished until the employee attains full retirement age. However, in order for a supplemental annuity to be paid by the RRB, or for an eligible spouse to begin receiving annuity payments, a disabled annuitant under full retirement age must relinquish employment rights. And, regardless of age and/or earnings, no railroad retirement annuity is payable for any month in which a retired or disabled employee annuitant, a spouse annuitant or a survivor annuitant works for an employer covered under the Railroad Retirement Act, including labor organizations. Such work includes service for more than $24.99 in a calendar month to a local lodge or division of a railway labor organization. Also, work by a local lodge or division secretary collecting insurance premiums, regardless of the amount of salary, is railroad work which must be stopped.
Railroad retirement annuitants may work in nonrailroad employment, but benefits may be reduced if a beneficiary under full retirement age works after retirement and earnings exceed annual exempt amounts. Additional earnings deductions are assessed if a retired or disabled employee annuitant, or a spouse annuitant, works for his or her last pre-retirement nonrailroad employer, regardless of age or the level of earnings.
Special restrictions also apply to any earnings by disabled employees.
7. How soon after filing can an applicant expect payment?
Under the RRB’s Customer Service Plan, if an applicant filed for a railroad retirement employee or spouse annuity in advance of the beginning date of the annuity, the RRB is expected to make a decision within 35 days of the beginning date of the annuity. If an applicant did not file in advance, the RRB is expected to make a decision within 60 days of the date the application was filed.
If an applicant filed for a railroad retirement survivor annuity and was not already receiving benefits as a spouse, the RRB will make a decision to pay, deny, or transfer the application to the Social Security Administration within 60 days of the beginning date of the annuity or the date the application was filed (whichever is later). If an applicant is already receiving a spouse annuity, the RRB will make a decision to pay, deny, or transfer the application for a survivor annuity to the Social Security Administration within 30 days of the first notice of the employee’s death. If an applicant filed for a lump-sum death benefit, the RRB will make a decision to pay or deny the application within 60 days of the date the application was filed.
After the RRB has made its decision, applicants should receive a notice of award or denial within two weeks. If entitled to benefits, it is generally expected that the payment will be deposited in an individual’s bank account within one week of the RRB’s decision.
For disability annuities, processing applications is more complex than for other benefits because of the need to develop medical evidence. Under the Customer Service Plan, if an applicant filed for a railroad retirement disability annuity, the RRB is expected to make a decision within 100 days of the date the application was filed.
If it is determined that an applicant is entitled to disability benefits, the individual’s first payment will be received within 25 days of the date of the RRB’s decision, or the earliest payment date, whichever is later.
Of course, claims for some benefits may take longer to handle than others if they are more complex, or if information from other people or organizations is needed. If this happens, the RRB will provide an explanation and an estimate of the additional time required to make a decision.
8. How are railroad retirement payments made?
The Department of the Treasury has eliminated the vast majority of paper checks for Federal benefit payments. New recipients of federal benefits now receive their payments by electronic means. The most common form of electronic payment for railroad retirement, social security and veterans benefits is through direct deposit, in which the amount is automatically transferred to an individual’s bank account. Those without bank accounts can enroll in Treasury’s Direct Express® program, which electronically transfers Federal payments to an individual’s Direct Express®-issued debit card. The card can then be used like an ordinary debit card. While agencies can still grant waivers from electronic payment, they can do so only in very limited cases.
9. How can individuals find more information about filing for railroad retirement annuities?
More information is available by visiting the RRB’s website, www.rrb.gov, or by calling an RRB office toll-free at (877) 772-5772. Persons can find the address of the RRB office servicing their area by calling the agency’s toll-free number or at www.rrb.gov.
The Railroad Retirement Act provides disability annuities for railroaders who become totally or occupationally disabled. Medicare coverage before age 65 is also available for totally disabled employees and those suffering from ALS (amyotrophic lateral sclerosis) or chronic kidney disease.
The following questions and answers describe these disability benefits, their requirements, and how to apply for them.
1. How do railroad retirement provisions for total disability and occupational disability differ?
A total disability annuity is based on permanent disability for all employment and is payable at any age to employees with at least 10 years (120 months) of creditable railroad service and, under certain conditions, to employees with five to nine years (60-119 months) of creditable railroad service after 1995.
An occupational disability annuity is based on disability for the employee’s regular railroad occupation and is payable at age 60 if the employee has 10 years (120 months) of railroad service, or at any age if the employee has at least 20 years (240 months) of service. A “current connection” with the railroad industry is also required for an occupational disability annuity. The current connection requirement is normally met if the employee worked for a railroad in at least 12 of the last 30 consecutive months immediately preceding his or her annuity beginning date.
If an employee does not qualify for a current connection on this basis, but has 12 months of service in an earlier 30-month period, he or she may still meet the current connection requirement. This alternative generally applies if the employee did not have any regular employment outside the railroad industry after the end of the last 30-month period which included 12 months of railroad service and before the month the annuity begins or the date of death. Full or part-time work for a non-railroad employer in the interval between the end of the last 30-month period including 12 months of railroad service and the month an employee’s annuity begins, or the month of death if earlier, can break a current connection.
2. Under what conditions can disabled employees with five to nine years of service be eligible for railroad retirement disability annuities?
Employees with five to nine years (60-119 months) of service after 1995 may qualify for an annuity based on total and permanent, but not occupational, disability if they have a disability insured status under social security law. A disability insured status is established when an employee has social security or railroad retirement earnings credits in 20 calendar quarters in a period of 40 consecutive quarters ending in or after the quarter in which the disability began.
Unlike the two-tier annuities payable to a 10-year employee, disability annuities payable to five-year employees are initially limited to a tier I social security equivalent benefit; a tier II benefit is not payable in these cases until the employee attains age 62. And, the employee’s tier II benefit will be reduced for early retirement in the same manner as the tier II benefit of an employee who retired on the basis of age rather than disability at age 62 with less than 30 years of service.
3. How do the standards for total disability and occupational disability differ?
An employee is considered to be totally disabled if medical evidence shows a permanent physical and/or mental impairment preventing the performance of any regular and gainful work. A condition is considered to be permanent if it has lasted or may be expected to last for a continuous period of at least 12 months or result in death.
An employee is considered to be occupationally disabled if a physical and/or mental impairment prevents the employee from performing the duties of his or her regular railroad occupation, even though the employee may be able to perform other kinds of work. An employee’s regular occupation is generally that particular work he or she has performed for hire in more calendar months, which may or may not be consecutive, than any other work during the last five years; or that work which was performed for hire in at least one-half of all the months, which must be consecutive, in which the employee worked for hire during the last 15 years.
4. How does the amount of a railroad retirement disability annuity compare to a social security disability benefit?
Disabled railroad workers retiring directly from the railroad industry at the end of fiscal year 2012 were awarded almost $2,900 a month on the average, while awards for disabled workers under social security averaged about $1,190.
5. When is early Medicare coverage available for the disabled?
In general, Medicare coverage before age 65 may begin after a disabled employee annuitant has been entitled to monthly benefits based on total disability for at least 24 months and has a disability insured status under social security law. There is no 24-month waiting period for those who have ALS (amyotrophic lateral sclerosis), also known as Lou Gehrig’s disease. The fact that an employee is initially awarded an occupational disability annuity does not preclude early Medicare coverage, if the employee’s physical and/or mental condition is such that he or she is totally and permanently disabled.
Medicare coverage on the basis of permanent kidney failure requiring dialysis or a kidney transplant is available not only to employee annuitants, but also to employees who have not retired but meet certain minimum service requirements, as well as spouses and dependent children. For those suffering from chronic kidney disease, coverage may begin with the third month after dialysis treatment begins, or earlier under certain conditions.
6. Do the railroad retirement disability annuity requirements include a waiting period similar to the one required for social security disability benefits?
Yes. A five-month waiting period beginning with the month after the month of the disability’s onset is required before railroad retirement disability annuity payments can begin. However, an applicant need not wait until this five-month period is over to file for benefits.
The Railroad Retirement Board (RRB) accepts disability applications up to three months in advance of an annuity beginning date which allows the agency to complete the processing of most new claims before a person’s actual retirement date. An employee can be in compensated service while filing a disability application provided that the compensated service is not active service and terminates within 90 days from the date of filing. When an employee files a disability application while still in compensated service, it will be necessary for the employee to provide a specific ending date of the compensation.
Compensated service includes not only compensation with respect to active service performed by an employee for an employer, but also includes pay for time lost, wage continuation payments, certain employee protection payments and any other payment for which the employee will receive additional creditable service.
7. What documentation is required when filing for a railroad retirement disability annuity?
Employees filing for disability annuities are required to submit medical evidence supporting their claim. Applicants should be prepared to furnish dates of hospitalization, names and dosages of medication, names of doctors, etc. Applicants may also be asked to take special medical examinations given by a doctor named by the RRB. If a disability applicant is receiving workers’ compensation or public disability benefits, notice of such payments must be submitted.
Sources of medical evidence for railroad retirement disability purposes may include, but are not limited to, the applicant’s railroad employer, personal physician and hospital, the Social Security Administration or the agency paying workers’ compensation or public disability benefits. This evidence generally should not be more than 12 months old. In addition, proof of age and proof of any military service credit claimed and a description of past work activity will also be required.
8. What is the best way to apply for a railroad retirement disability annuity or early Medicare coverage?
Applications for railroad retirement disability annuities are generally filed at one of the RRB’s field offices, or at one of the office’s Customer Outreach Program (CORP) service locations, or by telephone and mail. However, applications by rail employees for early Medicare coverage on the basis of kidney disease have to be filed with an office of the Social Security Administration, rather than the RRB.
To expedite filing for a railroad retirement disability annuity, disabled employees or a family member should call, write, or send a secure message via the RRB’s website, www.rrb.gov, to the agency’s nearest field office to schedule an appointment. For the appointment, claimants should bring in any medical evidence in their possession and any medical records they can secure from their treating sources, such as their regular physician. Employees who are unable to personally visit an RRB office or meet an RRB representative at a CORP service location may request special assistance, such as having an agency representative come to a hospital or the employee’s home. RRB personnel can assist disabled employees with their applications and advise them on how to obtain any additional medical evidence required or any other necessary documents or records.
9. Can an individual continue to receive an employee disability annuity even if he or she does some work after it begins?
Special earnings rules apply to disability annuitants and they are more stringent than those that apply to annuitants who have retired on the basis of age and service. Disability annuities are not payable for any month in which the annuitant earns more than $810 in 2013 in any employment or self-employment, exclusive of work-related expenses. Withheld payments will be restored if earnings for 2013 are less than $10,125 after deduction of disability-related work expenses. Failure to report such earnings could involve a significant penalty charge.
These disability work restrictions cease upon a disabled employee annuitant’s attainment of full retirement age (age 65 for those born before 1938 to age 67 for those born in 1960 or later). This transition is effective no earlier than full retirement age, even if the annuitant had 30 years of service. Earnings deductions continue to apply to annuitants working for their last pre-retirement non-railroad employer.
If a disabled annuitant works before full retirement age, this may also raise a question about the possibility of that individual’s recovery from disability, regardless of the amount of earnings. Consequently, any earnings must be reported promptly to avoid overpayments, which are recoverable by the RRB and may also include penalties.
10. Does employment with a rail labor organization affect eligibility for a disability annuity?
Payment of an employee’s disability annuity cannot begin earlier than the day after the employee stops working in compensated service for any railroad employer, including labor organizations. Such work includes service for more than $24.99 in a calendar month to a local lodge or division of a railway labor organization. Also, work by a local lodge or division secretary collecting insurance premiums, regardless of the amount of salary, is railroad work which must be stopped.
11. Must an employee relinquish employment rights in order to receive a disability annuity?
An employee can be in compensated, but non-active, service while filing a disability annuity application as long as the compensated service terminates within 90 days from the date of filing. However, in order for a supplemental annuity to be paid or for an eligible spouse to begin receiving benefits, a disability annuitant under full retirement age must relinquish employment rights.
12. How can individuals get more information about disability annuities?
More information is available by visiting the RRB’s website, www.rrb.gov, or by calling an RRB office toll-free at 1-877-772-5772. Persons can find the address of the RRB office servicing their area by calling the agency’s toll-free number or at www.rrb.gov.
How long will you live after you retire, and will you have enough money to live on comfortably?
Good question. That’s why – before you retire – you should think about post-retirement economic security, because few things could be worse than money running out during what are supposed to be carefree years.
A balanced retirement portfolio should resemble a three-legged stool.
The first leg is your Tier I Railroad Retirement, Social Security or CalPERS (the California retirement system for public employees), plus Tier II Railroad Retirement and/or an employer pension.
The second leg is the equity in your home, plus your personal savings, such as certificates of deposit and mutual funds.
The third leg of this financial stool are annuities, IRAs, 401(k) plans and whole life insurance.
These three financial legs are the assets to support you through retirement. The fewer legs, or the lower value of any legs, could mean a less secure financial situation during retirement.
Determining available assets before you retire is essential. You may, for example, choose to wait another year or two before retiring and build up assets in one or more legs of your financial stool.
Younger members are wise to consider these financial legs long before they retire.
The UTUIA can help build the third leg of your financial stool prior to, and even during, retirement.
UTUIA whole life policies provide a death benefit while accumulating cash value. The death benefit protects your surviving family if you die; and the cash value becomes a source of tax-deferred savings available during your retirement years.
UTUIA annuities and individual retirement accounts (IRAs) earn guaranteed interest that is tax deferred until you draw down the balance. You may invest in UTUIA annuities up to age 85.
Existing IRAs and/or employer 401(k) plans may be rolled over into a UTUIA IRA.
To learn how the UTUIA can help make your retirement more secure, talk with a UTUIA regional insurance manager, call the UTUIA toll-free line at (800) 558-8842, or click here.
So how long will you live after you retire, and will you have enough money to live on comfortably?
Precisely. And that’s why – before you retire – you should think about post-retirement economic security, because few things could be worse than money running out during what are supposed to be carefree years.
A balanced retirement portfolio should resemble a three-legged stool.
The first leg is your Tier I Railroad Retirement, Social Security or CalPERS (the California retirement system for public employees), plus Tier II Railroad Retirement and/or an employer pension.
The second leg is the equity in your home, plus your personal savings, such as certificates of deposit and mutual funds.
The third leg of this financial stool are annuities, IRAs, 401(k) plans and whole life insurance.
These three financial legs are the assets to support you through retirement. The fewer legs, or the lower value of any legs, could mean a less secure financial situation during retirement.
Determining available assets before you retire is essential. You may, for example, choose to wait another year or two and build up assets in one or more legs of your financial stool.
Younger members are wise to consider these financial legs long before they retire.
The UTU Insurance Association can help build the third leg of your financial stool prior to and even during retirement.
UTUIA whole life policies provide a death benefit while accumulating cash value. The death benefit protects surviving family if you die; and the cash value becomes a source of tax-deferred savings available during your retirement years.
UTUIA annuities and individual retirement accounts (IRAs) earn guaranteed interest that is tax deferred until you draw down the balance. You may invest in UTUIA annuities up to age 85. Existing IRAs and/or employer 401(k) plans may be rolled over into a UTUIA IRA.
To learn how the UTUIA can help make your retirement more secure, talk with a UTUIA field supervisor, or call the UTUIA toll-free line at (800) 558-8842.
The Railroad Retirement Board has confirmed for rail workers what the Social Security Administration already has told Social Security recipients: There will be no increase in benefits in 2011.
The reason is there was no increase in the Consumer Price Index (CPI) from the third quarter of 2009 to the corresponding period of the current year.
Additionally, and because the CPI did not rise, Railroad Retirement and Social Security beneficiaries will not see an increase in 2011 in the earnings limitation that triggers benefits cuts if they continue working while receiving benefits.
For those under full retirement age throughout 2011, the exempt earnings amount remains at $14,160. For beneficiaries attaining full retirement age in 2011, the exempt earnings amount, for the months before the month full retirement age is attained, remains at $37,680 in 2011.
For employee and spouse annuitants, full retirement age ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later. For survivor annuitants, full retirement age ranges from age 65 for those born before 1940 to age 67 for those born in 1962 or later.
Special work restrictions continue to be applicable to disability annuitants. In 2011, the monthly disability earnings limit will also stay at the previous year’s amount of $780.
Regardless of age and/or earnings, no Railroad Retirement annuity is payable for any month in which an annuitant (retired employee, spouse or survivor) works for a railroad employer or railroad union.
The Department of Health and Human Services has not yet announced if there will be Medicare premium changes for 2011. Information about Medicare changes for 2011, when available, may be found at www.medicare.gov.
If you are planning to retire in the coming months, you are sure to have concerns and many more questions.
Understanding retirement benefits, Medicare and Medigap – and, especially, assuring you obtain all you are entitled to – is no simple task. There is help, however, and SMART TD can help you.
Many of your pre-retirement questions can be answered at the UTU Internet home page, at www.utu.org by clicking on “UTU Alumni Association” (located along the top under “About UTU”).
See, for example, the article headlined, “Preparing for Your Retirement,” which provides advice on tasks to consider in the months before your actual retirement.
The topics include, “Money and health,” “Medicare and more,” “Pension plans,” “Investment income,” “Monthly income,” information for UTUIA policy holders, and advice on documents you will need to complete or obtain before applying for certain retirement benefits.
Also provided are contact information – phone numbers and Web addresses – where additional retirement information (such as veteran’s benefits for surviving spouses) may be obtained.
A new addition to that the Alumni Association page is a link to UnitedHealthcare’s “Retirement Made Easy Kit,” crafted for railroaders about to retire.
For Bus and Aviation Department members, there is a link for Social Security information.
Don’t overlook information on joining the UTU Alumni Association, which will keep you in touch with other UTU retirees and continuing news about the UTU, your past employer and current events affecting airlines, the motorcoach industry and railroads.
Those nearing retirement also should click on the “Health Care” link in the grey tile area at the top of the UTU homepage at www.utu.org. You will find there additional links to information on health care benefits, disabilities and Medicare prescription drug benefits.
Advance planning is an important first step toward assuring smooth sailing toward a successful and enjoyable retirement.
Railroad retirement benefits are subject to reduction if an employee with less than 30 years of service retires before attaining full retirement age. While employees with less than 30 years of service may still retire at age 62, the age at which full retirement benefits are payable has been gradually increasing since the year 2000, the same as for social security.
The following questions and answers explain how these early retirement age reductions are applied to railroad retirement annuities.
1. What is the full retirement age for employees with less than 30 years of service and is it the same for all employees?
Full retirement age, the earliest age at which a person can begin receiving railroad retirement or social security benefits without any reduction for early retirement, ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the same as for social security.
2. How are the changes in the maximum age reduction being phased in?
Since 2000, the age requirements for some unreduced railroad retirement benefits have been rising just like the social security requirements. For employees with less than 30 years of service and their spouses, full retirement age increases from 65 to 66, and from 66 to 67, at the rate of two months per year over two separate six-year periods. This also affects how reduced benefits are computed for early retirement.
The gradual increase in full retirement age from age 65 to age 66 affects those people who were born in the years 1938 through 1942. The full retirement age will remain age 66 for people born in the years 1943 through 1954. The gradual increase in full retirement age from age 66 to age 67 affects those who were born in the years 1955 through 1959. For people who were born in 1960 or later the full retirement age will be age 67.
3. How does this affect the early retirement age reductions applied to the annuities of those who retire before full retirement age?
The early retirement annuity reductions applied to annuities awarded before full retirement age are increasing. For employees retiring between age 62 and full retirement age with less than 30 years of service, the maximum reduction will be 30 percent by the year 2022. Prior to 2000, the maximum reduction was 20 percent.
Age reductions are applied separately to the tier I and tier II components of an annuity. The tier I reduction is 1/180 for each of the first 36 months the employee is under full retirement age when his or her annuity begins and 1/240 for each additional month. This will result in a gradual increase in the reduction at age 62 to 30 percent for an employee once the age 67 retirement age is in effect.
These same reductions apply to the tier II component of the annuity. However, if an employee had any creditable railroad service before August 12, 1983, the retirement age for tier II purposes will remain 65, and the tier II benefit will not be reduced beyond 20 percent.
The following chart shows how the gradual increase in full retirement age will affect employees.
Employee retires with less than 30 years of service:
- If the employee was born in 1937* or earlier, his or her full retirement age** is 65 and the maximum annuity reduction at age 62 is 20 percent.
- If the employee was born in 1938*, his or her full retirement age** is 65 years and 2 months and the maximum annuity reduction at age 62 is 20.833 percent.
- If the employee was born in 1939*, his or her full retirement age** is 65 and 4 months and the maximum annuity reduction at age 62 is 21.667 percent.
- If the employee was born in 1940*, his or her full retirement age** is 65 and 6 months and the maximum annuity reduction at age 62 is 22.50 percent.
- If the employee was born in 1941*, his or her full retirement age** is 65 and 8 months and the maximum annuity reduction at age 62 is 23.333 percent.
- If the employee was born in 1942*, his or her full retirement age** is 65 and 10 months and the maximum annuity reduction at age 62 is 24.167 percent.
- If the employee was born in 1943 through 1954*, his or her full retirement age** is 66 and the maximum annuity reduction at age 62 is 25 percent.
- If the employee was born in 1955*, his or her full retirement age** is 66 and 2 months and the maximum annuity reduction at age 62 is 25.833 percent.
- If the employee was born in 1956*, his or her full retirement age** is 66 and 4 months and the maximum annuity reduction at age 62 is 26.667 percent.
- If the employee was born in 1957*, his or her full retirement age** is 66 and 6 months and the maximum annuity reduction at age 62 is 27.50 percent.
- If the employee was born in 1958*, his or her full retirement age** is 66 and 8 months and the maximum annuity reduction at age 62 is 28.333 percent.
- If the employee was born in 1959*, his or her full retirement age** is 66 and 10 months and the maximum annuity reduction at age 62 is 29.167 percent.
- If the employee was born in 1960* or later, his or her full retirement age** is 67 and the maximum annuity reduction at age 62 is 30 percent.
*A person attains a given age the day before his or her birthday. Consequently, someone born on Jan. 1 is considered to have attained his or her given age on December 31 of the previous year.
**If an employee has less than 10 years of railroad service and is already entitled to an age-reduced social security benefit, the tier I reduction is based on the reduction applicable on the beginning date of the social security benefit, even if the employee is already of full retirement age on the beginning date of the railroad retirement annuity.
4. What are some examples of how this will affect the amounts payable to employees retiring before full retirement age with less than 30 years of service?
Take the example of an employee born on June 2, 1950, who retires in 2012 at the age of 62. In terms of today’s dollars and current benefit levels, not counting future increases in creditable earnings, assume this employee is eligible for monthly tier I and tier II benefits, before age reductions, of $1,200 and $800, respectively, for a total monthly benefit of $2,000.
Upon retirement at age 62, the employee’s tier I benefit would be reduced by 25 percent, the maximum age reduction applicable in 2012. This would yield a tier I monthly benefit of $900; the employee’s tier II benefit would also be reduced by 25 percent, providing a tier II amount of $600 and a total monthly rate of $1,500. However, if the employee had any rail service before Aug. 12, 1983, the tier II benefit would be subject to a maximum reduction of only 20 percent, providing a tier II amount of $640, and a total monthly rate of $1,540. As a second example, take an employee born on June 2, 1960, and also eligible for monthly tier I and tier II benefits, before age reductions, of $1,200 and $800, respectively, for a total monthly benefit of $2,000. This employee retires in 2022 at age 62 with no service before Aug. 12, 1983. Consequently, a 30 percent reduction is applied to both the tier I and tier II benefits and the net total annuity would be $1,400.
5. How are railroad retirement spouse benefits affected by this change?
If an employee retiring with less than 30 years of service is age 62, the employee’s spouse is also eligible for an annuity the first full month the spouse is age 62. Early retirement reductions are applied to the spouse annuity if the spouse retires prior to full retirement age. Beginning in the year 2000, full retirement age for a spouse gradually began to rise to age 67, just as for an employee, depending on the year of birth. While reduced spouse benefits are still payable at age 62, the maximum reduction will be 35 percent by the year 2022. However, if an employee had any creditable rail service prior to Aug. 12, 1983, the increased age
reduction is applied only to the spouse’s tier I benefit. The maximum reduction in tier II, in this case, would only be 25 percent, as under prior law.
Take for an example the spouse of a railroader with less than 30 years of service, none of it prior to Aug. 12, 1983, who was born on April 2, 1960, and is retiring in 2022 at age 62, with a spouse annuity, in terms of today’s dollars and current benefit payments and before any reductions for age, of $1,000 a month. With the maximum reduction of 35 percent applicable in 2022, her net monthly benefit would be $650.
As a second example, if the same spouse had been born on April 2, 1948, and was retiring in 2010 at age 62, with the maximum age reduction of 30 percent, her net monthly benefit would be $700.
The following chart shows how this will affect the spouses of railroad employees if the employee retires with less than 30 years of service.
Spouse Age Reductions
- If the employee retires with less than 30 years of service and the employee’s spouse was born in 1937* or earlier, the spouse’s full retirement age** is 65 and the spouse’s maximum annuity reduction at age 62 is 25 percent.
- If the spouse was born in 1938*, the spouse’s full retirement age** is 65 years and 2 months and the spouse’s maximum annuity reduction at age 62 is 25.833 percent.
- If the spouse was born in 1939*, her or his full retirement age** is 65 and 4 months and the maximum annuity reduction at age 62 is 26.667 percent.
- If the spouse was born in 1940*, her or his full retirement age** is 65 and 6 months and the maximum annuity reduction at age 62 is 27.50 percent.
- If the spouse was born in 1941*, her or his full retirement age** is 65 and 8 months and the maximum annuity reduction at age 62 is 28.333 percent.
- If the spouse was born in 1942*, her or his full retirement age** is 65 and 10 months and the maximum annuity reduction at age 62 is 29.167 percent.
- If the spouse was born in 1943 through 1954*, her or his full retirement age** is 66 and the maximum annuity reduction at age 62 is 30 percent.
- If the spouse was born in 1955*, her or his full retirement age** is 66 and 2 months and the maximum annuity reduction at age 62 is 30.833 percent.
- If the spouse was born in 1956*, her or his full retirement age** is 66 and 4 months and the maximum annuity reduction at age 62 is 31.667 percent.
- If the spouse was born in 1957*, her or his full retirement age** is 66 and 6 months and the maximum annuity reduction at age 62 is 32.50 percent.
- If the spouse was born in 1958*, her or his full retirement age** is 66 and 8 months and the maximum annuity reduction at age 62 is 33.333 percent.
- If the spouse was born in 1959*, her or his full retirement age** is 66 and 10 months and the maximum annuity reduction at age 62 is 34.167 percent.
- If the spouse was born in 1960* or later, her or his full retirement age** is 67 and the maximum annuity reduction at age 62 is 35 percent.
*A person attains a given age the day before his or her birthday. Consequently, someone born on January 1 is considered to have attained his or her given age on December 31 of the previous year.
**If the employee has less than 10 years of railroad service and the spouse is already entitled to an age-reduced social security benefit, the age reduction in her or his tier I will be based on the age reduction applicable on the beginning date of the spouse’s social security benefit, even if the spouse is already of full retirement age on the beginning date of her or his railroad retirement annuity.
6. Are age reductions applied to employee disability annuities?
Employee annuities based on disability are not subject to age reductions except for employees with less than 10 years of service, but who have 5 years of service after 1995. Such employees may qualify for a tier I benefit before retirement age based on total and permanent disability, but only if they have a disability insured status (also called a “disability freeze”) under Social Security Act rules, counting both railroad retirement and social security-covered earnings. Unlike with a 10-year employee, a tier II benefit is not payable in these disability cases until the employee attains age 62. And, the employee’s tier II benefit will be reduced for early retirement in the same manner as the tier II benefit of an employee who retired at age 62 with less than 30 years of service.
7. Do these changes also affect survivor benefits?
Yes. The eligibility age for a full widow(er)’s annuity is also gradually rising from age 65 for those born before 1940 to age 67 for those born in 1962 or later. A widow(er), surviving divorced spouse or remarried widow(er) whose annuity begins at full retirement age or later will generally receive an annuity unreduced for early retirement. However, if the deceased employee received an annuity that was reduced for early retirement, a reduction would be applied to the tier I amount payable to the widow(er), surviving divorced spouse or remarried widow(er). The maximum age reductions will range from 17.1 percent to 20.36 percent, depending on the widow(er)’s date of birth. (These age reductions apply to both tier I and tier II.) For a surviving divorced spouse or remarried widow(er), the maximum age reduction is 28.5 percent. For a disabled widow(er), disabled surviving divorced spouse or disabled remarried widow(er), the maximum reduction is also 28.5 percent, even if the annuity begins at age 50.
8. Does the increase in full retirement age affect the age at which a person becomes eligible for Medicare benefits?
No. Although the age requirements for some unreduced railroad retirement benefits have risen just like the social security requirements, beneficiaries are still eligible for Medicare at age 65.
9. Do these increases in full retirement age also apply to the earnings limitations and work deductions governing benefit payments to annuitants who work after retirement?
Like social security benefits, railroad retirement tier I and vested dual benefits paid to employees and spouses, and tier I, tier II, and vested dual benefits paid to survivors are subject to deductions if an annuitant’s earnings exceed certain exempt amounts. These earnings limitations and work deductions apply to all age and service annuitants and spouses under full retirement age regardless of the employee’s years of service. Although employees retiring at age 60 with 30 years of service have no age reduction, these earnings limitations and work deductions still apply until they reach their full retirement age. These earnings limitations also apply to survivor annuitants, with the exception of disabled widow(er)s under age 60 and disabled children.
Likewise, while special earnings restrictions apply to employees entitled to disability annuities, these disability earnings restrictions cease upon a disabled employee annuitant’s attainment of full retirement age. This transition is effective no earlier than full retirement age even if the annuitant had 30 years of railroad service.
The additional deductions applied to the annuities of retired employees and spouses who work for their last pre-retirement nonrailroad employer continue to apply after the attainment of full retirement age.
10. How can individuals get more information about railroad retirement annuities and their eligibility requirements?
Employees should contact a field office of the RRB by calling toll-free 1-877-772-5772 or via the RRB’s web site at www.rrb.gov. Most RRB offices are open to the public from 9:00 a.m. to 3:30 p.m., Monday through Friday, except on Federal holidays.
(The preceding release was issued by the Railroad Retirement Board on June 16, 2010.)
Employers and employees covered by the Railroad Retirement Act pay higher retirement taxes than those covered by the Social Security Act, so that railroad retirement benefits remain higher than Social Security benefits, especially for career employees.
The following questions and answers show the differences in railroad retirement and social security benefits payable at the close of the fiscal year ending September 30, 2009. They also show the differences in age requirements and payroll taxes under the two systems.
1. How do the average monthly railroad retirement and social security benefits paid to retired employees and spouses compare?
The average age annuity being paid by the Railroad Retirement Board (RRB) at the end of fiscal year 2009 to career rail employees was $2,690 a month, and for all retired rail employees the average was $2,125. The average age retirement benefit being paid under social security was over $1,160 a month. Spouse benefits averaged $795 a month under railroad retirement compared to $555 under social security.
The Railroad Retirement Act also provides supplemental railroad retirement annuities of between $23 and $43 a month, which are payable to employees who retire directly from the rail industry with 25 or more years of service.
2. Are the benefits awarded to recent retirees generally greater than the benefits payable to those who retired years ago?
Yes, because recent awards are based on higher average earnings. Age annuities awarded to career railroad employees retiring at the end of fiscal year 2009 averaged over $3,280 a month while monthly benefits awarded to workers retiring at full retirement age under social security averaged about $1,625. If spouse benefits are added, the combined benefits for the employee and spouse would approximate $4,550 under railroad retirement coverage, compared to $2,435 under social security. Adding a supplemental annuity to the railroad family’s benefit increases average total benefits for current career rail retirees to about $4,585 a month.
3. How much are the disability benefits currently awarded?
Disabled railroad workers retiring directly from the railroad industry at the end of fiscal year 2009 were awarded nearly $2,800 a month on the average while awards for disabled workers under social security averaged about $1,125.
While both the Railroad Retirement and Social Security Acts provide benefits to workers who are totally disabled for any regular work, the Railroad Retirement Act also provides disability benefits specifically for career employees who are disabled for work in their regular railroad occupation. Career employees may be eligible for such an occupational disability annuity at age 60 with 10 years of service, or at any age with 20 years of service.
4. Can railroaders receive benefits at earlier ages than workers under social security?
Railroad employees with 30 or more years of creditable service are eligible for regular annuities based on age and service the first full month they are age 60, and rail employees with less than 30 years of creditable service are eligible for regular annuities based on age and service the first full month they are age 62.
No early retirement reduction applies if a rail employee retires at age 60 or older with 30 years of service and his or her retirement is after 2001, or if the employee retired before 2002 at age 62 or older with 30 years of service.
Early retirement reductions are otherwise applied to annuities awarded before full retirement age — the age at which an employee can receive full benefits with no reduction for early retirement. This ranges from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the same as under social security.
Under social security, a worker cannot begin receiving retirement benefits based on age until age 62, regardless of how long he or she worked, and social security retirement benefits are reduced for retirement prior to full retirement age regardless of years of coverage.
5. Does social security offer any benefits that are not available under railroad retirement?
Social security does pay certain types of benefits that are not available under railroad retirement. For example, social security provides children’s benefits when an employee is disabled, retired or deceased. Under current law, the Railroad Retirement Act only provides children’s benefits if the employee is deceased.
However, the Railroad Retirement Act includes a special minimum guaranty provision which ensures that railroad families will not receive less in monthly benefits than they would have if railroad earnings were covered by social security rather than railroad retirement laws. This guaranty is intended to cover situations in which one or more members of a family would otherwise be eligible for a type of social security benefit that is not provided under the Railroad Retirement Act. Therefore, if a retired rail employee has children who would otherwise be eligible for a benefit under social security, the employee’s annuity can be increased to reflect what social security would pay the family.
6. How much are monthly benefits for survivors under railroad retirement and social security?
Survivor benefits are generally higher if payable by the RRB rather than social security. At the end of fiscal year 2009, the average annuity being paid to all aged and disabled widow(er)s averaged $1,285 a month, compared to $1,100 under social security.
Benefits awarded by the RRB at the end of fiscal year 2009 to aged and disabled widow(er)s of railroaders averaged approximately $1,725 a month, compared to about $890 under social security.
The annuities being paid at the end of fiscal year 2009 to widowed mothers/fathers averaged $1,595 a month and children’s annuities averaged $935, compared to $840 and $745 a month for widowed mothers/fathers and children, respectively, under social security.
Those awarded at the end of fiscal year 2009 averaged $1,620 a month for widowed mothers/fathers and $1,240 a month for children under railroad retirement, compared to $820 and $750 for widowed mothers/fathers and children, respectively, under social security.
7. How do railroad retirement and social security lump-sum death benefit provisions differ?
Both the railroad retirement and social security systems provide a lump-sum death benefit. The railroad retirement lump-sum benefit is generally payable only if survivor annuities are not immediately due upon an employee’s death. The social security lump-sum benefit may be payable regardless of whether monthly benefits are also due. Both railroad retirement and social security provide a lump-sum benefit of $255. However, if a railroad employee completed 10 years of creditable railroad service before 1975, the average railroad retirement lump-sum benefit payable is $990. Also, if an employee had less than 10 years of service, but had at least 5 years of such service after 1995, he or she would have to have had an insured status under social security law (counting both railroad retirement and social security credits) in order for the $255 lump-sum benefit to be payable.
The social security lump sum is generally only payable to the widow(er) living with the employee at the time of death. Under railroad retirement, if the employee had 10 years of service before 1975, and was not survived by a living-with widow(er), the lump sum may be paid to the funeral home or the payer of the funeral expenses.
8. How do railroad retirement and social security payroll taxes compare?
Railroad retirement payroll taxes, like railroad retirement benefits, are calculated on a two-tier basis. Rail employees and employers pay tier I taxes at the same rate as social security taxes, 7.65 percent, consisting of 6.20 percent for retirement on e
arnings up to $106,800 in 2010 and 1.45 percent for Medicare hospital insurance on all earnings.
In addition, rail employees and employers both pay tier II taxes which are used to finance railroad retirement benefit payments over and above social security levels.
In 2010, the tier II tax rate on employees is 3.9 percent and on rail employers it is 12.1 percent on employee earnings up to $79,200.
9. How much are regular railroad retirement taxes for an employee earning $106,800 in 2010 compared to social security taxes?
The maximum amount of regular railroad retirement taxes that an employee earning $106,800 can pay in 2010 is $11,259, compared to $8,170.20 under social security. For railroad employers, the maximum annual regular retirement taxes on an employee earning $106,800 are $17,753.40 compared to $8,170.20 under social security. Employees earning over $106,800, and their employers, will pay more in retirement taxes than the above amounts because the Medicare hospital insurance tax of 1.45 percent is applied to all earnings.