August 2, 2001
House Passage of H.R. 1140
The Railroad Retirement and Survivors' Improvement Act of 2001
On July 31, 2001, the House of Representatives, by a vote of 384-33, passed H.R. 1140, the Railroad Retirement and Survivors' Improvement Act of 2001.
Under the bill, Social Security benefit payments will be certified for payment by the Railroad Retirement Board (RRB) on the records of workers with either 10 years of service covered under the Railroad Retirement Act or 5 years of such covered service accrued after December 31, 1995. (SSA will have to identify and review any cases now paid by SSA that may have to be certified for payment by the RRB effective January 1, 2002.) The bill would have no apparent effect on the interchange between the Social Security Equivalent Benefit Account and the Social Security trust funds. (This interchange reflects the difference between benefits and revenue that would result each year if employees and retirees who have been covered under tier 1 of the Railroad Retirement program had instead been covered under OASDI.) The bill would have no effect on the long-range financial status of the Social Security program.
Specific bill provisions follow:
Amendments to Railroad Retirement Act of 1974
- Amends the Railroad Retirement Act of 1974 to increase benefits to railroad employees and their beneficiaries and to revise financing of the pension part (tier 2) of the railroad retirement system.
- Provides for a guaranteed initial minimum amount for surviving spouses of deceased railroad employees. Bases such amount on the tier 1 and tier 2 benefit that would have been payable to the employee at the time of the award of the surviving spouse's annuity.
- Repeals the reduction in tier 1 annuity components for employees and spouses prior to age 62, thus providing for full tier 1 annuities to employees at age 60 with 30 years of service and to spouses of employees with 30 years of service at age 60.
- Reduces the vesting requirement for railroad retirement benefits for employees and survivors to 5 (currently 10) years of service, based on service after 1995. Sets forth computation formulas for individual annuities through railroad retirement and Social Security benefit systems.
- Repeals a maximum limit on annuity benefits payable to an employee and spouse under the railroad retirement system.
- Establishes a Railroad Retirement Trust Fund (the Fund) and a Railroad Retirement Investment Trust to manage and invest Fund assets.
- Abolishes the Railroad Retirement Supplemental Annuity Account and provides for transfer of its funds to the Fund. Provides for transfer to the Fund of certain portions of the Railroad Retirement Account and of Social Security Equivalent Benefit account funds.
- Transfers to the disbursing agent from the Dual Benefits Payments Account the amount necessary to make dual benefit payments.
- Requires the Railroad Retirement Board to calculate the ratio of assets to benefits to determine annual tier 2 tax rates for employers, employee representatives, and employees.
Amendments to the Internal Revenue Code of 1986
- Amends the Internal Revenue Code to exempt the Fund from taxation.
- Repeals a supplemental annuity tax that railroad employers pay to finance a benefit for long-time rail employees.
- Provides for adjustments to railroad employers, employee representatives, and employee tier 2 tax rates.
A companion bill, S. 697, was introduced in the Senate by Senator Hatch (R., UT) on April 4, 2001, and was referred to the Committee on Finance. The Senate bill currently has 71 cosponsors.