Keeping The Railroad Retirement Program On Track PDF Download

The railroad retirement program is the only federally administered pension plan for a private industry. Funds to finance the program consist of taxes paid by railroad workers and employers, transfers from social security trust funds, and general revenue appropriations from the Federal Government. A review was performed of the Federal role in providing financial assistance to the program and the alternatives available for funding and administering the program. The railroad retirement program has been inadequately funded, and beneficiaries may receive no benefits or may receive less than their social security equivalent benefits as early as 1982. A primary reason for the overall inadequate funding is that funds from railroad employers and the Federal Government for other benefits have not been adequate to cover the benefits paid. In addition, commingling all of the funds in one account blurs the accountability of each funding source for providing what is needed. Establishing a separate account for social security equivalent benefits would help ensure that beneficiaries will at least receive the equivalent of social security benefits. Because the Railroad Retirement Board uses its own eligibility requirements, railroad workers' remarried widows and divorced spouses do not receive full social security equivalent benefits under the program. Also, the estimated annual cost for funding windfall benefits for the program has doubled from the original estimate in 1974.