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Vigilance key to protecting pension benefits
Posted By rob On April 30, 2012 @ 4:36 am In Leadership Messages,News,Top Story,Washington | Comments Disabled
By UTU International President Mike Futhey –
Railroaders should not lose sleep over a rumor that Congress will cut Railroad Retirement benefits.
The rumor began after language was inserted in a budget report by conservative Rep. Paul Ryan (R-Wis.) suggesting the federal deficit could be cut by eliminating certain Railroad Retirement benefits. He did not understand how Railroad Retirement is funded.
The UTU, SMWIA and other rail union legislative departments, along with carriers and the Railroad Retirement Board, immediately contacted congressional offices to remind lawmakers there are no federal funds used to pay Railroad Retirement Tier I benefits. Every penny of Railroad Retirement Tier I benefits is funded by payroll taxes on railroads and their workers.
Thus, there can be no savings to the federal government by tinkering with Railroad Retirement. As National Legislative Director James Stem said, “We are all confident that Rep. Ryan’s unfortunate draft language will disappear from consideration in Congress.”
This reminds us all to be ever vigilant in protecting Railroad Retirement, and the importance of participating in the UTU PAC.
Railroad Retirement, along with Social Security – which covers virtually all other private sector workers – originated with President Franklin Roosevelt’s New Deal during the Great Depression.
Railroad unions gained from Congress a guarantee that Railroad Retirement would never provide less in monthly benefits than Social Security. In fact, Railroad Retirement today pays considerably more than Social Security — the additional cost borne entirely by railroads and their workers.
For Railroad Retirement Tier I, the payroll taxes on employers and workers are the same as for Social Security, but Tier I allows railroaders with at least 30 years of service to retire at age 60 with full benefits for themselves and spouse. The cost of early retirement is funded by Tier II payroll taxes, which also fund additional Railroad Retirement benefits similar to private-sector pension plans where they still exist.
The average Railroad Retirement benefit paid current retirees is some $1,700 more monthly than paid to Social Security recipients, while the Railroad Retirement spouse benefit is some $500 more than paid spouses under Social Security.
Carriers pay the bulk of the additional Railroad Retirement taxes – 12.1 percent on payroll up to $81,900 per employee, while employees pay 3.9 percent on the same earnings. This significant pension benefit is what the railroads rely on to keep our professional workforce on the job until retirement.
For more information on Railroad Retirement, visit the Railroad Retirement Board website by clicking on the following link: https://secure.rrb.gov/
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