Railroad Retirement Board

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The Railroad Retirement Board (or RRB) is an agency of the United States government created in the 1930s to administer a social insurance program providing retirement benefits to the country's railroad workers.

The RRB serves U.S. railroad workers and their families, and administers retirement, survivor, unemployment, and sickness benefits. Its headquarters are in Chicago, Illinois with field offices throughout the country.

Railroad workers do not pay money into Social Security, nor do they receive Social Security benefits. In connection with the retirement program, the RRB has administrative responsibilities for railroad workers' Medicare coverage.

During 2005, retirement-survivor benefits of $9 billion were paid to 634,000 beneficiaries, while net unemployment-sickness benefits of $73 million were paid to 29,000 claimants.

Railroad retirement benefits are paid jointly by the member railroads and their employees. The Board administers a trust fund which operates at a substantial profit. In 2007, the fund recorded a net profit of $1.4 Billion, a return of 16.38% on its investment.[1]

Contents

Disability

In contrast to the single disability program offered by Social Security, Railroad Retirement offers two types of disability annuities. The Total Disability, or "Disability Freeze" as it is called, is based on guidelines similar to Social Security Disability. The Occupational Disability only requires that applicants possess certain ailments which are deemed by law as an inability for them to safely perform their particular regular job.

Railroad employees applying for either disability annuity must not be under pay at the time of application. Applicants either quit their jobs, retire or exhaust sick benefits before applying for either disability. Because of this requirement and the prohibition against working while receiving a disability annuity, most annuitants had worked for carriers that already awarded them private company pensions.

In 2008 more than 90% of Long Island Rail Road retirees were receiving disability payments. [2] A former LIRR pension department manager was arrested and charged with official misconduct for allegedly "taking money to help railroad employees find a doctor and fill out paperwork for federal disability payments".[3] All charges of corruption and official misconduct were dismissed by Supreme Court Judge Kase on December 11, 2009[4], who stated the the prosecution had mislead the Grand Jury in the indictment. In October of that year the Board voted to strengthen its oversight of disability pensions.[5]

A report produced in September 2009 by the U. S. Government Accountability Office noted that "a nearly 100-percent approval rate in a federal disability program is troubling, and could indicate lax internal controls in RRB's decision-making process, weaknesses in program design, or both." The report did not explicitly allege fraud or wrongdoing, but noted that in "prior work, we found that numerous claims with evidence from the same doctors can be an indicator of potential fraud or abuse"; unlike Metro-North, LIRR disability evidence was provided primarily by one of three doctors.[6]

History

The assignment, furlough, and recall of most railroad employees was based on seniority. When work became scarce, employees with the least seniority were the first to be laid-off. The majority of railroaders were covered by pension plans, but private pension payments could be reduced if revenues were down, and many had been cut drastically by 1932.

This practice created a conflict between older employees, who preferred the certainty of a paycheck to an unreliable pension, and younger employees, who saw opportunity for increased job security if superannuated workers could be induced to retire by guaranteeing them a decent pension.

Railroad workers formed an association to agitate for government action. Labor proposed its own plan in response, eventually compromising with the workers to produce the Railroad Retirement Act of 1934. This legislation anticipated the Social Security Act of 1935, which covered most other employees, and was tailored to address the specific concerns of railroad workers.

The 1934 Act was soon found unconstitutional, but President Roosevelt intervened to push for a lasting compromise. This pressure resulted in the Railroad Retirement and Carrier Taxing Acts of 1937, which made railroad employees the only private-sector workers outside the Social Security system to have a separate, federally administered pension plan. More than 95,000 elderly and disabled railroad employees applied for pension benefits by the end of 1937.[7]

See also

References

  1. ^ http://www.rrb.gov/pdf/nrrit/reportFY2007.pdf
  2. ^ A Disability Epidemic Among a Railroad’s Retirees New York Times, 20 September 2008
  3. ^ Ex-Manager Charged in L.I.R.R. Disability Probe New York Times, November 17 2008
  4. ^ Judge dismisses most charges against LIRR officialNewsday, December 11, 1009
  5. ^ International Business Times US Railroad Retirement Board approves reforms
  6. ^ Railroad Retirement Board: Review of Commuter Railroad Occupational Disability Claims
  7. ^ How Railroad Retirement Works Publications International, Ltd., the Editors of. "The Railroad Retirement Board." 18 April 2008. HowStuffWorks.com. February, 6th 2010.

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This page was last modified on 6 February 2010 at 20:56.

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