Railroads Seek Retirement Law Change
Railroad management and labor unions have agreed on changes they want to make in the Railroad Retirement Act, and now they want Congress to enact them.
The Railroad Retirement Act is the industry’s version of Social Security and dates to the same period. The first railroad retirement legislation was enacted in 1934, one year before the Social Security Act expanded such benefits to more Americans.
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The agreement, announced Jan. 14, was reached by a coalition of labor unions and the National Railway Labor Conference, which represents U.S. freight railroads.
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The subject of much revision over the years, railroad retirement benefits now consist of two tiers. The first tier is similar to Social Security and is funded by a 7.65% payroll tax levied on employers and employees. The second tier, which was the object of the recent negotiations, resembles a private pension plan. Up to now, it has been funded by a 16.1% payroll tax on employers and a 4.9% tax on employees, but the new agreement would reduce the employer tax to 13.1%.
