Updated June 18, 2018
Railroad Retirement Board: Retirement, Survivor, Disability,
Unemployment, and Sickness Benefits
Introduction
Security is counted toward tier I benefits, Social Security
The Railroad Retirement Board (RRB) administers
benefits are subtracted from tier I benefits and the worker
retirement, survivor, disability, unemployment, and
receives one payment.
sickness benefits for railroad workers and their families
under the provisions of the Railroad Retirement Act (RRA)
Tier II retirement annuities are paid in addition to tier I
and the Railroad Unemployment Insurance Act (RUIA).
benefits and any private pension and retirement savings
Work for railroads engaged in interstate commerce, railroad
plans offered by railroad employers. Tier II benefits are
associations, and railroad labor organizations is covered by
similar to private pensions and are based on the worker’s 60
the railroad benefits system instead of Social Security or the
highest months of railroad earnings.
federal-state unemployment compensation system.
Table 1. Railroad Retirement, Survivor, and Disability
During FY2017, the RRB paid nearly $12.5 billion in
Benefits, December 2017
retirement and survivor benefits to approximately 548,000
beneficiaries. Unemployment and sickness benefits totaling
Number of Benefits
$106 million were paid to approximately 28,000 claimants.
Type of Benefit
(% of Total Benefits)
The number of railroad workers has been declining since
Age-Based
190,450 (29.4)
the 1950’s, although the rate of decline has been irregular
and recent years have seen increases in railroad
Disability
73,860 (11.4)
employment after an all-time low of 215,000 in January
Supplemental
121,902 (18.8)
2010. Railroad employment peaked in April 2015 at
253,000, the highest level since November 1999, and then
Spouse
147,437 (22.8)
declined through FY2016, falling to 224,000.
Widow(er)
104,153 (16.1)
The RRB consists of three members appointed by the
Children
8,454 (1.3)
President with the advice and consent of the Senate to
staggered five-year terms. One member is appointed on the
Partition Payments
1,737 (0.3)
recommendation of the railroad industry, one on the
Total
647,993 (100)
recommendation of railroad labor, and the chair is
appointed to represent the public.
Source: Railroad Retirement Board, Bureau of the Actuary,
Quarterly Benefit Statistics, October-December 2017, March 2018,
Retirement, Survivor, and Disability
Table 1.
Benefits
Notes: Partition payments are made to spouses pursuant to divorce
Similar to Social Security, the RRB provides retirement,
rulings. Beneficiaries may be eligible for more than one type of
survivor, and disability benefits to covered employees and
benefit.
their families who meet insurance requirements by working
in covered railroad employment and paying RRA payroll
Supplemental annuities are paid to employees first hired
taxes.
in railroad work before October 1981 and who are aged 65
or older with at least 25 years of railroad service or aged 60
Retirement Benefits
with at least 20 years of service. Workers must also have a
Tier I retirement annuities are designed to be nearly
current connection to the railroad industry (generally one
equivalent to Social Security retirement benefits and are
year of railroad work in the previous 30 months). In
calculated using the Social Security benefit formula. To be
addition, vested dual benefits are paid to those who were
eligible for retirement benefits, a person must have at least
insured for both railroad retirement and Social Security in
10 years of railroad service, or at least five years after 1995
1974 when the two-tier railroad retirement benefit structure
and a sufficient combination of railroad service and work
was established.
covered by Social Security.
Spouses of annuitants may receive benefits based on the
Tier I benefits are more generous than Social Security in
worker’s earnings. Unlike Social Security, children are not
that, at the age of 60, railroad workers with at least 30 years
eligible for their own benefits based on the record of a
of covered railroad work may receive unreduced retirement
living beneficiary but are factored into the eligibility of
annuities, unlike Social Security which only pays
spouses for benefits and the presence of a minor child or
unreduced benefits at full retirement age and pays reduced
adult disabled before age 22 may increase a worker’s
benefits at age 62. Because work covered by Social
annuity amount under the RRA’s Special Guaranty
provision.
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
Survivor Benefits
in addition to any paid leave or private insurance an
After the death of a covered worker, surviving spouses,
employee may have. For sickness benefits, a worker must
former spouses, children, and other dependents may be
be unable to work because of illness or injury. Sickness
eligible to receive survivor benefits if the worker had a
benefits are distinct from disability benefits because they
current connection to the railroad industry at the time of
are intended to cover a finite, temporary period of time. To
death. Benefits for children stop when the child marries or
receive unemployment benefits, a worker must be ready,
reaches age 18 (age 19 if still enrolled in elementary or
willing, and able to work.
secondary school), unless the child has a disability that
began before age 22 in which case the benefits continue for
The maximum daily benefit payable in the benefit year that
life or duration of disability.
began July 1, 2017, is $72, and maximum benefits for
biweekly claims is $720. However, due to sequestration
Disability Benefits
pursuant to the Budget Control Act of 2011 (P.L. 112-25, as
Railroad workers may be eligible for disability benefits if
amended), the railroad unemployment and sickness
they are unable to work because of physical or mental
insurance benefits is reduced by 6.6% through September
impairments. Total disability benefits are paid to workers
30, 2018. The maximum daily benefit rate $72 is reduced
who are permanently and totally disabled and unable to
6.6% to $67.25 and the maximum biweekly benefit is
perform any work. Occupational disability benefits are paid
reduced 6.6% to $672.48.
to workers unable to perform their regular railroad
occupations if they are aged 60 or older with at least 10
Unemployment and sickness beneficiaries may receive
years of railroad service or any age with at least 20 years of
normal benefits for up to 26 weeks in a benefit year, or until
service. A current connection to the railroad industry is also
the benefits they receive equal their creditable earnings in
required for occupational disability benefits.
the prior year. Employees with at least 10 years of covered
railroad service may qualify for extended benefits for 13
Financing of Retirement, Survivor, and Disability
weeks after they have exhausted normal benefits.
Benefits
Payroll taxes are the largest funding source for railroad
Financing of Unemployment and Sickness Benefits
retirement, survivor, and disability benefits. The tier I tax is
Railroad unemployment and sickness benefits are financed
the same as the Social Security payroll tax: railroad
solely by railroad employers. Employers’ contributions are
employers and employees each pay 6.2% on earnings up to
based on the taxable earnings of their employees.
$128,400 in 2018. The tier II tax is set each year based on
Employers’ tax rates depend on the past rates of
the railroad retirement system’s asset balances, benefit
unemployment and sickness claims by employees. For
payments, and administrative costs. In 2018, the tier II tax
calendar year 2018, the tax rate ranges from 2.15% to 12%
is 13.1% for employers and 4.9% for employees on
on the first $1,560 paid to each employee per month due to
earnings up to $95,400. Tier II taxes are used to finance tier
a 1.5% surcharge. A surcharge is assessed in any year in
II benefits, excess tier I benefits (the portion of tier I
which the Railroad Unemployment Insurance Account falls
benefits that are more generous than Social Security
below a threshold level.
retirement benefits), and supplemental annuities.
Railroad unemployment funds not needed immediately are
Revenues not needed to pay current tier I benefits in excess
deposited into an account that is part of the national
of Social Security benefits, tier II benefits, supplemental
Unemployment Trust Fund (UTF), and the railroad account
annuities, and associated administrative costs are held in the
receives interest based on these deposits.
National Railroad Retirement Investment Trust (NRRIT),
which is invested in both government securities and private
For Additional Information
equities, unlike the Social Security trust funds, which are
CRS Report RS22350, Railroad Retirement Board:
only invested in government securities.
Retirement, Survivor, Disability, Unemployment, and
Sickness Benefits, by Julie M. Whittaker.
The railroad retirement system receives an annual financial
interchange payment from the Social Security system. The
CRS Report RS22782, Railroad Retirement Board: Trust
financial interchange is designed to place the Social
Fund Investment Practices, by Scott D. Szymendera.
Security trust funds in the same position they would have
been in if railroad employment had been covered under
CRS Report R43542, How Social Security Benefits Are
Social Security since Social Security’s inception. In
Computed: In Brief, by Katelin P. Isaacs.
FY2016, the financial interchange payment accounted for
33.6% of gross railroad retirement system revenue. The
CRS Report RL33362, Unemployment Insurance:
railroad retirement, survivor, and disability system is
Programs and Benefits, by Julie M. Whittaker and Katelin
projected to remain solvent over at least the next 25 years.
P. Isaacs.
Unemployment and Sickness Benefits
Zhe Li, Analyst in Social Policy
Railroad workers may qualify for daily unemployment and
sickness benefits under the RUIA. These benefits are paid
IF10481

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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits



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