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Updated October 2, 2019
Railroad Retirement Board: Retirement, Survivor, Disability,
Unemployment, and Sickness Benefits
Introduction
benefits at age 62. Because work covered by Social
The Railroad Retirement Board (RRB) administers
Security is counted toward tier I benefits, if a railroad
retirement, survivor, disability, unemployment, and
retirement annuitant is also awarded Social Security
sickness benefits for railroad workers and their families
benefits, those benefits are subtracted from tier I benefits.
under the provisions of the Railroad Retirement Act (RRA)
and the Railroad Unemployment Insurance Act (RUIA).
Tier II retirement annuities are paid in addition to tier I
Work for railroads engaged in interstate commerce, railroad
benefits and any private pension and retirement savings
associations, and railroad labor organizations is covered by
plans offered by railroad employers. Tier II benefits are
the railroad benefits system instead of Social Security or the
similar to private pensions and are based on the worker’s 60
federal-state unemployment compensation system.
highest months of railroad earnings.
During FY2017, the RRB paid nearly $12.5 billion in
Table 1. Railroad Retirement, Survivor, and Disability
retirement and survivor benefits to approximately 548,000
Benefits, March 2019
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
the 1950s, although the rate of decline has been irregular
Retirement
188,893 (29.6%)
and recent years have seen increases in railroad
Supplemental Annuities
119,032 (18.7%)
employment after an all-time low of 215,000 in January
2010. Since reaching a low in 2010, railroad employment
Disability
71,698 (11.3%)
again peaked in April 2015 at 253,000, and then declined
Spouses
147,975 (23.2%)
through FY2017, falling to 221,000.
Surviving Spouses
99,462 (15.6%)
The RRB consists of three members appointed by the
Surviving Children
8,115 (1.3%)
President with the advice and consent of the Senate to
Partition Payments
1,960 (0.3%)
staggered five-year terms. One member is appointed on the
recommendation of the railroad industry, one on the
Total
637,135 (100%)
recommendation of railroad labor, and the chair is
Source: Railroad Retirement Board, Bureau of the Actuary,
appointed to represent the public.
Quarterly Benefit Statistics, January-March 2019, July 2019, Table 1.
Retirement, Survivor, and Disability
Notes: Partition payments are made to spouses pursuant to divorce
rulings. Beneficiaries may be eligible for more than one type of
Benefits
benefit.
Similar to Social Security, the RRB provides retirement,
survivor, and disability benefits to covered employees and
Supplemental annuities are paid to employees first hired in
their families who meet insurance requirements by working
railroad work before October 1981, and who are aged 65 or
in covered railroad employment and paying RRA payroll
older with at least 25 years of railroad service, or aged 60
taxes (see Table 1).
with at least 20 years of service. Workers must also have a
current connection to the railroad industry (generally one
Retirement Benefits
year of railroad work in the previous 30 months). In
Tier I retirement annuities are designed to be nearly
addition, vested dual benefits are paid to those who were
equivalent to Social Security retirement benefits and are
insured for both railroad retirement and Social Security in
calculated using the Social Security benefit formula. To be
1974 when the two-tier railroad retirement benefit structure
eligible for retirement benefits, a person must have at least
was established.
10 years of railroad service, or at least five years after 1995
and a sufficient combination of railroad service and work
Disability Benefits
covered by Social Security.
Railroad workers may be eligible for disability benefits if
they are unable to work because of physical or mental
Tier I benefits are more generous than Social Security in
impairments. Total disability benefits are paid to workers
that, at the age of 60, railroad workers with at least 30 years
who are permanently and totally disabled and unable to
of covered railroad work may receive unreduced retirement
perform any work. Occupational disability benefits are paid
annuities, unlike Social Security which only pays
to workers unable to perform their regular railroad
unreduced benefits at full retirement age and pays reduced
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
occupations if they are aged 60 or older with at least 10
Unemployment and Sickness Benefits
years of railroad service or any age with at least 20 years of
Railroad workers may qualify for daily unemployment and
service. A current connection to the railroad industry is also
sickness benefits under the RUIA. These benefits are paid
required for occupational disability benefits.
in addition to any paid leave or private insurance an
employee may have. To receive unemployment benefits, a
Spouse Benefits
worker must be ready, willing, and able to work. For
Spouses of annuitants may receive benefits based on the
sickness benefits, a worker must be unable to work because
worker’s earnings. Unlike Social Security, children are not
of illness or injury. Sickness benefits are distinct from
eligible for their own benefits based on the record of a
disability benefits because they are intended to cover a
living beneficiary but are factored into the eligibility of
finite, temporary period of time.
spouses for benefits and the presence of a minor child or
adult disabled before age 22 may increase a worker’s
The maximum daily benefit payable in the benefit year that
annuity amount under the RRA’s Special Guaranty
began July 1, 2019, is $78, and maximum benefits for
provision.
biweekly claims is $780. However, due to sequestration
pursuant to the Budget Control Act of 2011 (P.L. 112-25, as
Survivor Benefits
amended), the railroad unemployment and sickness
After the death of a covered worker, surviving spouses,
insurance benefits is reduced by 5.9% from October 1, 2019
former spouses, children, and other dependents may be
through September 30, 2020. The maximum daily benefit
eligible to receive survivor benefits if the worker had a
rate $78 is reduced by 5.9% to $73.40 and the maximum
current connection to the railroad industry at the time of
biweekly benefit is reduced by 5.9% to $733.98.
death. Benefits for children stop when the child marries or
reaches age 18 (age 19 if still enrolled in elementary or
Unemployment and sickness beneficiaries may receive
secondary school), unless the child has a disability that
normal benefits for up to 26 weeks in a benefit year, or until
began before age 22 in which case the benefits continue for
the benefits they receive equal their creditable earnings in
life or duration of disability.
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. An
$132,900 in 2019. The tier II tax is set each year based on
employer’s tax rates depend on the past rates of
the railroad retirement system’s asset balances, benefit
unemployment and sickness claims by its employees. For
payments, and administrative costs. In 2019, the tier II tax
calendar year 2019, the tax rate ranges from 2.15% to
is 13.1% for employers and 4.9% for employees on
12.0% on the first $1,605 paid to each employee per month,
earnings up to $98,700. Tier II taxes are used to finance tier
which includes a 1.5% surcharge. A surcharge is assessed
II benefits, excess tier I benefits (the portion of tier I
in any year in which the Railroad Unemployment Insurance
benefits that are more generous than Social Security
Account falls below a threshold level.
retirement benefits), and supplemental annuities.
Railroad unemployment and sickness funds not needed
Revenues not needed to pay current tier I benefits in excess
immediately are deposited into an account that is part of the
of Social Security benefits, tier II benefits, supplemental
national Unemployment Trust Fund (UTF), and the railroad
annuities, or associated administrative costs are held in the
account receives interest based on these deposits.
National Railroad Retirement Investment Trust (NRRIT).
The NRRIT is invested in both government securities and
For Additional Information
private equities, unlike the Social Security trust funds,
CRS Report RS22350, Railroad Retirement Board:
which are only invested in government securities.
Retirement, Survivor, Disability, Unemployment, and
Sickness Benefits
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
Security trust funds in the same position they would have
been in if railroad employment had been covered under
CRS Report RL33362, Unemployment Insurance:
Social Security since Social Security’s inception. In
Programs and Benefits
FY2017, the financial interchange payment accounted for
32.6% of gross railroad retirement system revenue. The
Zhe Li, Analyst in Social Policy
railroad retirement, survivor, and disability system is
projected to remain solvent over at least the next 25 years.
IF10481
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
Disclaimer
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