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Updated March 26, 2020
Railroad Retirement Board: Retirement, Survivor, Disability,
Unemployment, and Sickness Benefits
Introduction
age 62. Because work covered by Social Security is counted
The Railroad Retirement Board (RRB) administers
toward tier I benefits, if a railroad retirement annuitant is
retirement, survivor, disability, unemployment, and
also awarded Social Security benefits, those benefits are
sickness benefits for railroad workers and their families
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 FY2018, the RRB paid nearly $12.7 billion in
Table 1. Railroad Retirement, Survivor, and Disability
retirement and survivor benefits to approximately 540,000
Benefits, September 2019
beneficiaries. Unemployment and sickness benefits totaling
Number of Benefits
$92.6 million were paid to approximately 25,000 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
188,372 (29.7%)
and recent years have seen increases in railroad
Supplemental Annuities
117,831 (18.6%)
employment after a low of 215,000 workers in January
2010. Since reaching that 2010 low, railroad employment
Disability
71,027 (11.2%)
again peaked in April 2015 at 253,000, and then generally
Spouses
148,163 (23.4%)
declined through October 2019, falling to 206,000 workers.
Surviving Spouses
98,319 (15.5%)
The RRB consists of three members appointed by the
Surviving Children
7,957 (1.3%)
President with the advice and consent of the Senate to
Partition Payments
2,050 (0.3%)
staggered five-year terms. One member is appointed on the
recommendation of the railroad industry, one on the
Total
633,719 (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, July-September 2019, January 2020, Table
1.
Retirement, Survivor, and Disability
Notes: Partition payments are made to spouses pursuant to divorce
Benefits
rulings. Beneficiaries may be eligible for more than one type of
Similar to Social Security, the RRB provides retirement,
benefit. The total number of benefits does not include the 23
survivor, and disability benefits to covered employees and
dependent parents’ annuities.
their families who meet insurance requirements by working
in covered railroad employment and paying RRA payroll
Supplemental annuities are paid to employees first hired in
taxes (see Table 1).
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.
Disability Benefits
Tier I benefits are more generous than Social Security in
Railroad workers may be eligible for disability benefits if
that, at the age of 60, railroad workers with at least 30 years
they are unable to work because of physical or mental
of covered railroad work may receive unreduced retirement
impairments. Total disability benefits are paid to workers
annuities, unlike Social Security that only pays unreduced
who are permanently and totally disabled and unable to
benefits at full retirement age and pays reduced benefits at
perform any work. Occupational disability benefits are paid
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
to workers unable to perform their regular railroad
Unemployment and Sickness Benefits
occupations if they are aged 60 or older with at least 10
Railroad workers may qualify for daily unemployment and
years of railroad service or any age with at least 20 years of
sickness benefits under the RUIA. These benefits are paid
service. A current connection to the railroad industry is also
in addition to any paid leave or private insurance an
required for occupational disability benefits.
employee may have. To receive unemployment benefits, a
worker must be ready, willing, and able to work. For
Spouse Benefits
sickness benefits, a worker must be unable to work because
Spouses of annuitants may receive benefits based on the
of illness or injury. Sickness benefits are distinct from
worker’s earnings. Unlike Social Security, children are not
disability benefits because they are intended to cover a
eligible for their own benefits based on the record of a
finite, temporary period of time.
living beneficiary but are factored into the eligibility of
spouses for benefits and the presence of a minor child or
The maximum daily benefit payable in the benefit year that
adult disabled before age 22 may increase a worker’s
began July 1, 2019, is $78, and maximum benefits for
annuity amount under the RRA’s Special Guaranty
biweekly claims is $780. However, due to sequestration
provision.
pursuant to the Budget Control Act of 2011 (P.L. 112-25, as
amended), the railroad unemployment and sickness
Survivor Benefits
insurance benefits is reduced by 5.9% from October 1,
After the death of a covered worker, surviving spouses,
2019, through September 30, 2020. The maximum daily
former spouses, children, and other dependents may be
benefit rate $78 is reduced by 5.9% to $73.40 and the
eligible to receive survivor benefits if the worker had a
maximum biweekly benefit is reduced by 5.9% to $733.98.
current connection to the railroad industry at the time of
death. Benefits for children stop when the child marries or
Unemployment and sickness beneficiaries may receive
reaches age 18 (age 19 if still enrolled in elementary or
normal benefits for up to 26 weeks in a benefit year, or until
secondary school), unless the child has a disability that
the benefits they receive equal their creditable earnings in
began before age 22 in which case the benefits continue for
the prior year. Employees with at least 10 years of covered
life or duration of disability.
railroad service may qualify for extended benefits for 13
weeks after they have exhausted normal benefits.
Financing of Retirement, Survivor, and Disability
Benefits
Financing of Unemployment and Sickness Benefits
Payroll taxes are the largest funding source for railroad
Railroad unemployment and sickness benefits are financed
retirement, survivor, and disability benefits. The tier I tax is
solely by railroad employers. Employers’ contributions are
the same as the Social Security payroll tax: railroad
based on the taxable earnings of their employees. An
employers and employees each pay 6.2% on earnings up to
employer’s tax rates depend on the past rates of
$137,700 in 2020. The tier II tax is set each year based on
unemployment and sickness claims by its employees. For
the railroad retirement system’s asset balances, benefit
calendar year 2020, the tax rate ranges from 0.65% to
payments, and administrative costs. In 2020, the tier II tax
12.00% on the first $1,655 paid to each employee per
is 13.1% for employers and 4.9% for employees on
month, which includes a 1.5% surcharge. A surcharge is
earnings up to $102,300. Tier II taxes are used to finance
assessed in any year in which the Railroad Unemployment
tier II benefits, excess tier I benefits (the portion of tier I
Insurance Account falls below a threshold level.
benefits that are more generous than Social Security
retirement benefits), and supplemental annuities.
Railroad unemployment and sickness funds not needed
immediately are deposited into an account that is part of the
Revenues not needed to pay current tier I benefits in excess
national Unemployment Trust Fund (UTF), and the railroad
of Social Security benefits, tier II benefits, supplemental
account receives interest based on these deposits.
annuities, or associated administrative costs are held in the
National Railroad Retirement Investment Trust (NRRIT).
For Additional Information
The NRRIT is invested in both government securities and
CRS Report RS22350, Railroad Retirement Board:
private equities, unlike the Social Security trust funds,
Retirement, Survivor, Disability, Unemployment, and
which are only invested in government securities.
Sickness Benefits
The railroad retirement system receives an annual financial
CRS Report RS22782, Railroad Retirement Board: Trust
interchange payment from the Social Security system. The
Fund Investment Practices
financial interchange is designed to place the Social
Security trust funds in the same position they would have
CRS Report RL33362, Unemployment Insurance:
been in if railroad employment had been covered under
Programs and Benefits
Social Security since Social Security’s inception. In
FY2018, the financial interchange payment accounted for
Zhe Li, Analyst in Social Policy
32.4% of gross railroad retirement system revenue. The
railroad retirement, survivor, and disability system is
IF10481
projected to remain solvent over at least the next 25 years.
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
Disclaimer
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