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Updated February 19, 2021
Railroad Retirement Board: Retirement, Survivor, Disability,
Unemployment, and Sickness Benefits
Introduction
Tier II retirement annuities are paid in addition to tier I
The Railroad Retirement Board (RRB) administers
benefits and any private pension and retirement savings
retirement, survivor, disability, unemployment, and
plans offered by railroad employers. Tier II benefits are
sickness benefits for railroad workers and their families
similar to private pensions and are based on the worker’s 60
under the provisions of the Railroad Retirement Act (RRA)
highest months of railroad earnings.
and the Railroad Unemployment Insurance Act (RUIA).
Work for railroads engaged in interstate commerce, railroad
Table 1. Railroad Retirement, Survivor, and Disability
associations, and railroad labor organizations is covered by
Benefits, June 2020
the railroad benefits system instead of Social Security or the
Number of Benefits
federal-state unemployment compensation system.
Type of Benefit
(% of Total Benefits)
During FY2019, the RRB paid $13.0 billion in retirement
Retirement
186,479 (29.8%)
and survivor benefits to approximately 535,000
Supplemental Annuities
115,116 (18.4%)
beneficiaries. Unemployment and sickness benefits totaling
$93.4 million were paid to approximately 23,000 claimants.
Disability
69,725 (11.2%)
The number of railroad workers has been generally
Spouses
147,449 (23.6%)
declining since the 1950s. In December 2020, about
193,000 railroad workers were employed.
Surviving Spouses
96,070 (15.4%)
Surviving Children
7,812 (1.3%)
The RRB consists of three members appointed by the
President with the advice and consent of the Senate to
Partition Payments
2,187 (0.4%)
staggered five-year terms. One member is appointed on the
Total
624, 838 (100%)
recommendation of the railroad industry, one on the
Source: Railroad Retirement Board, Bureau of the Actuary,
recommendation of railroad labor, and the chair is
Quarterly Benefit Statistics, April-June 2020, Table1.
appointed to represent the public.
Notes: Partition payments are made to spouses pursuant to divorce
rulings. Beneficiaries may be eligible for more than one type of
Retirement, Survivor, and Disability
benefit. The total number of benefits does not include the 14
Benefits
dependent parents’ annuities.
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 that only pays unreduced
to workers unable to perform their regular railroad
benefits at full retirement age and pays reduced benefits at
occupations if they are aged 60 or older with at least 10
age 62. Because work covered by Social Security is counted
years of railroad service or any age with at least 20 years of
toward tier I benefits, if a railroad retirement annuitant is
service. A current connection to the railroad industry is also
also awarded Social Security benefits, those benefits are
required for occupational disability benefits.
subtracted from tier I benefits.
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemploy ment, and Sickness Benefits
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, 2020, is $80, and maximum benefits for
provision.
biweekly claims is $800. Due to sequestration pursuant to
the Budget Control Act of 2011 (P.L. 112-25, as amended),
Survivor Benefits
the railroad unemployment and sickness insurance benefits
After the death of a covered worker, surviving spouses,
were reduced by 5.9% through September 30, 2020, and by
former spouses, children, and other dependents may be
5.7% from October 1, 2020, to January 2, 2021. The
eligible to receive survivor benefits if the worker had a
Continued Assistance to Rail Workers Act of 2020
current connection to the railroad industry at the time of
(CARWA; enacted under P.L. 116-260 on December 27,
death. Benefits for children stop when the child marries or
2020) granted temporary relief from sequestration
reaches age 18 (age 19 if still enrolled in elementary or
beginning January 3, 2021, through 30 days after
secondary school), unless the child has a disability that
termination of the presidential declaration of a national
began before age 22 in which case the benefits continue for
emergency concerning Coronavirus Disease 2019.
life or duration of disability.
Unemployment and sickness beneficiaries may receive
Financing of Retirement, Survivor, and Disability
normal benefits for up to 26 weeks in a benefit year, or until
Benefits
the benefits they receive equal their creditable earnings in
Payroll taxes are the largest funding source for railroad
the prior year. There is generally a one-week waiting period
retirement, survivor, and disability benefits. The tier I tax is
for unemployment and sickness benefits. Employees with at
the same as the Social Security payroll tax: railroad
least 10 years of covered railroad service may qualify for
employers and employees each pay 6.2% on earnings up to
extended benefits for 13 weeks after they have exhausted
$142,800 in 2021. The tier II tax is set each year based on
normal benefits. The Coronavirus Aid, Relief, and
the railroad retirement system’s asset balances, benefit
Economic Security Act (CARES Act; P.L. 116-136; March
payments, and administrative costs. In 2021, the tier II tax
27, 2020) and CARWA temporarily authorized additional
is 13.1% for employers and 4.9% for employees on
benefit payments and additional weeks of benefits to
earnings up to $106,200. Tier II taxes are used to finance
qualified unemployed railroad workers and waived the one-
tier II benefits, excess tier I benefits (the portion of tier I
week waiting period for both unemployment and sickness
benefits that are more generous than Social Security
benefits under the RUIA.
retirement benefits), and supplemental annuities.
Financing of Unemployment and Sickness Benefits
Revenues not needed to pay current tier I benefits in excess
Railroad unemployment and sickness benefits are financed
of Social Security benefits, tier II benefits, supplemental
solely by railroad employers. Employers’ contributions are
annuities, or associated administrative costs are held in the
based on the taxable earnings of their employees. An
National Railroad Retirement Investment Trust (NRRIT).
employer’s tax rates depend on the past rates of
The NRRIT is invested in both government securities and
unemployment and sickness claims by its employees. For
private equities, unlike the Social Security trust funds,
calendar year 2021, the tax rate ranges from 3.15% to
which are only invested in government securities.
12.00% on the first $1,710 paid to each employee per
month, which includes a 2.5% surcharge. A surcharge is
The railroad retirement system receives an annual financial
assessed in any year in which the Railroad Unemployment
interchange payment from the Social Security system. The
Insurance Account falls below a threshold level.
financial interchange is designed to place the Social
Security trust funds in the same position they would have
Railroad unemployment and sickness funds not needed
been in if railroad employment had been covered under
immediately are deposited into an account that is part of the
Social Security since Social Security’s inception. In
national Unemployment Trust Fund (UTF), and the railroad
FY2019, the financial interchange payment accounted for
account receives interest based on these deposits.
35.2% of gross railroad retirement system revenue. The
railroad retirement, survivor, and disability system is
For Additional Information
projected to remain solvent over at least the next 25 years.
CRS Report RS22350, Railroad Retirement Board:
Retirement, Survivor, Disability, Unemployment, and
Unemployment and Sickness Benefits
Sick ness Benefits
Railroad workers may qualify for daily unemployment and
sickness benefits under the RUIA. These benefits are paid
Zhe Li, Analyst in Social Policy
in addition to any paid leave or private insurance an
employee may have. To receive unemployment benefits, a
IF10481
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemploy ment, and Sickness Benefits
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