Railroad Retirement Board:
Trust Fund Investment Practices
Updated March 15, 2021
Congressional Research Service
https://crsreports.congress.gov
RS22782

Railroad Retirement Board: Trust Fund Investment Practices

Summary
The Railroad Retirement Board (RRB), an independent federal agency, administers retirement,
survivor, disability, unemployment, and sickness insurance for railroad workers and their
families. Railroad retirement payroll taxes include two tiers—Tier I and Tier II taxes. The Tier I
tax finances the Tier I railroad retirement benefit that is equivalent to Social Security benefits and
the Tier II tax finances the Tier II benefit, Tier I benefits in excess of Social Security benefits, and
supplemental annuities.
Since 2002, Tier II tax revenues in excess of obligatory RRB benefits and associated
administrative costs have been invested in private stocks, bonds, and other investments. Prior to
the Railroad Retirement and Survivors’ Improvement Act of 2001 (RRSIA; P.L. 107-90), surplus
railroad retirement assets could only be invested in U.S. government securities—just as the Social
Security trust funds must be invested. The RRSIA established the National Railroad Retirement
Investment Trust (NRRIT; hereinafter, the Trust) to manage and invest part of the RRB’s assets in
much the same way that the assets of private-sector and most state and local government pension
plans are invested. The remainder of RRB’s assets continues to be invested solely in U.S.
government securities.
Congress structured the Trust in an effort to ensure investment independence and limit political
interference. It also aimed to increase railroad retirement system funding, add enhanced benefits,
potential y reduce taxes, and protect system financing in case of market downturns. The Trust’s
assets are invested in a diversified portfolio, both to minimize investment risk and avoid
disproportionate influence over an industry or firm. The Trust is a tax-exempt entity independent
of the federal government, and it is not subject to the same oversight as federal agencies.
However, the RRSIA requires an annual management report to Congress.
From its inception in February 2002 to the end of 2020, $21.3 bil ion has been transferred to the
Trust from the RRB and $28.1 bil ion has been transferred from the Trust to pay railroad
retirement benefits. At the end of 2020, the net asset value of the Trust was $26.3 bil ion. The
Trust’s investments have general y followed the markets’ recent performance. From FY2003 to
FY2019, the Trust’s annual returns averaged 7.9%, slightly lower than expectations of the bil ’s
drafters, who assumed nominal annual returns of 8.0%. As the Trust’s investment portfolio
diversified over time, its administrative expenses steadily increased, to 36 basis points in FY2011,
but fel to 27 basis points in FY2019, and remained low when compared with other mutual funds
in 2019.
The combined fair market value of Tier II taxes and Trust assets is designed to maintain four to
six years’ worth of RRB benefits and administrative expenses. To maintain this balance, the
Railroad Retirement Tier II tax rates automatical y adjust as needed. This tax adjustment does not
require congressional action. The Railroad Retirement Tier II tax rates increased in 2013 and
most recently in 2015.
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Railroad Retirement Board: Trust Fund Investment Practices

Background
The Railroad Retirement Act authorizes retirement, survivor, and disability benefits for railroad
workers and their families.1 The Railroad Retirement Board (RRB), an independent federal
agency, administers these benefits. Workers covered by the RRB include those employed by
railroads engaged in interstate commerce and related subsidiaries, railroad associations, and
railroad labor organizations. These benefits are earned by railroad workers and their families in
lieu of Social Security.
Railroad retirement benefits are divided into two tiers. Tier I benefits are general y computed
using the Social Security benefit formula, on the basis of earnings covered by either the Railroad
Retirement or Social Security programs. In some cases, RRB Tier I benefits can be higher than
comparable Social Security benefits. For example, RRB beneficiaries may receive unreduced Tier
I retirement benefits as early as aged 60 if they have at least 30 years of railroad service; Social
Security beneficiaries may receive unreduced retirement benefits only when they reach their full
retirement ages, currently rising from aged 65 to 67. RRB Tier II benefits are similar to private
pension benefits and are based only on railroad work.2
The Tier I railroad retirement benefit that is equivalent to Social Security benefits is mainly
finance by Tier I payroll taxes (typical y the same rate as the 12.4% Social Security payroll tax—
6.2% for employers and 6.2% for employees—on earnings up to $142,800 in 2021) and Social
Security’s financial interchange transfers.3 Tier II benefits, Tier I benefits in excess of Social
Security benefits, and supplemental annuities4 are mainly financed by Tier II payroll taxes
(currently 13.1% for employers and 4.9% for employees on earnings up to $106,200 in 2021) and
transfers from the National Railroad Retirement Investment Trust (NRRIT; hereinafter, the Trust).
History of the Trust
Beginning in 2002, Tier II tax revenues in excess of obligatory benefits and associated
administrative costs have been transferred from the Railroad Retirement Accounts to the Trust,
which is invested in private stocks, bonds, and other investments. Prior to the Railroad
Retirement and Survivors’ Improvement Act of 2001 (RRSIA; P.L. 107-90), surplus railroad
retirement assets could be invested only in U.S. government securities—just as the Social

1 45 U.S.C. §231 et seq. For additional information on the RRB, see CRS Report RS22350, Railroad Retirement
Board: Retirem ent, Survivor, Disability, Unem ploym ent, and Sickness Benefits.
2 Railroad employers also finance a supplemental annuity program for certain railroad employees hired before October
1981. General revenues finance a vested dual benefit for certain railroad employees who were eligible for benefits
before 1975.
3 T he financial interchange is intended to place the Social Security T rust Funds in the same position in which they
would have been had railroad employment been covered by the Social Security since Social Security’s inception. T his
involves computing the amount of Social Security taxes that would have been collected on railroad employment, and
comput ing the amount of additional benefits which Social Security would have paid to railroad retirement beneficiaries
during the same fiscal year. When benefit reimbursements exceed payroll taxes, the difference, with an allowance for
interest and administrative expenses, is transferred from the Social Security T rust Funds to the Social Security
Equivalent Benefits Account . If taxes exceed benefit reimbursements (this has not happened since 1951), a transfer
would be made in favor of the Social Security T rust Funds.
4 Supplemental annuities are payable to employees first hired before October 1981, aged 60 with at least 30 years of
covered railroad service or aged 65 and older with at least 25 years of covered railroad service, and a current
connection with the railroad industry.
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Security trust funds must be invested.5 The RRSIA established the Trust to manage and invest
assets in the Railroad Retirement Account in much the same way that the assets of private-sector
retirement plans are invested. The RRB also receives transfers from the Trust, as needed, to pay
railroad retirement and survivor benefits. Assets in the Social Security Equivalent Benefits
Account, which are used for RRB Tier I benefits that are equivalent to Social Security benefits,
continue to be invested solely in U.S. government bonds, as required by law.
Since February 2002 when railroad retirement funds were first invested through the Trust, a total
of $21.3 bil ion has been transferred to the Trust from the RRB,6 and, as of the end of 2020, $28.1
bil ion in earnings have been transferred from the Trust to the RRB to pay railroad benefits and
administrative expenses.7 From its inception to the end of 2020, the Trust has earned a total of
$33.1 bil ion. At the end of 2020, the market value of the Trust’s managed assets was $26.3
bil ion.8
Structure of the Trust
Independence
Congress structured the Trust to be independent and free of political interference. As such, the
Trust is a tax-exempt entity independent of the RRB and is not part of the federal government,
which has no responsibilities for administering RRB benefits. The Trust’s trustees are required to
act solely in the interest of the RRB and the railroad retirement system participants. The fiduciary
rules governing the trustees are similar to those required by the law that governs the private
pension system, the Employee Retirement Income Security Act (ERISA).9
The board of the Trust is made up of seven trustees who have expertise in managing financial
investments and pension plans. Three of the trustees are selected by railroad labor unions, three
by railroad management, and one by the other six trustees. Each trustee serves a three-year term.
A professional staff handles the Trust’s day-to-day operations.
Independent investment managers invest the Trust’s assets according to the investment guidelines
established by the trustees. Each investment manager
 may control no more than 10% of the Trust’s assets;
 must vote al proxies he or she holds in the Trust’s portfolio in the sole interest of
railroad retirement participants and beneficiaries;
 must certify each year that al proxies have been voted in the sole interest of
railroad retirement participants and beneficiaries; and

5 T he Social Security trust funds may not be invested in private markets. For additional information on current
practices, see CRS In Focus IF10564, Social Security Trust Fund Investm ent Practices.
6 National Railroad Retirement Investment Trust (NRRIT ), Quarterly Update for the Period Ending December 31,
2020, January 2021, at https://www.rrb.gov/sites/default/files/2021-02/qrtly122020.pdf. T he T rust has received no
transfers from the RRB since the end of FY2004.
7 NRRIT , Quarterly Update for the Period Ending December 31, 2020 , p. 1.
8 NRRIT , Quarterly Update for the Period Ending December 31, 2020 , p. 2.
9 For additional information on ERISA, see CRS Report 95-926, Regulating Private Pensions: A Brief Summary of
ERISA.
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 must record votes and provide them to the Trust upon request.10
Goals
Congress designed the Trust to increase RRB funding. Investing railroad retirement funds in
private markets was expected to yield higher average annual returns than investing solely in
government securities. The higher returns were intended to pay for the enhanced benefits that
were established in the RRSIA and to potential y reduce future tax rates for railroad employers
and employees.11
Impact on Railroad Retirement Tier II Tax Rates
Under the RRSIA, Tier II taxes on both employers and employees are automatical y adjusted
according to the average account benefits ratio. The average account benefits ratio (ABR) is the
average of the 10 most recent annual ABRs. The ABR is the ratio of the combined fair market
value of Railroad Retirement Account and Trust assets as of the close of the fiscal year to the total
RRB benefits and administrative expenses paid from the Railroad Retirement Account and the
Trust in that fiscal year. A higher average ABR wil result in a lower Tier II tax rate and
consequently lower future tax income, whereas a lower average ABR results in higher Tier II tax
rates and income.
Depending on the average ABR, Tier II taxes for employers can range between 8.2% and 22.1%
and the Tier II tax rate for employees is capped at 4.9%. Since the Trust’s inception, Tier II tax
rates have been lowered twice and increased twice (see Figure 1). In 2005, the Tier II tax rate on
employers was automatical y lowered from 13.1% to 12.6% and the tax rate on employees was
lowered from 4.9% to 4.4%. Tier II tax rates were lowered again in 2007 to 12.1% on employers
and 3.9% on employees. In 2013, tax rates were raised to 12.6% and 4.4% on employers and
employees, respectively, and in 2015, the rates were raised to their current levels of 13.1% on
employers and 4.9% on employees. The maximum amount of earnings subject to Tier II taxes is
$106,200 in 2021.

10 NRRIT , Annual Management Report for Fiscal Year 2019.
11 U.S. Congress, House Committee on T ransportation and Infrastructure, Railroad Retirement and Survivors
Im provem ent Act of 2001, report to accompany H.R. 1140, 107th Cong., 1st sess., May 24, 2001, H.Rept. 107-82, part 1
(Washington: GPO, 2001), pp. 14-15. Hereinafter cited as H.Rept. 107-82, part 1.
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Railroad Retirement Board: Trust Fund Investment Practices

Figure 1. Average Account Benefits Ratio (ABR) and Tier II Tax Rates, 2004-2021

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2006-2019;
and Railroad Retirement Board, RRB Reminders for 2020 and 2021.
Notes: The Average ABR was measured at the end of each fiscal year (September 30 of each calendar year) and
was available through the end of FY2019. The Tier II tax rate was applied to railroad employers and employees
in each calendar year and was available through 2021.
Investment Guidelines
The Trust’s assets are invested in a diversified portfolio, both to minimize investment risk and
avoid disproportionate influence over a particular industry or firm. The investment guidelines
adopted by the trustees include target asset al ocations developed by the Trust’s investment staff
in consultation with an independent investment advisory firm. Outside investment managers hired
by the Trust invest the assets according to these guidelines. The resulting investment performance
is monitored by the trustees and the Trust’s Chief Investment Officer. The current investment
guidelines are shown in detail in Table 1.
Table 1. Current Trust Target Asset Allocations and Ranges
(ef ective beginning October 1, 2017)
Asset Class
Target Allocation
Target Allocation Range
Equity
58%

Domestic
24%
19%-29%
International
24%
19%-29%
Private
10%
5%-15%
Fixed Income
20%

Domestic
14%
10%-18%
International
4%
2%-6%
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Railroad Retirement Board: Trust Fund Investment Practices

Asset Class
Target Allocation
Target Allocation Range
Private Debt
2%
0%-4%
Real Assets
14%

Commodities
4%
2%-6%
Real Estate
10%
5%-15%
Other
8%

Absolute Return
7%
3%-11%
Cash
1%
0%-3%
Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2019, 2019, p.
17, https://www.rrb.gov/sites/default/files/2020-04/FY2019_Report_with_Auditors_Report.pdf. See pages 17-19
for detailed definitions of assets.
The Trust’s target asset al ocations change over time to reflect current market expectation (see
Figure 2).12 For example, from FY2006 to FY2014, the Trust has continued its effort in moving
away from fixed income investment, with a decline from 35% of total investments to 20%. The
target proportion of total investment in fixed income has remained at 20% after FY2014. The
target proportion of total investments in equity—domestic, international, and private equity—has
been relatively stable between FY2006 and FY2019, ranging from 54% to 58%. The percentage
of total investments in private equity increased from 5% in FY2006 to 10% in FY2008, and
remained at this level thereafter. The investment in real assets, including real estate and
commodities, increased from 10% of total investments in FY2006 to 15% in FY2008 and then the
proportion remained relatively stable. Cash and absolute return investments were adopted in
FY2011, and they have accounted for around 10% of total investments since then.
Figure 2. NRRIT Target Asset Allocations, FY2006-FY2019

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2006-2019.

12 At the T rust’s inception, the initial asset allocation policy established target weights between 2002 and 2006 were
47% in domestic equity, 21% in international equity, and 32% in fixed income. National Railroad Retirement
Investment T rust , Annual Management Report for Fiscal Year 200 7, at https://www.goiam.org/wp-content/uploads/
2015/08/uploadedFiles_T CUnion_Railroad_Retirement_Updates_2007_Annual_Report.pdf .
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Notes: Real assets include investments in real estate and commodities.
Oversight
The Trust is an independent nongovernmental entity, and it is not subject to the same oversight as
federal agencies. The RRSIA outlines specific reporting requirements, including an annual
management report to Congress. The report must include a statement of financial position, a
statement of cash flows, a statement on internal accounting and administrative control systems,
and any other information necessary to inform Congress about the operations and financial
condition of the Trust. The financial statements must be audited by independent public
accountants. A copy of the annual report and audit must be submitted to the President, the RRB,
and the Director of the Office of Management and Budget (OMB). The RRB has the authority to
bring a civil action to enforce provisions of the act.
In 2002, shortly after the Trust was created, the Trust, RRB, OMB, and the Treasury co-signed a
memorandum of understanding that requires the Trust to submit a monthly report to the RRB
containing the information on investment and other transactions. The RRB then uses this
information to prepare monthly financial reports submitted to the Treasury.13 In a 2014 report, the
Government Accountability Office (GAO) interviewed RRB officials regarding their relationship
with the Trust. RRB officials indicated that the annual reports and other communications between
the RRB and the Trust had “effectively provided continuous oversight” on the Trust.14
Between 2004 and 2012, the Trust commissioned four performance reviews, including reviews of
its internal financial controls, investment operations, and others.15 In 2014, the Trust and the RRB
entered a memorandum of understanding that specifies the timing of future performance reviews
(every three years starting in 2015) and the structure, scope, management, cost, and assessment of
those reviews.16 According to the memorandum, qualified independent professionals wil
complete the performance reviews, and the RRB and the Trust wil review the results and assess
the appropriate changes (if any) to the practices or procedures of the Trust. These performance
audits are not required by law.
In addition, the Trust worked with the GAO during 2018 to create a memorandum of
understanding related to the GAO’s access to information supporting the Trust’s audited financial
statements. The memorandum was implemented in FY2019 and provides for coordination

13 T he memorandum of understanding was included in NRRIT , Annual Management Report for Fiscal Year 2019,
Appendix C, at https://rrb.gov/sites/default/files/2020-04/FY2019_Appendices.pdf.
14 GAO, Oversight of the National Railroad Retirement Investment Trust, May 2014, GAO-14-312. Communications
between the RRB and T rust also include twice face-to-face meetings each year and quarterly conference calls.
15 T he four performance audits took place in 2004, 2006, 2009, and 2012. T he detailed information of each
performance audit is available at GAO, Oversight of the National Railroad Retirem ent Investm ent Trust, T able 3.
16 T he memorandum of understanding was included in NRRIT , Annual Management Report for Fiscal Year 2019,
Appendix D, at https://rrb.gov/sites/default/files/2020-04/FY2019_Appendices.pdf. According to the memorandum, the
T rust commissioned two additional performance reviews in 2015 and 2018. T he 2015 performance review, among
others, assessed NRRIT ’s corporate governance oversight framework over its investment activities and its overall
fiduciary responsibilities as outlined in the T rust’s governing documents. T he 2018 performance review asse ssed the
content of and the process related to the development of the Trust’s investment documents, including the T rust’s
investment guidelines and asset allocation, investment plan, performance benchmarks, and the quarterly reporting
package regularly provided to the board. CRS received the information of the performance reviews in 2015 and 2018
from NRRIT in March 2021.
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between the GAO and the Trust’s auditors to facilitate the inclusion of audited Trust net asset
balances in the Financial Report of the U.S. Government.17
At the same time, however, the RRB Office of Inspector General (OIG) has expressed concerns
about the effectiveness of the oversight of the Trust. In 2008, the OIG argued that the required
annual financial audit in and of itself “is not adequate to support the RRB’s enforcement
responsibility because such audits are not intended to provide information about al areas of risk
that could indicate the need for enforcement action.”18 The OIG noted that there are fewer
safeguards protecting the Trust than there are for the retirement investments of federal
government and private-sector workers. For example, there is no federal requirement for
performance audits of the Trust by an independent auditor such as the RRB’s OIG, the GAO, or
public accountants. Those performance audits would assess program effectiveness, economy and
efficiency, internal control, and compliance with the law.
In 2011, the OIG reiterated its concerns with the oversight of the Trust and stated,
The lack of NRRIT investment fund management accountability, transparency, and
stringent financial oversight can be precursors to fraud, waste and abuse. Within the
Federal agency spectrum there is no comparable example where Federal program assets
are completely outside the jurisdiction of a Federal agency’s appointed Inspector General.
However, the NRRIT fund which supports the Railroad Retirement program remains
outside the purview of those appointed to protect the interests of the program’s
beneficiaries and the tax-paying public.19
In a recent report in FY2018, the OIG asserted that lack of access to the Trust’s auditor continued
to be a concern,
This lack of cooperation and communication prevents OIG auditors from obtaining
sufficient appropriate audit evidence regarding the RRB’s financial statements…. During
fiscal year 2014, [OIG] recommended that an independent committee be established to
identify a functional solution that would enable communication between OIG and NRRIT’s
auditors. Although RRB management did not concur with this recommendation, [OIG] will
continue to cite this issue and the need for corrective action.20
Accounting in the Federal Budget
As required in the RRSIA, Trust purchases and sales initial y were treated as exchanges of assets
of equal value, thus did not produce direct budgetary cost or income.21 The law did not prescribe

17 T he memorandum of understanding was included in NRRIT , Annual Management Report for Fiscal Year 2019,
Appendix E, at https://rrb.gov/sites/default/files/2020-04/FY2019_Appendices.pdf.
18 Railroad Retirement Board, Office of Inspector General, Statement of Concern: National Railroad Retirement
Investm ent Trust Lack of Provision for Perform ance Audits, March 31, 2008, https://www.rrb.gov/sites/default/files/
2017-05/nrritStatement.pdf.
19 Railroad Retirement Board, Office of the Inspector General, Office of the Inspector General’s Proposal to Improve
Business Efficiency at the Railroad Retirem ent Board , September 21, 2011, p. 5, https://rrb.gov/sites/default/files/2017-
05/SR_092111.pdf.
20 RRB Office of Inspector General, Independent Auditor’s Report in Performance and Accountability Report of
FY2018, p. 9, at https://www.rrb.gov/sites/default/files/2018-11/
Report%20on%20the%20Railroad%20Retirement%20Board%27s%20Financial%20Statements%20%20Fiscal%20Yea
r%202018%20%287.2%20MB%29_0.pdf.
21 For budgetary purposes, purchases or sales by the T rust are treated as a means of financing, which are not considered
as outlays or receipts, so they are nonbudgetary. T his differs from long-standing budgetary rules, which usually treat an
investment in nonfederal securities as the purchase of an asset, recording both an obligation and an outlay equal to the
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the treatment of unrealized capital gains and losses on the Trust’s investments. The Congressional
Budget Office (CBO) and OMB agreed that any capital loss or gain resulting from changes in
market prices would be recognized in the year in which the price change occurs, and interest
payments and dividends would be recorded as offsetting receipts.22 As a result, income and
capital gains reduce outlays and the deficit, and losses increase them. This reflects the change in
real economic resources available to the government as the value of the Trust changes. As for
future performance, both CBO and OMB use risk-adjusted rate of return assumptions—that is,
they assume that the Trust’s investments wil earn the comparable Treasury bond rate.
Performance of the Trust
From FY2003 to FY2018, the Trust’s average annual performance (with an average annual rate of
return, net of fees, of 8.2%) slightly exceeded expectations expressed by the RRSIA’s drafters,
which had assumed that Trust investments would earn an average annual rate of return of 8.0%.23
In FY2019, the Trust’s annual rate of return, net of fees, was 2.8%, resulting in 7.9% for the
average annual rate of return from FY2003 to FY2019, slightly below the RRSIA drafter
expectation.
For the first half of the Trust’s existence, its returns largely exceeded expectations. Prior to
FY2008, the average rate of return on Trust investments was 14.7% and the average rate of return
exceeded the expected rate of 8.0% through FY2010. The Trust then had negative rates of return
in FY2008 (-19.1%) and FY2009 (-0.7%) but rebounded with an 11.2% rate of return in FY2010,
followed by a slightly negative rate of return of -0.1% in FY2011. The FY2012 rate of return of
16.4% brought the average annual rate of return of the Trust above the expected level of 8.0% for
the first time in two years (since FY2010). The rate of return was 7.4% in FY2018 and dropped to
2.8% in FY2019.24
Comparison to Benchmarks
The Trust’s annual rates of return have general y compared favorably to its benchmarks. A
benchmark is a standard used for comparison when measuring investment performance, and the
NRRIT strategic policy benchmark is based on a series of benchmarks corresponding to each of
the major asset classes in the Trust.25 For example, the current benchmark for the Trust’s
investments in domestic equities is the Russel 3000 Index.26
As shown in Figure 3, in the majority of years between FY2003 and FY2019, Trust performances
exceeded its strategic policy benchmarks. In FY2006 and FY2007, the Trust’s performances were
roughly equal to its benchmarks, whereas in FY2008, FY2009, FY2011, FY2016, and FY2019

purchase price during the year of the purchase.
22 For more information on accounting for government investment in priv ate markets, see Congressional Budget Office,
Evaluating and Accounting for Federal Investm ent in Corporate Stocks and Other Private Securities, January 2003,
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/40xx/doc4023/01-08-03-stocks.pdf.
23 H.Rept. 107-82, part 1, p. 14.
24 NRRIT , Annual Management Report for Fiscal Year 2019, p. 16, https://www.rrb.gov/sites/default/files/2020-04/
FY2019_Report_with_Auditors_Report.pdf.
25 Benchmarks for each of the T rust’s asset classes are provided in NRRIT , Annual Management Report for Fiscal Year
2019, Appendix B.
26 Additional information on the Russell 3000 Index is available on the website of Russell Investments at
http://www.ftse.com/Analytics/FactSheets/temp/44c7ed53-1026-4910-9fda-55fb203f8744.pdf.
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the Trust’s investments had lower returns than its strategic policy benchmarks. In FY2019, the
Trust’s rate of return of 2.8% (net of fees) was lower than the benchmark of 3.9%.27
Figure 3. Actual Trust Rates of Return Compared with Strategic Policy Benchmarks
(FY2003-FY2019)

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2019, p. 16;
and previous editions.
Notes: Rates of return are net of fees.
Administrative Expenses
The Trust’s administrative expenses steadily increased through FY2011 as its investment
portfolio diversified. However, as shown in Table 2, beginning in FY2012, the Trust’s
administrative expense ratio decreased, mirroring a national trend of decreasing expense ratios for
mutual and money market funds. The Trust’s administrative expenses remain low compared with
industry standards. In FY2019, the Trust’s expense ratio was 27 basis points (expenses were
0.27% of average net assets).28 In comparison, in 2019, average expense ratios were 52 basis
points for equity funds, 48 basis points for bond funds, 62 basis points for hybrid funds, and 25
basis points for money market funds.29
Table 2. Trust Expense Ratios
(FY2003-FY2019)
Fiscal Year
Basis Points
2003
2
2004
4
2005
9
2006
15

27 NRRIT , Annual Management Report for FY2019, p. 16; and previous editions.
28 NRRIT , Annual Management Report for FY2019, p. 20.
29 Investment Company Institute, Trends in the Fees and Expenses of Mutual Funds, 2019, March 2019,
https://www.ici.org/pdf/per26-01.pdf.
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Fiscal Year
Basis Points
2007
24
2008
25
2009
26
2010
33
2011
36
2012
30
2013
29
2014
29
2015
27
2016
28
2017
31
2018
29
2019
27

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2019, p. 20;
and previous editions.
Notes: One basis point is equal to 1/100th of 1% of the average net assets of a fund. For example an expense
ratio of 27 basis points indicates that expenses were 0.27% of average net assets.

Author Information

Zhe Li

Analyst in Social Policy

Acknowledgments
CRS Analyst Scott Szymendera originally authored an earlier version of this report. CRS Specialist Julie
Whittaker made additional contributions. CRS Research Assistant Isaac Nicchitta contributed in updating
the report.
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Disclaimer
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Congressional Research Service
RS22782 · VERSION 29 · UPDATED
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