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Updated February 28, 2023
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, September 2022
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 FY2022, the RRB paid $13.4 billion in retirement
Retirement
179,295 (30.3%)
and survivor benefits to approximately 506,000
Supplemental Annuities
105,171 (17.80%)
beneficiaries. Unemployment and sickness benefits totaling
$94 million were paid to approximately 23,000 claimants.
Disability
64,875 (11.0%)
The number of railroad workers has been generally
Spouses
141,566(23.9%)
declining since the 1950s. In December 2022, about
194,000 railroad workers were employed.
Surviving Spouses
90,595 (15.3%)
Surviving Children
7,306 (1.2%)
The RRB consists of three members appointed by the
Partition Paymentsa
2,646 (0.4%)
President with the advice and consent of the Senate to
staggered five-year terms. One member is appointed on the
Total
591,454 (100%)
recommendation of the railroad industry, one is appointed
Source: Railroad Retirement Board, Bureau of the Actuary,
on the recommendation of railroad labor organizations, and
Quarterly Benefit Statistics, July-September 2022, Table 1.
the chair is appointed to represent the public.
Notes: There were 477,271 beneficiaries in September 2022.
Beneficiaries may be eligible for more than one type of benefit. The
Retirement, Survivor, and Disability
total number of benefits does not include the 10 dependent parents’
Benefits
annuities.
a.
Similar to Social Security, the RRB provides retirement,
Partition payments are made to spouses pursuant to divorce
rulings.
survivor, and disability benefits to covered employees and
their families who meet insurance requirements by working
Supplemental annuities are paid to employees first hired in
in covered railroad employment and paying RRA payroll
railroad work before October 1981 and who are age 65 or
taxes (see Table 1).
older with at least 25 years of railroad service or age 60
with at least 20 years of service. Workers must also have a
Retirement Benefits
current connection to the railroad industry (generally 12
Tier I retirement annuities are designed to be nearly
months of railroad work in the previous 30 months prior to
equivalent to Social Security retirement benefits and are
retiring). In addition, vested dual benefits are paid to those
calculated using the Social Security benefit formula. To be
who were insured for both railroad retirement and Social
eligible for retirement benefits, a person must have at least
Security in 1974 when the two-tier railroad retirement
10 years of railroad service or at least five years after 1995
benefit structure was established.
and a sufficient combination of railroad service and work
covered by Social Security.
Disability Benefits
Railroad workers may be eligible for disability benefits if
Tier I benefits are more generous than Social Security in
they are unable to work because of physical or mental
that, at the age of 60, railroad workers with at least 30 years
impairments. Total disability benefits are paid to workers
of covered railroad work may receive unreduced retirement
who are permanently and totally disabled and unable to
annuities, unlike Social Security, which pays unreduced
perform any work. Occupational disability benefits are paid
benefits only at full retirement age and pays reduced
to workers unable to perform their regular railroad
benefits at age 62. Because work covered by Social
occupations if they are age 60 or older with at least 10 years
Security is counted toward tier I benefits, if a railroad
of railroad service or any age with at least 20 years of
retirement annuitant is also awarded Social Security
benefits, those benefits are subtracted from tier I benefits.
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
service. A current connection to the railroad industry is also
disability system is projected to remain solvent over at least
required for occupational disability benefits.
the next 25 years.
Spouse Benefits
Unemployment and Sickness Benefits
Spouses of annuitants may receive benefits based on the
Railroad workers may qualify for daily unemployment and
worker’s earnings. Unlike Social Security, children are not
sickness benefits under the RUIA. These benefits are paid
eligible for their own benefits based on the record of a
in addition to any paid leave or private insurance an
living beneficiary but are factored into the eligibility of
employee may have. To receive unemployment benefits, a
spouses for benefits, and the presence of a minor child or
worker must be ready, willing, and able to work. For
adult child disabled before age 22 may increase a worker’s
sickness benefits, a worker must be unable to work because
family annuity amount under the RRA’s Special Guaranty
of illness or injury. Sickness benefits are distinct from
provision.
disability benefits because they are intended to cover a
temporary period of time.
Survivor Benefits
After the death of a covered worker, surviving spouses,
The maximum daily unemployment and sickness benefit
former spouses, children, and other dependents may be
payable in the benefit year that began July 1, 2022, is $85,
eligible to receive survivor benefits if the worker had a
and the maximum benefit for biweekly claims is $850.
current connection to the railroad industry at the time of
Normally, the benefit amount is subject to sequestration
death. Benefits for children stop when the child marries or
pursuant to the Budget Control Act of 2011 (P.L. 112-25, as
reaches age 18 (age 19 if still enrolled in elementary or
amended). For example, the maximum daily benefit of $80
secondary school) unless the child has a disability that
was reduced by 5.9% to $75.28, and the maximum
began before age 22, in which case the benefits continue for
biweekly benefit was reduced by 5.9% to $752.80 from
life or duration of disability.
July 1 to September 30, 2020. The Continued Assistance to
Rail Workers Act of 2020 (enacted under P.L. 116-260 on
Financing of Retirement, Survivor, and Disability
December 27, 2020) granted temporary relief from
Benefits
sequestration beginning January 3, 2021, through 30 days
Payroll taxes are the largest funding source for railroad
after termination of the presidential declaration of a national
retirement, survivor, and disability benefits. The tier I tax is
emergency concerning COVID-2019. Based on the
the same as the Social Security payroll tax: Railroad
announcement on January 30, 2023, the President
employers and employees each pay 6.2% on earnings up to
anticipates terminating the COVID-19 national emergency
$160,200 in 2023. The tier II tax is set each year based on
declaration on May 11, 2023. Therefore, the railroad
the railroad retirement system’s asset balances, benefit
unemployment and sickness benefit is expected to be
payments, and administrative costs. In 2021, the tier II tax
subject to sequestration starting on June 10, 2023.
is 13.1% for employers and 4.9% for employees on
earnings up to $118,800. Tier II taxes are used to finance
Unemployment and sickness beneficiaries may receive
tier II benefits, excess tier I benefits (the portion of tier I
normal benefits for up to 26 weeks in a benefit year or until
benefits that are more generous than Social Security
the benefits they receive equal their creditable earnings in
retirement benefits), and supplemental annuities.
the prior year. There is generally a one-week waiting period
for unemployment and sickness benefits. Employees with at
Tax revenues that are not needed to pay current tier I
least 10 years of covered railroad service may qualify for
benefits in excess of Social Security benefits, tier II
extended benefits for 13 weeks after they have exhausted
benefits, supplemental annuities, or associated
normal benefits.
administrative costs are held in the National Railroad
Retirement Investment Trust, which is invested in both
Financing of Unemployment and Sickness Benefits
government securities and private equities, unlike the Social
Railroad unemployment and sickness benefits are financed
Security trust funds, which are invested only in government
solely by railroad employers. Employers’ contributions are
securities.
based on the taxable earnings of their employees. An
employer’s tax rates depend on the past rates of
The railroad retirement system has received an annual
unemployment and sickness claims by its employees. For
financial interchange payment from the Social Security
calendar year 2023, the tax rate ranges from 2.15% to
system. When benefit reimbursements exceed payroll and
12.00% on the first $1,895 paid to each employee per
income taxes, the difference, with an allowance for interest
month, which includes a 1.5% surcharge. A surcharge is
and administrative expenses, is transferred from the Social
assessed in any year in which the Railroad Unemployment
Security trust funds to RRB. The financial interchange is
Insurance Account falls below a threshold level.
designed to place the Social Security trust funds in the same
position they would have been in if railroad employment
Railroad unemployment and sickness funds not needed
had been covered under Social Security since Social
immediately are deposited into an account that is part of the
Security’s inception. In FY2021, the financial interchange
national Unemployment Trust Fund, and the railroad
payment accounted for 30.3% of gross railroad retirement
account receives interest based on these deposits.
system revenue. The railroad retirement, survivor, and
Zhe Li, Analyst in Social Policy
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Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits
IF10481
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