Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits

Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits

link to page 1 link to page 1

Updated May 11, 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
President with the advice and consent of the Senate to
Partition Paymentsa
2,646 (0.4%)
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.
Similar to Social Security, the RRB provides retirement,
a. 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.
https://crsreports.congress.gov

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). The Continued Assistance to Rail Workers Act
secondary school) unless the child has a disability that
of 2020 (enacted under P.L. 116-260 on December 27,
began before age 22, in which case the benefits continue for
2020) granted temporary relief from sequestration
life or duration of disability.
beginning January 3, 2021, through 30 days after
termination of the presidential declaration of a national
Financing of Retirement, Survivor, and Disability
emergency concerning COVID-2019. On April 10, 2023,
Benefits
President Biden signed P.L. 118-3, terminating the national
Payroll taxes are the largest funding source for railroad
emergency. Therefore, the RRB announced that
retirement, survivor, and disability benefits. The tier I tax is
sequestration will resume for railroad unemployment and
the same as the Social Security payroll tax: Railroad
sickness benefits on May 10, 2023. Applying the
employers and employees each pay 6.2% on earnings up to
sequestration reduction of 5.7% (rate in effect at least
$160,200 in 2023. The tier II tax is set each year based on
through September 30, 2023), the maximum biweekly
the railroad retirement system’s asset balances, benefit
benefit is reduced from $850.00 to $801.55.
payments, and administrative costs. In 2021, the tier II tax
is 13.1% for employers and 4.9% for employees on
Unemployment and sickness beneficiaries may receive
earnings up to $118,800. Tier II taxes are used to finance
normal benefits for up to 26 weeks in a benefit year or until
tier II benefits, excess tier I benefits (the portion of tier I
the benefits they receive equal their creditable earnings in
benefits that are more generous than Social Security
the prior year. There is generally a one-week waiting period
retirement benefits), and supplemental annuities.
for unemployment and sickness benefits. Employees with at
least 10 years of covered railroad service may qualify for
Tax revenues that are not needed to pay current tier I
extended benefits for 13 weeks after they have exhausted
benefits in excess of Social Security benefits, tier II
normal benefits.
benefits, supplemental annuities, or associated
administrative costs are held in the National Railroad
Financing of Unemployment and Sickness Benefits
Retirement Investment Trust, which is invested in both
Railroad unemployment and sickness benefits are financed
government securities and private equities, unlike the Social
solely by railroad employers. Employers’ contributions are
Security trust funds, which are invested only in government
based on the taxable earnings of their employees. An
securities.
employer’s tax rates depend on the past rates of
unemployment and sickness claims by its employees. For
The railroad retirement system has received an annual
calendar year 2023, the tax rate ranges from 2.15% to
financial interchange payment from the Social Security
12.00% on the first $1,895 paid to each employee per
system. When benefit reimbursements exceed payroll and
month, which includes a 1.5% surcharge. A surcharge is
income taxes, the difference, with an allowance for interest
assessed in any year in which the Railroad Unemployment
and administrative expenses, is transferred from the Social
Insurance Account falls below a threshold level.
Security trust funds to RRB. The financial interchange is
designed to place the Social Security trust funds in the same
Railroad unemployment and sickness funds not needed
position they would have been in if railroad employment
immediately are deposited into an account that is part of the
had been covered under Social Security since Social
national Unemployment Trust Fund, and the railroad
Security’s inception. In FY2021, the financial interchange
account receives interest based on these deposits.
payment accounted for 30.3% of gross railroad retirement
system revenue. The railroad retirement, survivor, and
Zhe Li, Analyst in Social Policy
https://crsreports.congress.gov

Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits

IF10481

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10481 · VERSION 12 · UPDATED