Railroad Retirement Board: Trust Fund Investment Practices




Railroad Retirement Board:
Trust Fund Investment Practices

Updated August 1, 2022
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,
potentially 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 March 2022, $21.3 billion has been transferred
to the Trust from the RRB and $30.6 billion has been transferred from the Trust to pay railroad
retirement benefits. At the end of March 2022, the net asset value of the Trust was $28.1 billion.
The Trust’s investments have generally followed the markets’ recent performance. From FY2003
to FY2021, the Trust’s annual returns averaged 8.92%, slightly higher than expectations of the
bill’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 fell to 28 basis points in FY2021 and generally remained low when compared with other
mutual funds in 2021.
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 automatically 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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Contents
Background ..................................................................................................................................... 1
History of the Trust .......................................................................................................................... 1
Structure of the Trust ....................................................................................................................... 2
Independence............................................................................................................................. 2
Goals ......................................................................................................................................... 3
Impact on Railroad Retirement Tier II Tax Rates ..................................................................... 3
Investment Guidelines ............................................................................................................... 4
Oversight ................................................................................................................................... 6
Accounting in the Federal Budget ............................................................................................. 7
Performance of the Trust ................................................................................................................. 8
Comparison to Benchmarks ...................................................................................................... 8
Administrative Expenses ........................................................................................................... 9

Figures
Figure 1. Average Account Benefits Ratio (ABR) and Tier II Tax Rates, 2004-2022 ..................... 4
Figure 2. NRRIT Target Asset Allocations, FY2006-FY2021 ........................................................ 5
Figure 3. Actual Trust Rates of Return Compared with Strategic Policy Benchmarks ................... 9

Tables
Table 1. Current Trust Target Asset Allocations and Ranges ........................................................... 4
Table 2. Trust Expense Ratios ......................................................................................................... 9

Contacts
Author Information ........................................................................................................................ 10
Acknowledgments ......................................................................................................................... 10

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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 generally 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
financed by Tier I payroll taxes (typically the same rate as the 12.4% Social Security payroll
tax—6.2% for employers and 6.2% for employees—on earnings up to $147,000 in 2022) 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 $109,200 in 2022) and
transfers from the National Railroad Retirement Investment Trust (NRRIT; hereinafter, the
Trust).5
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

1 45 U.S.C. §231 et seq. For additional information on the RRB, see CRS Report RS22350, Railroad Retirement
Board: Retirement, Survivor, Disability, Unemployment, 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 The financial interchange is intended to place the Social Security Trust 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. This
involves computing the amount of Social Security taxes that would have been collected on railroad employment, and
computing 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 Trust 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 Trust 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.
5 RRB, Railroad Retirement and Unemployment Insurance Taxes in 2022, December 2021, at https://www.rrb.gov/
Newsroom/NewsReleases/RetirementUnemploymentInsuranceTaxes.
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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
Security trust funds must be invested.6 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 billion has been transferred to the Trust from the RRB,7 and, as of March 2022, $30.6
billion in earnings have been transferred from the Trust to the RRB to pay railroad benefits and
administrative expenses.8 From its inception to the end of March 2022, the Trust has earned a
total of $37.4 billion. At the end of March 2022, the market value of the Trust’s managed assets
was $28.1 billion.9
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).10
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 all proxies he or she holds in the Trust’s portfolio in the sole interest of
railroad retirement participants and beneficiaries;

6 The 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 Investment Practices.
7 National Railroad Retirement Investment Trust (NRRIT), Quarterly Update for the Period Ending March 31, 2022,
April 2022, at https://www.rrb.gov/sites/default/files/2022-05/qrtly032022.pdf. The Trust has received no transfers
from the RRB since the end of FY2004.
8 NRRIT, Quarterly Update for the Period Ending March 31, 2022, p. 2.
9 NRRIT, Quarterly Update for the Period Ending March 31, 2022, p. 2.
10 For additional information on ERISA, see CRS Report 95-926, Regulating Private Pensions: A Brief Summary of
ERISA
.
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 must certify each year that all proxies have been voted in the sole interest of
railroad retirement participants and beneficiaries; and
 must record votes and provide them to the Trust upon request.11
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 potentially reduce future tax rates for railroad employers
and employees.12
Impact on Railroad Retirement Tier II Tax Rates
Under the RRSIA, Tier II taxes on both employers and employees are automatically 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 will 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 automatically 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
$109,200 in 2022.

11 NRRIT, Annual Management Report for Fiscal Year 2021.
12 U.S. Congress, House Committee on Transportation and Infrastructure, Railroad Retirement and Survivors
Improvement 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, 2004-2022

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2006-2021;
and Railroad Retirement Board, RRB Reminders for 2020 and 2022.
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 FY2021. The Tier II tax rate was applied to railroad employers and employees
in each calendar year and was available through 2022.
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 allocations 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
(effective beginning November 18, 2020)
Asset Class
Target Allocation
Target Allocation Range
Equity
67%

Domestic
31%
26%-36%
International
24%
19%-29%
Private
12%
7%-17%
Fixed Income
14%

Domestic
10%
6%-14%
International
2%
0%-4%
Private Debt
2%
0%-4%
Real Estate
10%

Real Estate
10%
5%-15%
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Asset Class
Target Allocation
Target Allocation Range
Other
9%

Absolute Return
4%
2%-6%
Opportunistic
3%
1%-5%
Cash
2%
0%-4%
Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2021, p. 16,
https://www.rrb.gov/sites/default/files/2022-03/FY2021_Report_with_Auditors_Report.pdf. See pages 16-18 for
detailed definitions of assets.
The Trust’s target asset allocations change over time to reflect current market expectation (see
Figure 2).13 For example, from FY2006 to FY2014, the Trust 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 remained at 20% between FY2014 and FY2020
and then declined to 14% in FY2021. The target proportion of total investments in equity—
domestic, international, and private equity—was relatively stable between FY2006 and FY2020,
ranging from 54% to 58%, and then increased to 67% in FY2021. The percentage of total
investments in private equity increased from 5% in FY2006 to 10% in FY2008 and remained at
about this level thereafter. The investment in real estate increased from 5% of total investments in
FY2006 to 10% in FY2008, and then the proportion remained relatively stable.
Figure 2. NRRIT Target Asset Allocations, FY2006-FY2021

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2006-2021.
Note: Others include cash, absolute return, commodities and opportunistic. Commodities were eliminated in
FY2021.

13 At the Trust’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 Trust, Annual Management Report for Fiscal Year 2007, at https://www.goiam.org/wp-content/uploads/
2015/08/uploadedFiles_TCUnion_Railroad_Retirement_Updates_2007_Annual_Report.pdf.
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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.14 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.15
Between 2004 and 2012, the Trust commissioned four performance reviews, including reviews of
its internal financial controls, investment operations, and others.16 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.17 According to the memorandum, qualified independent professionals will
complete the performance reviews, and the RRB and the Trust will 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
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.18

14 The 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.
15 U.S. Government Accountability Office (GAO), Oversight of the National Railroad Retirement Investment Trust,
May 2014, GAO-14-312, https://www.gao.gov/products/gao-14-312. Communications between the RRB and Trust also
include twice face-to-face meetings each year and quarterly conference calls.
16 The four performance audits took place in 2004, 2006, 2009, and 2012. The detailed information of each
performance audit is available at GAO, Oversight of the National Railroad Retirement Investment Trust, Table 3.
17 The memorandum of understanding was included in NRRIT, Annual Management Report for Fiscal Year 2021,
Appendix D, at https://www.rrb.gov/sites/default/files/2022-03/FY2021_Appendices.pdf. According to the
memorandum, the Trust commissioned two additional performance reviews in 2015 and 2018. The 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 Trust’s governing documents. The 2018 performance review
assessed the content of and the process related to the development of the Trust’s investment documents, including the
Trust’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.
18 The memorandum of understanding was included in NRRIT, Annual Management Report for Fiscal Year 2021,
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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 all areas of risk
that could indicate the need for enforcement action.”19 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.20
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.21
Accounting in the Federal Budget
As required in the RRSIA, Trust purchases and sales initially were treated as exchanges of assets
of equal value, thus did not produce direct budgetary cost or income.22 The law did not prescribe
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

Appendix E, at https://www.rrb.gov/sites/default/files/2022-03/FY2021_Appendices.pdf.
19 Railroad Retirement Board, Office of Inspector General, Statement of Concern: National Railroad Retirement
Investment Trust Lack of Provision for Performance Audits
, March 31, 2008, https://www.rrb.gov/sites/default/files/
2017-05/nrritStatement.pdf.
20 Railroad Retirement Board, Office of the Inspector General, Office of the Inspector General’s Proposal to Improve
Business Efficiency at the Railroad Retirement Board
, September 21, 2011, p. 5, https://rrb.gov/sites/default/files/2017-
05/SR_092111.pdf.
21 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.
22 For budgetary purposes, purchases or sales by the Trust are treated as a means of financing, which are not considered
as outlays or receipts, so they are nonbudgetary. This 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
purchase price during the year of the purchase.
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payments and dividends would be recorded as offsetting receipts.23 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 will earn the comparable Treasury bond rate.
Performance of the Trust
From FY2003 to FY2021, the Trust’s average annual performance (with an average annual rate of
return, net of fees, of 8.92%) 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%.24
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 7.3% in FY2020 and increased
to 27.9% in FY2021.25
Comparison to Benchmarks
The Trust’s annual rates of return have generally 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.26 For example, the current benchmark for the Trust’s
investments in domestic equities is the Russell 3000 Index.27
As shown in Figure 3, in the majority of years between FY2003 and FY2021, 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
the Trust’s investments had lower returns than its strategic policy benchmarks. In FY2021, the
Trust’s rate of return of 27.9% (net of fees) was higher than the benchmark of 22.9%.28

23 For more information on accounting for government investment in private markets, see Congressional Budget Office,
Evaluating and Accounting for Federal Investment 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.
24 H.Rept. 107-82, part 1, p. 14.
25 NRRIT, Annual Management Report for Fiscal Year 2021, p. 15, https://www.rrb.gov/sites/default/files/2022-03/
FY2021_Report_with_Auditors_Report.pdf.
26 Benchmarks for each of the Trust’s asset classes are provided in NRRIT, Annual Management Report for Fiscal Year
2021
, Appendix B.
27 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.
28 NRRIT, Annual Management Report for FY2021, p. 15; and previous editions.
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Figure 3. Actual Trust Rates of Return Compared with Strategic Policy Benchmarks
(FY2003-FY2021)

Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2021, p. 15,
and previous editions.
Note: 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 FY2021, the Trust’s expense ratio was 28 basis points (expenses were
0.28% of average net assets).29 In comparison, in 2021, average expense ratios were 47 basis
points for equity funds, 39 basis points for bond funds, 57 basis points for hybrid funds, and 12
basis points for money market funds.30
Table 2. Trust Expense Ratios
(FY2003-FY2021)
Fiscal Year
Basis Points
2003
2
2004
4
2005
9
2006
15
2007
24

29 NRRIT, Annual Management Report for FY2021, p. 19.
30 Investment Company Institute, Trends in the Fees and Expenses of Mutual Funds, 2021, March 2022,
https://www.ici.org/system/files/2022-03/per28-02_2.pdf.
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Fiscal Year
Basis Points
2008
25
2009
26
2010
33
2011
36
2012
30
2013
29
2014
29
2015
27
2016
28
2017
31
2018
29
2019
27
2020
25
2021
28
Source: National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2021, pp. 19-
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 28 basis points indicates that expenses were 0.28% 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 Sylvia Bryan contributed in updating the
report.
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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
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Congressional Research Service
RS22782 · VERSION 32 · UPDATED
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