RAILROAD RETIREMENT ACT

The Railroad Retirement Act is a federal law (45 U.S.C.A. § 231 et seq.) enacted by Congress in 1937 that provides a special system of annuity, pension, and death benefits to railroad workers.

Congress first passed the Railroad Retirement Act in 1934 to reward the hard work done by railroad workers, recognize the national benefits conferred by railroad work, and encourage the retirement of older railroad workers. By offering the means for railroad workers "to enjoy the closing days of their lives with peace of mind and physical comfort," Congress intended to provide jobs to younger workers and generally improve the operation of the railroads with stronger, more able bodies (H.R. Rep. No. 1711, 74th Cong., 1st Sess. 10 [1935]).

The U.S. Supreme Court rejected the first version of the act. In 1935 the Court ruled that the act violated the U.S. Constitution because it deprived the railroads of property without due process under the fifth amendment and because it exceeded Congress's power to regulate interstate commerce (Railroad Retirement Board v. Alton R.R. Co., 295 U.S. 330, 55 S. Ct. 758, 79 L. Ed. 1468 [1935]). Congress passed a similar law the following year based on its power to tax and spend for the general welfare (49 Stat. 967 and 974). That act was put on hold by judicial order (Alton R.R. Co. v. Railroad Retirement Board, 16 F. Supp. 955 [D.C. 1936]). President franklin d. roosevelt worked with Congress to reformulate the act, and in 1937 the Railroad Retirement Act emerged.

The act established the Railroad Retirement Board to administer the benefits program. The Railroad Retirement Board also administers the benefits programs under the Railroad Unemployment Insurance Act (45 U.S.C.A. §§ 351 et seq.) and manages other railroad-related issues.

The Railroad Retirement Act was amended several times to make it similar to the benefits scheme of the social security act (42 U.S.C.A. § 301 et seq.). In 1970 Congress established a Commission on Railroad Retirement to thoroughly analyze the structure of the act. The commission recommended changes, Congress negotiated with the railroad industry, and the act was overhauled in 1974.

The Railroad Retirement Act of 1974 is a complex set of requirements for benefits that essentially provides two tiers of benefits. One level is similar to a private pension plan. The benefits received on this level are determined according to earnings and career service. To qualify for these benefits, the employee must have worked in the railroad industry for at least ten years. For seasonal workers, it may take several more years of railroad work to qualify. No benefits are paid until the employee either reaches the normal retirement age under the Social Security Act (age sixty-five), or age sixty with thirty years of service.

The second and larger tier of benefits under the act provides annuities that are similar to, and a replacement of, Social Security benefits. Under the act, that portion of earnings that would normally go into a worker's Social Security account instead goes into a railroad retirement account. This account provides slightly higher returns than the average Social Security account. To qualify for this benefit, a railroad worker must work in the industry a total of ten years.

The act also provides disability benefits to disabled workers and the children or parents of deceased railroad workers. A spouse of an employee who worked in the railroad industry for ten years or more also receives individual annuities. These benefits to the spouse cease if the couple divorces.

Under the act, an employee is considered any person who received remuneration to work for any railroad company or carrier or for any railroad association that was owned by at least two businesses engaged in the railroad business.

RAILROAD RETIREMENT ACTS

RAILROAD RETIREMENT ACTS. President Franklin D. Roosevelt approved a railroad retirement act on 27 June 1934, with the comment that it was "crudely drawn" and would require revision. The act called for a federal board to oversee a system of retirement allowances for certain categories of employees, with two-thirds of the cost to be borne by employers and the balance by the employees. No adequate actuarial studies had been made; carriers claimed that their share would prove a crushing load on the finances of most railroads. In March 1935 the U.S. Supreme Court, in Railroad Retirement Board v. Alton Railroad Company, declared the act unconstitutional. Two bills were passed the following August, the first (Wagner-Crosser Railroad Retirement Act) providing a retirement plan and the second imposing special taxes for its support. These acts retained several features that the Supreme Court had found objectionable in the earlier enactment. The railroads renewed their objections and won an injunction against the new acts on 30 June 1936.In May 1937, after protracted negotiation, new legislation gained the approval of both parties and a month later passed through Congress with little opposition.

BIBLIOGRAPHY

Graebner, William. A History of Retirement: The Meaning and Function of an American Institution, 1885–1978. New Haven, Conn.: Yale University Press, 1980.

Schreiber, David B. The Legislative History of the Railroad Retirement and Railroad Unemployment Insurance Systems. Washington, D.C.: U.S. Government Printing Office, 1978.

W. A.Robinson/a. r.

See alsoPension Plans ; Railroad Retirement Board v. Alton Railroad Company ; Railroads ; Retirement .