House Joins Senate, Passes Railroad Pension Bill

The 369-33 vote sanctioned the measure approved by the Senate last week (see Senate Passes Railway Bill ) and has now sent it to President George W. Bush for his anticipated signature.

The bill would cut railroad’s payroll taxes while aiming to boost the benefits of retirees and their widows or widowers.

Supported by both unions and the railroads, proponents say the bill would help tens of thousands of rail retirees, who are not covered by Social Security, as well as the rail companies.

New Structure, Benefits

The main provision in the bill allows $15.3 billion in railroad retirement assets to be transferred to a new National Railroad Retirement Investment Trust. The trust could invest the assets in a diversified portfolio, similar to private sector retirement plans.

It would have a seven-member Board of Trustees, with three appointed by rail management, three by rail labor, and the seventh appointed by the other six.

Under the legislation, rail companies would benefit from a reduction in payroll taxes, to 15.6% for those employers who now pay 16.1%. The rate would be further reduced to 14.2% in 2003, according to the bill.

Widows’ and widowers’ benefits would be guaranteed to be equal to the annuity the retiree had received, just as for Social Security. Previously they could receive no more than half once the retiree died, according to the Associated Press.

The measure would also permit employees to retire at age 60 with 30 years of service, rather than the current retirement age of 62.

– Nevin Adams                       editors@plansponsor.com