The bill would authorize using the anticipated higher returns to boost benefits, while reducing payroll taxes for railroad workers. Safety provisions in the bill would raise these taxes if the increased rates of return did not occur.
About $15 billion in contributions from employees would become eligible for investment under the Railroad Retirement and Survivors’ Improvement Act, or H.R. 1140, affecting about a million workers, retirees and survivors.
At present, railroad employees currently contribute a portion of their pay, equivalent to social security payments, tier 1, and an additional amount, tier 2, which goes into the equivalent of a private pension plan. The change would involve only the tier 2 contribution.
Other major changes to railroad retirement program include:
- retirement at age 60 for employees with 30 years’ experience without reduced benefits,
- more generous benefits for surviving spouses, and
- a reduction in vesting requirements from 10 years to five years
The Senate must vote on the legislation before it could go to the White House, where concerns that it could violate President Bush ‘s principles for Social Security, and adversely affect the federal budget, abound.
Similar legislation stalled in the Senate last year after passing in the House. This year, supporters have lined up 72 co-sponsors in the Senate and are optimistic on the bills chances for passage.
– Camilla Klein firstname.lastname@example.org