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Regarding housereport

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Info on RR proposed change under Ryan budget plan

Info on RR proposed change under Ryan budget plan

Published in: News & Politics
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  • 1. Regarding House Budget Report on Conforming Tier I Benefits to Social Security BenefitsAn accompanying report (House Report 112-421) to the House of Representatives’ version ofthe federal budget for fiscal year 2013 includes a list of reforms that could impact governmentincome security programs.One of these measures calls for conforming railroad retirement tier I benefits to social securitybenefits. According to the report, “Tier I benefits for railroad retirees are supposed to mimicSocial Security benefits, but they are more generous than Social Security in many ways. Thisoption would conform Tier I so that its benefits would equal those of Social Security, with anestimated savings to taxpayers of $2 billion over 10 years.”It should be noted that payroll taxes paid by railroad employers and their employees arethe primary source of funding for railroad retirement benefits, and railroad retirementtaxes have historically been higher than social security taxes. While railroad retirementtier I payroll taxes are coordinated with social security taxes so that employers andemployees pay tier I taxes at the same rate as social security taxes, both railroademployees and employers pay additional tier II taxes which are used to finance railroadretirement benefit payments over and above social security levels.Consistent with the higher taxes paid by railroad employers and employees, the averagerailroad retirement benefit payable to a retired railroad employee is generally higher thanthe average social security benefit.The Railroad Retirement Board cannot comment specifically on what changes to tier Ibenefits would be made under this resolution without seeing the legislative language thatwould be used to amend the Railroad Retirement Act. At this time, no such legislationhas been introduced. # # #

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