THE FOLLOWING INFORMATION IS PROVIDED BY THE RAILROAD RETIREMENT BOARD:
Tier I Funding Source Fact Sheet
Social Security Benefit Equivalent (SSEB) Account
Social Security Administration reimburses Railroad Retirement Board for all benefits paid that are identical to Social
Payments are drawn from the Social Security Trust Fund
Employees/spouses who reach age 62 and are entitled to a reduced annuity
Employees/spouses who reach full retirement age and are entitled to a full annuity
Employees who are totally and permanently disabled
Non-Social Security Benefit Equivalent (NSSEB) Account
Social Security Administration does NOT reimburse Railroad Retirement Board for benefits that are unavailable under
the Social Security Act.
These annuity payments are funded by Tier 2 taxes, contributed by rail labor and rail industry, based upon
long-standing collective bargaining agreements.
There are no public funds or general tax revenues used to pay these annuities.
ANALYSIS OF LEGISLATION THAT WOULD CONFORM RAILROAD RETIREMENT TIER 1 BENEFITS TO SOCIAL
Railroad retirement Tier 1 benefits that are unique (occupational disability) or that exceed the social security benefit
(unreduced annuity for employees 60 years old with 30 years of railroad service) are fully funded by taxes paid by rail
labor and the rail industry. These taxes are held in the Railroad Retirement Account. When an individual attains
eligibility age for a social security benefits, (if the railroad retirement system did not exist), the Social Security Trust
Fund pays for the social security portion of the benefits and the remainder is funded by the Railroad Retirement
Account. For example, the annuity of an employee who qualifies for a railroad retirement annuity at age 60 because he
has 30 years of service will be funded entirely by the Railroad Retirement Account until that person attains age 62.
Because that individual would be entitled to a social security benefit at age 62, the Social Security Trust Fund will pay
for the portion of the annuity that would have been paid by Social Security and the remainder would be funded through
the Railroad Retirement Account Assume such a person has a Tier 1 of $1,000 and begins to receive his annuity at
age 60. The Railroad Retirement Account would fund the entire portion until that person reaches age 62. At that time,
the individual would be hypothetically entitled to a $600 social security benefit. Therefore, the Railroad Retirement
Account would still fund $400 of the Tier 1 and the Social Security Trust Fund would fund the remaining $600 of the
There are no public funds or general tax revenues used to pay these benefits.
All railroad retirement benefits are the result of collective bargaining agreements between rail labor and the rail
industry. These collective bargaining agreements, beginning in 1935, are the basis for the legislation (Railroad
Retirement Act and Railroad Unemployment and Insurance Act) currently enacted.
There are no actual budgetary savings. This legislation would increase the balance of the Railroad Retirement Trust
Fund allowing for the appearance that more reductions in the national budget could be achieved. However, these are
taxes paid by rail labor and the rail industry and should not be considered general revenue funds.
Enactment of this legislation would eliminate the occupational disability program and the 60/30 provision for employees
who have worked in the rail industry for at least 30 years and attain age 60. The earliest these individuals could file for
a benefit would be age 62, and that annuity would be reduced for early retirement. Moreover, annuities for spouses
who are married to these employees and attain age 60 would be negatively impacted in the same manner.
If this legislation is applied to individuals currently on the rolls, it would negatively affect the annuities of almost 120,000
non-disabled employees, almost 90,000 spouses and over 62,000 occupationally disabled employees.
Please make sure to spread this important information around to all active and retired railroad employees!