[Congressional Record Volume 147, Number 171 (Tuesday, December 11, 2001)]
[House]
[Pages H9160-H9166]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
RAILROAD RETIREMENT AND SURVIVORS' IMPROVEMENT ACT OF 2001
Mr. QUINN. Mr. Speaker, I move to suspend the rules and concur in the
Senate amendments to the bill (H.R. 10) to provide for pension reform,
and for other purposes.
The Clerk read as follows:
Senate amendments:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Railroad
Retirement and Survivors' Improvement Act of 2001''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974
Sec. 101. Expansion of widow's and widower's benefits.
Sec. 102. Retirement age restoration.
Sec. 103. Vesting requirement.
Sec. 104. Repeal of railroad retirement maximum.
Sec. 105. Investment of railroad retirement assets.
Sec. 106. Elimination of supplemental annuity account.
Sec. 107. Transfer authority revisions.
Sec. 108. Annual ratio projections and certifications by the Railroad
Retirement Board.
TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Exemption from tax for National Railroad Retirement
Investment Trust.
Sec. 203. Repeal of supplemental annuity tax.
Sec. 204. Employer, employee representative, and employee tier 2 tax
rate adjustments.
TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974
SEC. 101. EXPANSION OF WIDOW'S AND WIDOWER'S BENEFITS.
(a) In General.--Section 4(g) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231c(g)) is amended by adding at the
end the following new subdivision:
``(10)(i) If for any month the unreduced annuity provided
under this section for a widow or widower is less than the
widow's or widower's initial minimum amount computed pursuant
to paragraph (ii) of this subdivision, the unreduced annuity
shall be increased to that initial minimum amount. For the
purposes of this subdivision, the unreduced annuity is the
annuity without regard to any deduction on account of work,
without regard to any reduction for entitlement to an annuity
under section 2(a)(1) of this Act, without regard to any
reduction for entitlement to a benefit under title II of the
Social Security Act, and without regard to any reduction for
entitlement to a public service pension pursuant to section
202(e)(7), 202(f)(2), or 202(g)(4) of the Social Security
Act.
``(ii) For the purposes of this subdivision, the widow or
widower's initial minimum amount is the amount of the
unreduced annuity computed at the time an annuity is awarded
to that widow or widower, except that--
``(A) in subsection (g)(1)(i) `100 per centum' shall be
substituted for `50 per centum'; and
``(B) in subsection (g)(2)(ii) `130 per centum' shall be
substituted for `80 per centum' both places it appears.
``(iii) If a widow or widower who was previously entitled
to a widow's or widower's annuity under section 2(d)(1)(ii)
of this Act becomes entitled to a widow's or widower's
annuity under section 2(d)(1)(i) of this Act, a new initial
minimum amount shall be computed at the time of award of the
widow's or widower's annuity under section 2(d)(1)(i) of this
Act.''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
take effect on the first day of the first month that begins
more than 30 days after enactment, and shall apply to annuity
amounts accruing for months after the effective date in the
case of annuities awarded--
(A) on or after that date; and
(B) before that date, but only if the annuity amount under
section 4(g) of the Railroad Retirement Act of 1974 (45
U.S.C. 231c(g)) was computed under such section, as amended
by the Omnibus Budget Reconciliation Act of 1981 (Public Law
97-35; 95 Stat. 357).
(2) Special rule for annuities awarded before the effective
date.--In applying the amendment made by this section to
annuities awarded before the effective date, the calculation
of the initial minimum amount under new section 4(g)(10)(ii)
of the Railroad Retirement Act of 1974 (45 U.S.C.
231c(g)(10)(ii)), as added by subsection (a), shall be made
as of the date of the award of the widow's or widower's
annuity.
SEC. 102. RETIREMENT AGE RESTORATION.
(a) Employee Annuities.--Section 3(a)(2) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231b(a)(2)) is amended by
inserting after ``(2)'' the following new sentence: ``For
purposes of this subsection, individuals entitled to an
annuity under section 2(a)(1)(ii) of this Act shall, except
for the purposes of recomputations in accordance with section
215(f) of the Social Security Act, be deemed to have attained
retirement age (as defined by section 216(l) of the Social
Security Act).''.
(b) Spouse and Survivor Annuities.--Section 4(a)(2) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)(2)) is
amended by striking ``if an'' and all that follows through
``section 2(c)(1) of this Act'' and inserting ``a spouse
entitled to an annuity under section 2(c)(1)(ii)(B) of this
Act''.
(c) Conforming Repeals.--Sections 3(a)(3), 4(a)(3), and
4(a)(4) of the Railroad Retirement Act of 1974 (45 U.S.C.
231b(a)(3), 231c(a)(3), and 231c(a)(4)) are repealed.
(d) Effective Dates.--
(1) Generally.--Except as provided in paragraph (2), the
amendments made by this section shall apply to annuities that
begin to accrue on or after January 1, 2002.
(2) Exception.--The amount of the annuity provided for a
spouse under section 4(a) of the Railroad Retirement Act of
1974 (45 U.S.C. 231c(a)) shall be computed under section
4(a)(3) of such Act, as in effect on December 31, 2001, if
the annuity amount provided under section 3(a) of such Act
(45 U.S.C. 231b(a)) for the individual on whose employment
record the spouse annuity is based was computed under section
3(a)(3) of such Act, as in effect on December 31, 2001.
SEC. 103. VESTING REQUIREMENT.
(a) Certain Annuities for Individuals.--Section 2(a) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231a(a)) is
amended--
(1) by inserting in subdivision (1) ``(or, for purposes of
paragraphs (i), (iii), and (v), five years of service, all of
which accrues after December 31, 1995)'' after ``ten years of
service''; and
(2) by adding at the end the following new subdivision:
``(4) An individual who is entitled to an annuity under
paragraph (v) of subdivision (1), but who does not have at
least ten years of service, shall, prior to the month in
which the individual attains age 62, be entitled only to an
annuity amount computed under section 3(a) of this Act
(without regard to section 3(a)(2) of this Act) or section
3(f)(3) of this Act. Upon attainment of age 62, such an
individual may also be entitled to an annuity amount computed
under section 3(b), but such annuity amount shall be reduced
for early retirement in the same manner as if the individual
were entitled to an annuity under section 2(a)(1)(iii).''.
(b) Computation Rule for Individuals' Annuities.--Section
3(a) of the Railroad Retirement Act of 1974 (45 U.S.C.
231b(a)), as amended by section 102 of this Act, is further
amended by adding at the end the following new subdivision:
``(3) If an individual entitled to an annuity under section
2(a)(1)(i) or (iii) of this Act on the basis of less than ten
years of service is entitled to a benefit under section
202(a), section 202(b), or section 202(c) of the Social
Security Act which began to accrue before the annuity under
section 2(a)(1)(i) or (iii) of this Act, the annuity amount
provided such individual under this subsection, shall be
computed as though the annuity under this Act began to accrue
on the later of (A) the date on which the benefit under
section 202(a), section 202(b), or section 202(c) of the
Social Security Act began, or (B) the date on which the
individual first met the conditions for
[[Page H9161]]
entitlement to an age reduced annuity under this Act other
than the conditions set forth in sections 2(e)(1) and 2(e)(2)
of this Act and the requirement that an application be
filed.''.
(c) Survivors' Annuities.--Section 2(d)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231a(d)(1)) is amended by
inserting ``(or five years of service, all of which accrues
after December 31, 1995)'' after ``ten years of service''.
(d) Limitation on Annuity Amounts.--Section 2 of the
Railroad Retirement Act of 1974 (45 U.S.C. 231a) is amended
by adding at the end the following new subsection:
``(i) An individual entitled to an annuity under this
section who has completed five years of service, all of which
accrues after 1995, but who has not completed ten years of
service, and the spouse, divorced spouse, and survivors of
such individual, shall not be entitled to an annuity amount
provided under section 3(a), section 4(a), or section 4(f) of
this Act unless the individual, or the individual's spouse,
divorced spouse, or survivors, would be entitled to a benefit
under title II of the Social Security Act on the basis of the
individual's employment record under both this Act and title
II of the Social Security Act.''.
(e) Computation Rule for Spouses' Annuities.--Section 4(a)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)),
as amended by section 102 of this Act, is further amended by
adding at the end the following new subdivision:
``(3) If a spouse entitled to an annuity under section
2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), or section 2(c)(2) of
this Act or a divorced spouse entitled to an annuity under
section 2(c)(4) of this Act on the basis of the employment
record of an employee who will have completed less than 10
years of service is entitled to a benefit under section
202(a), section 202(b), or section 202(c) of the Social
Security Act which began to accrue before the annuity under
section 2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), section
2(c)(2), or section 2(c)(4) of this Act, the annuity amount
provided under this subsection shall be computed as though
the annuity under this Act began to accrue on the later of
(A) the date on which the benefit under section 202(a),
section 202(b), or section 202(c) of the Social Security Act
began or (B) the first date on which the annuitant met the
conditions for entitlement to an age reduced annuity under
this Act other than the conditions set forth in sections
2(e)(1) and 2(e)(2) of this Act and the requirement that an
application be filed.''.
(f) Application Deeming Provision.--Section 5(b) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231d(b)) is
amended by striking the second sentence and inserting the
following new sentence: ``An application filed with the Board
for an employee annuity, spouse annuity, or divorced spouse
annuity on the basis of the employment record of an employee
who will have completed less than ten years of service shall
be deemed to be an application for any benefit to which such
applicant may be entitled under this Act or section 202(a),
section 202(b), or section 202(c) of the Social Security Act.
An application filed with the Board for an annuity on the
basis of the employment record of an employee who will have
completed ten years of service shall, unless the applicant
specified otherwise, be deemed to be an application for any
benefit to which such applicant may be entitled under this
Act or title II of the Social Security Act.''.
(g) Crediting Service Under the Social Security Act.--
Section 18(2) of the Railroad Retirement Act of 1974 (45
U.S.C. 231q(2)) is amended--
(1) by inserting ``(or less than five years of service, all
of which accrues after December 31, 1995)'' after ``ten years
of service'' every place it appears; and
(2) by inserting ``(or five or more years of service, all
of which accrues after December 31, 1995)'' after ``ten or
more years of service''.
(h) Automatic Benefit Eligibility Adjustments.--Section 19
of the Railroad Retirement Act of 1974 (45 U.S.C. 231r) is
amended--
(1) by inserting ``(or five or more years of service, all
of which accrues after December 31, 1995)'' after ``ten years
of service'' in subsection (c); and
(2) by inserting ``(or five or more years of service, all
of which accrues after December 31, 1995)'' after ``ten years
of service'' in subsection (d)(2).
(i) Conforming Amendments.--
(1) Section 6(e)(1) of the Railroad Retirement Act of 1974
(45 U.S.C. 231e(1)) is amended by inserting ``(or five or
more years of service, all of which accrues after December
31, 1995)'' after ``ten years of service''.
(2) Section 7(b)(2)(A) of the Railroad Retirement Act of
1974 (45 U.S.C. 231f(b)(2)(A)) is amended by inserting ``(or
five or more years of service, all of which accrues after
December 31, 1995)'' after ``ten years of service''.
(3) Section 205(i) of the Social Security Act (42 U.S.C.
405(i)) is amended by inserting ``(or five or more years of
service, all of which accrues after December 31, 1995)''
after ``ten years of service''.
(4) Section 6(b)(2) of the Railroad Retirement Act of 1974
(45 U.S.C. 231e(b)(2)) is amended by inserting ``(or five or
more years of service, all of which accrues after December
31, 1995)'' after ``ten years of service'' the second place
it appears.
(j) Effective Date.--The amendments made by this section
shall take effect on January 1, 2002.
SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.
(a) Employee Annuities.--
(1) In general.--Section 3(f) of the Railroad Retirement
Act of 1974 (45 U.S.C. 231b(f)) is amended--
(A) by striking subdivision (1); and
(B) by redesignating subdivisions (2) and (3) as
subdivisions (1) and (2), respectively.
(2) Conforming amendments.--
(A) The first sentence of section 3(f)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231b(f)(1)), as
redesignated by paragraph (1)(B), is amended by striking ``,
without regard to the provisions of subdivision (1) of this
subsection,''.
(B) Paragraphs (i) and (ii) of section 7(d)(2) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231f(d)(2)) are
each amended by striking ``section 3(f)(3)'' and inserting
``section 3(f)(2)''.
(b) Spouse and Survivor Annuities.--Section 4 of the
Railroad Retirement Act of 1974 (45 U.S.C. 231c) is amended
by striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 2002, and shall apply to
annuity amounts accruing for months after December 2001.
SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.
(a) Establishment of National Railroad Retirement
Investment Trust.--Section 15 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231n) is amended by inserting after
subsection (i) the following new subsection:
``(j) National Railroad Retirement Investment Trust.--
``(1) Establishment.--The National Railroad Retirement
Investment Trust (hereinafter in this subsection referred to
as the `Trust') is hereby established as a trust domiciled in
the District of Columbia and shall, to the extent not
inconsistent with this Act, be subject to the laws of the
District of Columbia applicable to such trusts. The Trust
shall manage and invest its assets in the manner set forth in
this subsection.
``(2) Not a federal agency or instrumentality.--The Trust
is not a department, agency, or instrumentality of the
Government of the United States and shall not be subject to
title 31, United States Code.
``(3) Board of trustees.--
``(A) Generally.--
``(i) Membership.--The Trust shall have a Board of
Trustees, consisting of 7 members. Three shall represent the
interests of labor, 3 shall represent the interests of
management, and 1 shall be an independent Trustee. The
members of the Board of Trustees shall not be considered
officers or employees of the Government of the United States.
``(ii) Selection.--
``(I) The 3 members representing the interests of labor
shall be selected by the joint recommendation of labor
organizations, national in scope, organized in accordance
with section 2 of the Railway Labor Act, and representing at
least \2/3\ of all active employees, represented by such
national labor organizations, covered under this Act.
``(II) The 3 members representing the interests of
management shall be selected by the joint recommendation of
carriers as defined in section 1 of the Railway Labor Act
employing at least \2/3\ of all active employees covered
under this Act.
``(III) The independent member shall be selected by a
majority of the other 6 members of the Board of Trustees.
A member of the Board of Trustees may be removed in the same
manner and by the same constituency that selected that
member.
``(iii) Dispute resolution.--In the event that the parties
specified in subclause (I), (II), or (III) of the previous
clause cannot agree on the selection of Trustees within 60
days of the date of enactment or 60 days from any subsequent
date that a position of the Board of Trustees becomes vacant,
an impartial umpire to decide such dispute shall, on the
petition of a party to the dispute, be appointed by the
District Court of the United States for the District of
Columbia.
``(B) Qualifications.--Members of the Board of Trustees
shall be appointed only from among persons who have
experience and expertise in the management of financial
investments and pension plans. No member of the Railroad
Retirement Board shall be eligible to be a member of the
Board of Trustees.
``(C) Terms.--Except as provided in this subparagraph, each
member shall be appointed for a 3-year term. The initial
members appointed under this paragraph shall be divided into
equal groups so nearly as may be, of which one group will be
appointed for a 1-year term, one for a 2-year term, and one
for a 3-year term. The Trustee initially selected pursuant to
clause (ii)(III) shall be appointed to a 3-year term. A
vacancy in the Board of Trustees shall not affect the powers
of the Board of Trustees and shall be filled in the same
manner as the selection of the member whose departure caused
the vacancy. Upon the expiration of a term of a member of the
Board of Trustees, that member shall continue to serve until
a successor is appointed.
``(4) Powers of the board of trustees.--The Board of
Trustees shall--
``(A) retain independent advisers to assist it in the
formulation and adoption of its investment guidelines;
``(B) retain independent investment managers to invest the
assets of the Trust in a manner consistent with such
investment guidelines;
``(C) invest assets in the Trust, pursuant to the policies
adopted in subparagraph (A);
``(D) pay administrative expenses of the Trust from the
assets in the Trust; and
``(E) transfer money to the disbursing agent or as
otherwise provided in section 7(b)(4), to pay benefits
payable under this Act from the assets of the Trust.
``(5) Reporting requirements and fiduciary standards.--The
following reporting requirements and fiduciary standards
shall apply with respect to the Trust:
``(A) Duties of the board of trustees.--The Trust and each
member of the Board of Trustees shall discharge their duties
(including the voting of proxies) with respect to the assets
[[Page H9162]]
of the Trust solely in the interest of the Railroad
Retirement Board and through it, the participants and
beneficiaries of the programs funded under this Act--
``(i) for the exclusive purpose of--
``(I) providing benefits to participants and their
beneficiaries; and
``(II) defraying reasonable expenses of administering the
functions of the Trust;
``(ii) with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character
and with like aims;
``(iii) by diversifying investments so as to minimize the
risk of large losses and to avoid disproportionate influence
over a particular industry or firm, unless under the
circumstances it is clearly prudent not to do so; and
``(iv) in accordance with Trust governing documents and
instruments insofar as such documents and instruments are
consistent with this Act.
``(B) Prohibitions with respect to members of the board of
trustees.--No member of the Board of Trustees shall--
``(i) deal with the assets of the Trust in the trustee's
own interest or for the trustee's own account;
``(ii) in an individual or in any other capacity act in any
transaction involving the assets of the Trust on behalf of a
party (or represent a party) whose interests are adverse to
the interests of the Trust, the Railroad Retirement Board, or
the interests of participants or beneficiaries; or
``(iii) receive any consideration for the trustee's own
personal account from any party dealing with the assets of
the Trust.
``(C) Exculpatory provisions and insurance.--Any provision
in an agreement or instrument that purports to relieve a
trustee from responsibility or liability for any
responsibility, obligation, or duty under this Act shall be
void: Provided, however, That nothing shall preclude--
``(i) the Trust from purchasing insurance for its trustees
or for itself to cover liability or losses occurring by
reason of the act or omission of a trustee, if such insurance
permits recourse by the insurer against the trustee in the
case of a breach of a fiduciary obligation by such trustee;
``(ii) a trustee from purchasing insurance to cover
liability under this section from and for his own account; or
``(iii) an employer or an employee organization from
purchasing insurance to cover potential liability of one or
more trustees with respect to their fiduciary
responsibilities, obligations, and duties under this section.
``(D) Bonding.--Every trustee and every person who handles
funds or other property of the Trust (hereafter in this
subsection referred to as `Trust official') shall be bonded.
Such bond shall provide protection to the Trust against loss
by reason of acts of fraud or dishonesty on the part of any
Trust official, directly or through the connivance of others,
and shall be in accordance with the following:
``(i) The amount of such bond shall be fixed at the
beginning of each fiscal year of the Trust by the Railroad
Retirement Board. Such amount shall not be less than 10
percent of the amount of the funds handled. In no case shall
such bond be less than $1,000 nor more than $500,000, except
that the Railroad Retirement Board, after consideration of
the record, may prescribe an amount in excess of $500,000,
subject to the 10 per centum limitation of the preceding
sentence.
``(ii) It shall be unlawful for any Trust official to
receive, handle, disburse, or otherwise exercise custody or
control of any of the funds or other property of the Trust
without being bonded as required by this subsection and it
shall be unlawful for any Trust official, or any other person
having authority to direct the performance of such functions,
to permit such functions, or any of them, to be performed by
any Trust official, with respect to whom the requirements of
this subsection have not been met.
``(iii) It shall be unlawful for any person to procure any
bond required by this subsection from any surety or other
company or through any agent or broker in whose business
operations such person has any control or significant
financial interest, direct or indirect.
``(E) Audit and report.--
``(i) The Trust shall annually engage an independent
qualified public accountant to audit the financial statements
of the Trust.
``(ii) The Trust shall submit an annual management report
to the Congress not later than 180 days after the end of the
Trust's fiscal year. A management report under this
subsection shall include--
``(I) a statement of financial position;
``(II) a statement of operations;
``(III) a statement of cash flows;
``(IV) a statement on internal accounting and
administrative control systems;
``(V) the report resulting from an audit of the financial
statements of the Trust conducted under clause (i); and
``(VI) any other comments and information necessary to
inform the Congress about the operations and financial
condition of the Trust.
``(iii) The Trust shall provide the President, the Railroad
Retirement Board, and the Director of the Office of
Management and Budget a copy of the management report when it
is submitted to Congress.
``(F) Enforcement.--The Railroad Retirement Board may bring
a civil action--
``(i) to enjoin any act or practice by the Trust, its Board
of Trustees, or its employees or agents that violates any
provision of this Act; or
``(ii) to obtain other appropriate relief to redress such
violations, or to enforce any provisions of this Act.
``(6) Rules and administrative powers.--The Board of
Trustees shall have the authority to make rules to govern its
operations, employ professional staff, and contract with
outside advisers, including the Railroad Retirement Board, to
provide legal, accounting, investment advisory, or other
services necessary for the proper administration of this
subsection. In the case of contracts with investment advisory
services, compensation for such services may be on a fixed
contract fee basis or on such other terms and conditions as
are customary for such services.
``(7) Quorum.--Five members of the Board of Trustees
constitute a quorum to do business. Investment guidelines
must be adopted by a unanimous vote of the entire Board of
Trustees. All other decisions of the Board of Trustees shall
be decided by a majority vote of the quorum present. All
decisions of the Board of Trustees shall be entered upon the
records of the Board of Trustees.
``(8) Funding.--The expenses of the Trust and the Board of
Trustees incurred under this subsection shall be paid from
the Trust.''.
(b) Conforming and Technical Amendments Governing
Investments.--Section 15(e) of the Railroad Retirement Act of
1974 (45 U.S.C. 231n(e)) is amended--
(1) in the first sentence, by striking ``, the Dual
Benefits Payments Account'' and all that follows through
``may be made only'' in the second sentence and inserting
``and the Dual Benefits Payments Account as are not
transferred to the National Railroad Retirement Investment
Trust as the Board may determine'';
(2) by striking ``the Second Liberty Bond Act, as amended''
and inserting ``chapter 31 of title 31''; and
(3) by striking ``the foregoing requirements'' and
inserting ``the requirements of this subsection''.
(c) Means of Financing.--For all purposes of the
Congressional Budget Act of 1974, the Balanced Budget and
Emergency Deficit Control Act of 1985, and chapter 11 of
title 31, United States Code, and notwithstanding section 20
of the Office of Management and Budget Circular No. A-11, the
purchase or sale of non-Federal assets (other than gains or
losses from such transactions) by the National Railroad
Retirement Investment Trust shall be treated as a means of
financing.
(d) Effective Date.--The amendments made by this section
shall take effect on the first day of the month that begins
more than 30 days after enactment.
SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.
(a) Source of Payments.--Section 7(c)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231f(c)(1)) is amended by
striking ``payments of supplemental annuities under section
2(b) of this Act shall be made from the Railroad Retirement
Supplemental Account, and''.
(b) Elimination of Account.--Section 15(c) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n(c)) is repealed.
(c) Amendment to Railroad Retirement Account.--Section
15(a) of the Railroad Retirement Act of 1974 (45 U.S.C.
231n(a)) is amended by striking ``, except those portions of
the amounts covered into the Treasury under sections
3211(b),'' and all that follows through the end of the
subsection and inserting a period.
(d) Transfer.--
(1) Determination.--As soon as possible after December 31,
2001, the Railroad Retirement Board shall--
(A) determine the amount of funds in the Railroad
Retirement Supplemental Account under section 15(c) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n(c)) as of the
date of such determination; and
(B) direct the Secretary of the Treasury to transfer such
funds to the National Railroad Retirement Investment Trust
under section 15(j) of such Act (as added by section 105).
(2) Transfer by the secretary of the treasury.--The
Secretary of the Treasury shall make the transfer described
in paragraph (1).
(e) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by subsections (a), (b), and (c) shall take effect
January 1, 2002.
(2) Account in existence until transfer made.--The Railroad
Retirement Supplemental Account under section 15(c) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n(c)) shall
continue to exist until the date that the Secretary of the
Treasury makes the transfer described in subsection (d)(2).
SEC. 107. TRANSFER AUTHORITY REVISIONS.
(a) Railroad Retirement Account.--Section 15 of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n) is amended
by adding after subsection (j) the following new subsection:
``(k) Transfers to the Trust.--The Board shall, upon
establishment of the National Railroad Retirement Investment
Trust and from time to time thereafter, direct the Secretary
of the Treasury to transfer, in such manner as will maximize
the investment returns to the Railroad Retirement system,
that portion of the Railroad Retirement Account that is not
needed to pay current administrative expenses of the Board to
the National Railroad Retirement Investment Trust. The
Secretary shall make that transfer.''.
(b) Transfers From the National Railroad Retirement
Investment Trust.--Section 15 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231n), as amended by subsection (a), is
further amended by adding after subsection (k) the following
new subsection:
``(l) National Railroad Retirement Investment Trust.--The
National Railroad Retirement Investment Trust shall from time
to time transfer to the disbursing agent described in section
7(b)(4) or as otherwise directed by the Railroad Retirement
Board pursuant to section 7(b)(4), such amounts as may be
necessary to pay benefits under this Act (other than benefits
paid from the Social Security Equivalent Benefit
[[Page H9163]]
Account or the Dual Benefit Payments Account).''.
(c) Social Security Equivalent Benefit Account.--
(1) Transfers to trust.--Section 15A(d)(2) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231n-1(d)(2)) is amended to
read as follows:
``(2) Upon establishment of the National Railroad
Retirement Investment Trust and from time to time thereafter,
the Board shall direct the Secretary of the Treasury to
transfer, in such manner as will maximize the investment
returns to the Railroad Retirement system, the balance of the
Social Security Equivalent Benefit Account not needed to pay
current benefits and administrative expenses required to be
paid from that Account to the National Railroad Retirement
Investment Trust, and the Secretary shall make that transfer.
Any balance transferred under this paragraph shall be used by
the National Railroad Retirement Investment Trust only to pay
benefits under this Act or to purchase obligations of the
United States that are backed by the full faith and credit of
the United States pursuant to chapter 31 of title 31, United
States Code. The proceeds of sales of, and the interest
income from, such obligations shall be used by the Trust only
to pay benefits under this Act.''.
(2) Transfers to disbursing agent.--Section 15A(c)(1) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(c)(1))
is amended by adding at the end the following new sentence:
``The Secretary shall from time to time transfer to the
disbursing agent under section 7(b)(4) amounts necessary to
pay those benefits.''.
(3) Conforming amendment.--Section 15A(d)(1) of the
Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(d)(1)) is
amended by striking the second and third sentences.
(d) Dual Benefits Payments Account.--Section 15(d)(1) of
the Railroad Retirement Act of 1974 (45 U.S.C. 231n(d)(1)) is
amended by adding at the end the following new sentence:
``The Secretary of the Treasury shall from time to time
transfer from the Dual Benefits Payments Account to the
disbursing agent under section 7(b)(4) amounts necessary to
pay benefits payable from that Account.''.
(e) Certification by the Board and Payment.--Paragraph (4)
of section 7(b) of the Railroad Retirement Act of 1974 (45
U.S.C. 231f(b)(4)) is amended to read as follows:
``(4)(A) The Railroad Retirement Board, after consultation
with the Board of Trustees of the National Railroad
Retirement Investment Trust and the Secretary of the
Treasury, shall enter into an arrangement with a
nongovernmental financial institution to serve as disbursing
agent for benefits payable under this Act who shall disburse
consolidated benefits under this Act to each recipient.
Pending the taking effect of that arrangement, benefits shall
be paid as under the law in effect prior to the enactment of
the Railroad Retirement and Survivors' Improvement Act of
2001.
``(B) The Board shall from time to time certify--
``(i) to the Secretary of the Treasury the amounts required
to be transferred from the Social Security Equivalent Benefit
Account and the Dual Benefits Payments Account to the
disbursing agent to make payments of benefits and the
Secretary of the Treasury shall transfer those amounts;
``(ii) to the Board of Trustees of the National Railroad
Retirement Investment Trust the amounts required to be
transferred from the National Railroad Retirement Investment
Trust to the disbursing agent to make payments of benefits
and the Board of Trustees shall transfer those amounts; and
``(iii) to the disbursing agent the name and address of
each individual entitled to receive a payment, the amount of
such payment, and the time at which the payment should be
made.''.
(f) Benefit Payments.--Section 7(c)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231f(c)(1)) is amended--
(1) by striking ``from the Railroad Retirement Account''
and inserting ``by the disbursing agent under subsection
(b)(4) from money transferred to it from the National
Railroad Retirement Investment Trust or the Social Security
Equivalent Benefit Account, as the case may be''; and
(2) by inserting ``by the disbursing agent under subsection
(b)(4) from money transferred to it'' after ``Public Law 93-
445 shall be made''.
(g) Transitional Rule for Existing Obligation.--In making
transfers under sections 15(k) and 15A(d)(2) of the Railroad
Retirement Act of 1974, as amended by subsections (a) and
(c), respectively, the Railroad Retirement Board shall
consult with the Secretary of the Treasury to design an
appropriate method to transfer obligations held as of the
date of enactment of this Act or to convert such obligations
to cash at the discretion of the Railroad Retirement Board
prior to transfer. The National Railroad Retirement
Investment Trust may hold to maturity any obligations so
received or may redeem them prior to maturity, as the Trust
deems appropriate.
SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFICATIONS BY THE
RAILROAD RETIREMENT BOARD.
(a) Projections.--Section 22(a)(1) of the Railroad
Retirement Act of 1974 (45 U.S.C. 231u(a)(1)) is amended--
(1) by inserting after the first sentence the following new
sentence: ``On or before May 1 of each year beginning in
2003, the Railroad Retirement Board shall compute its
projection of the account benefits ratio and the average
account benefits ratio (as defined by section 3241(c) of the
Internal Revenue Code of 1986) for each of the next
succeeding five fiscal years.''; and
(2) by striking ``the projection prepared pursuant to the
preceding sentence'' and inserting ``the projections prepared
pursuant to the preceding two sentences''.
(b) Certifications.--The Railroad Retirement Act of 1974
(45 U.S.C. 231 et seq.) is amended by adding at the end the
following new section:
``computation and certification of account benefit ratios
``Sec. 23. (a) Initial Computation and Certification.--On
or before November 1, 2003, the Railroad Retirement Board
shall--
``(1) compute the account benefits ratios for each of the
most recent 10 preceding fiscal years, and
``(2) certify the account benefits ratios for each such
fiscal year to the Secretary of the Treasury.
``(b) Computations and Certifications After 2003.--On or
before November 1 of each year after 2003, the Railroad
Retirement Board shall--
``(1) compute the account benefits ratio for the fiscal
year ending in such year, and
``(2) certify the account benefits ratio for such fiscal
year to the Secretary of the Treasury.
``(c) Definition.--As used in this section, the term
`account benefits ratio' has the meaning given that term in
section 3241(c) of the Internal Revenue Code of 1986.''.
TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986
SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.
Except as otherwise provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to,
or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 202. EXEMPTION FROM TAX FOR NATIONAL RAILROAD RETIREMENT
INVESTMENT TRUST.
Subsection (c) of section 501 is amended by adding at the
end the following new paragraph:
``(28) The National Railroad Retirement Investment Trust
established under section 15(j) of the Railroad Retirement
Act of 1974.''.
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(a) Repeal of Tax on Employee Representatives.--Section
3211 is amended by striking subsection (b).
(b) Repeal of Tax on Employers.--Section 3221 is amended by
striking subsections (c) and (d) and by redesignating
subsection (e) as subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after December 31,
2001.
SEC. 204. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND EMPLOYEE
TIER 2 TAX RATE ADJUSTMENTS.
(a) Rate of Tax on Employers.--Subsection (b) of section
3221 is amended to read as follows:
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is
hereby imposed on every employer an excise tax, with respect
to having individuals in his employ, equal to the applicable
percentage of the compensation paid during any calendar year
by such employer for services rendered to such employer.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) 15.6 percent in the case of compensation paid during
2002,
``(B) 14.2 percent in the case of compensation paid during
2003, and
``(C) in the case of compensation paid during any calendar
year after 2003, the percentage determined under section 3241
for such calendar year.''.
(b) Rate of Tax on Employee Representatives.--Section 3211,
as amended by section 203, is amended by striking subsection
(a) and inserting the following new subsections:
``(a) Tier 1 Tax.--In addition to other taxes, there is
hereby imposed on the income of each employee representative
a tax equal to the applicable percentage of the compensation
received during any calendar year by such employee
representative for services rendered by such employee
representative. For purposes of the preceding sentence, the
term `applicable percentage' means the percentage equal to
the sum of the rates of tax in effect under subsections (a)
and (b) of section 3101 and subsections (a) and (b) of
section 3111 for the calendar year.
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is
hereby imposed on the income of each employee representative
a tax equal to the applicable percentage of the compensation
received during any calendar year by such employee
representatives for services rendered by such employee
representative.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
``(A) 14.75 percent in the case of compensation received
during 2002,
``(B) 14.20 percent in the case of compensation received
during 2003, and
``(C) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.
``(c) Cross Reference.--
``For application of different contribution bases with respect to the
taxes imposed by subsections (a) and (b), see section 3231(e)(2).''.
(c) Rate of Tax on Employees.--Subsection (b) of section
3201 is amended to read as follows:
``(b) Tier 2 Tax.--
``(1) In general.--In addition to other taxes, there is
hereby imposed on the income of each employee a tax equal to
the applicable percentage of the compensation received during
any calendar year by such employee for services rendered by
such employee.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means--
[[Page H9164]]
``(A) 4.90 percent in the case of compensation received
during 2002 or 2003, and
``(B) in the case of compensation received during any
calendar year after 2003, the percentage determined under
section 3241 for such calendar year.''.
(d) Determination of Rate.--Chapter 22 is amended by adding
at the end the following new subchapter:
``Subchapter E--Tier 2 Tax Rate Determination
``Sec. 3241. Determination of tier 2 tax rate based on average account
benefits ratio.
``SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED ON
AVERAGE ACCOUNT BENEFITS RATIO.
``(a) In General.--For purposes of sections 3201(b),
3211(b), and 3221(b), the applicable percentage for any
calendar year is the percentage determined in accordance with
the table in subsection (b).
``(b) Tax Rate Schedule.--
------------------------------------------------------------------------
``Average account benefits Applicable
ratio percentage for Applicable
----------------------------- sections 3211(b) and percentage for
At least But less than 3221(b) section 3201(b)
------------------------------------------------------------------------
2.5 22.1 4.9
2.5 3.0 18.1 4.9
3.0 3.5 15.1 4.9
3.5 4.0 14.1 4.9
4.0 6.1 13.1 4.9
6.1 6.5 12.6 4.4
6.5 7.0 12.1 3.9
7.0 7.5 11.6 3.4
7.5 8.0 11.1 2.9
8.0 8.5 10.1 1.9
8.5 9.0 9.1 0.9
9.0 8.2 0
------------------------------------------------------------------------
``(c) Definitions Related to Determination of Rates of
Tax.--
``(1) Average account benefits ratio.--For purposes of this
section, the term `average account benefits ratio' means,
with respect to any calendar year, the average determined by
the Secretary of the account benefits ratios for the 10 most
recent fiscal years ending before such calendar year. If the
amount determined under the preceding sentence is not a
multiple of 0.1, such amount shall be increased to the next
highest multiple of 0.1.
``(2) Account benefits ratio.--For purposes of this
section, the term `account benefits ratio' means, with
respect to any fiscal year, the amount determined by the
Railroad Retirement Board by dividing the fair market value
of the assets in the Railroad Retirement Account and of the
National Railroad Retirement Investment Trust (and for years
before 2002, the Social Security Equivalent Benefits Account)
as of the close of such fiscal year by the total benefits and
administrative expenses paid from the Railroad Retirement
Account and the National Railroad Retirement Investment Trust
during such fiscal year.
``(d) Notice.--No later than December 1 of each calendar
year, the Secretary shall publish a notice in the Federal
Register of the rates of tax determined under this section
which are applicable for the following calendar year.''.
(e) Conforming Amendments.--
(1) Section 24(d)(3)(A)(iii) is amended by striking
``section 3211(a)(1)'' and inserting ``section 3211(a)''.
(2) Section 72(r)(2)(B)(i) is amended by striking
``3211(a)(2)'' and inserting ``3211(b)''.
(3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section
3231(e) are amended by striking ``3211(a)(1)'' and inserting
``3211(a)''.
(4) Section 3231(e)(2)(B)(ii)(I) is amended by striking
``3211(a)(2)'' and inserting ``3211(b)''.
(5) The table of subchapters for chapter 22 is amended by
adding at the end the following new item:
``Subchapter E. Tier 2 tax rate determination.''.
(f) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after December 31,
2001.
Amend the title so as to read: ``An Act to modernize the
financing of the railroad retirement system and to provide
enhanced benefits to employees and beneficiaries.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
York (Mr. Quinn) and the gentleman from Tennessee (Mr. Clement) each
will control 20 minutes.
The Chair recognizes the gentleman from New York (Mr. Quinn).
Mr. QUINN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in steadfast support of H.R. 10, the
Railroad Retirement and Survivors' Improvement Act of 2001.
H.R. 10 is identical to the railroad retirement reform legislation
passed by the House earlier this year with over 380 votes.
Consideration of the bill today is merely a procedural step required
pursuant to its Senate approval to move the legislation to the
President's desk for signature.
Built into the legislation is an automatic safety net behind the
future investment strategy. The railroad retirement system now has
reserves of more than 6 years of benefit payments. Under the bill,
future payroll taxes would automatically adjust to reflect the
performance of pension investments. If reserves fall below the 4-year
benefit levels, automatic employer tax increases would be triggered. If
reserves go above the 6 years in the future, further tax reductions for
railroads and either tax relief or additional benefits for workers
would be provided.
This bill, Mr. Speaker, enjoys one of the highest levels of
bipartisan support in recent congressional history. It is sound,
commonsense legislation that helps our railroads stay competitive while
providing needed retirement benefits for all rail workers and their
families, without costing the American taxpayers a single dime.
I want to commend our committee full chairman, the gentleman from
Alaska (Mr. Young), the ranking member, the gentleman from Minnesota
(Mr. Oberstar), and the subcommittee ranking member and my partner, the
gentleman from Tennessee (Mr. Clement), for their leadership on this
legislation.
This is the workers' own money, Mr. Speaker. They deserve to improve
its returns and their benefit payments. I urge all Members to support
H.R. 10.
Mr. Speaker, I reserve the balance of my time.
Mr. CLEMENT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I say to the gentleman from New York (Mr. Quinn), it is
good to have him back. He has just had back surgery, and I am glad he
has made a speedy recovery. We need him here very badly.
Mr. Speaker, it is my sincere pleasure to manage H.R. 10, the
Railroad Retirement and Survivors' Improvement Act of 2001.
Today, as the ranking member of the Subcommittee on Railroads, in
fact, it is even a greater pleasure to be here today than the two
previous times this exact same measure has come to the floor and passed
with unequivocal, overwhelmingly strong majorities.
The reason for my happiness is simple: with the passage of this bill
today, all that will remain is the President's promised signature
before the over 250,000 railroad employees and the 700,000 retirees and
survivors of railroad workers can finally have what they have deserved
for years: a modern and equitable retirement plan.
It has been this goal that has led Democrats and Republicans alike to
work together with rail management and rail labor to craft a measure so
sound that it had 368 cosponsors as it passed through the House this
summer by a vote of 384 to 33.
As the ranking member of the Subcommittee on Railroads, I can
personally speak of the hard work and total commitment to this issue by
the gentleman from New York (Chairman Quinn) and all members of our
subcommittee on both sides of the aisle.
This support, along with the tireless leadership of the ranking
member, the gentleman from Minnesota (Mr. Oberstar), and the gentleman
from Alaska (Chairman Young), built a train that could not be stopped.
Whether temporarily stalled by procedure or debate, railroad retirement
reform continued to move forward, despite the opposition of the few who
wish to derail it.
Thus it brings me great satisfaction today that this bill can finally
depart this branch of government and begin its journey carrying
enhanced benefits toward the workers and retirees of our Nation's rail
system.
The overwhelming majority of the Members know that this is a good
bill. They know it has the support of both management and labor. This
is a vote that should require little soul searching. Members know that
this is right for railroad workers and their survivors. They know it is
right for the industry and for America as a whole.
I urge my colleagues to vote yes on the bill. It is time we retired
the debate on railroad retirement and let America's railroad workers
and survivors enjoy the financial health and security they have worked
long and hard for.
Mr. Speaker, I want to say this, too, as we close. I want to thank
our staff, Democrat and Republican staff alike. On the Democratic side,
I might say, Mr. Speaker, I want to thank Ward McCarrager, Frank
Mulvey, David Hymsfeld, Steve Gardner, Rachel Carr.
I want to thank our full committee and the staff of the Subcommittee
on Railroads. All of them have done a great job bringing about a great
bill.
Mr. Speaker, I reserve the balance of my time.
Mr. QUINN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would simply say at this point that I thank the
gentleman
[[Page H9165]]
from Tennessee for his kind remarks. This is one of our subcommittee's
clear issues we have been working on now since we came here together in
a bipartisan way. We know that it is a bipartisan issue.
I thank my good friend, the gentleman from Tennessee (Mr. Clement),
for his kind words.
Mr. CLEMENT. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Smith).
(Mr. SMITH of Michigan asked and was given permission to revise and
extend his remarks.)
Mr. SMITH of Michigan. Mr. Speaker, let me just express my concern at
scheduling a bill that requires taking $15 billion out of the general
fund to be on the suspension calendar.
I am concerned that this is going to end up being a disadvantage to
railroad workers, because the railroad has said when they need more
taxes, they will increase the tax rate. So here again, I am very
concerned that we are taking this bill that is so expensive up on
suspension; and I would, at the appropriate time, ask for a roll call
vote.
I rise in opposition to H.R. 10. I do not oppose what this bill is
trying to accomplish. Railroad workers should have the opportunity to
invest their money in the stock market and earn a higher rate of
return. I oppose this bill because it will not achieve its intended
goal. This bill would cut taxes and raise benefits for railroad
retirement beneficiaries in exchange for promises to pay higher taxes
in the future. This is an irresponsible and shortsighted approach to
reform.
This bill's supporters will dispute this. They will say things like
this bill ``modernizes'' the system. They will say, ``it's their money,
we should let them invest it.'' They will say, ``we only want to let
the railroads do what everyone else does.'' Don't believe it for a
minute.
First, this bill does not modernize the railroad retirement system.
There's nothing ``modern'' about increasing benefits today while
putting off tax increases until tomorrow. That's the oldest trick in
the book.
Second, despite what we will hear from the other side, it's not their
money. The railroad retirement program has paid out more in benefits
than it has collected in payroll taxes every single year since 1957.
The surplus that exists today in the railroad retirement trust fund is
made up entirely of taxpayer subsidies enacted by Congress over the
years.
Third, even if the railroads were responsible for all of the money in
the trust fund, that does not mean they can afford to increase benefits
and reduce payroll taxes at the same time. According the actuaries at
the Railroad Retirement Board, the higher returns earned from investing
in the stock market won't pay for the tax cuts and benefit increases
they have proposed. As a result, this bill will reduce the trust fund
by nearly 65% and trigger an automatic payroll tax increase of nearly
70% on employers.
The supporters will insist the bill places the responsibility to pay
future benefits on the railroads if their investments don't work out.
But, let me read to you what the railroad industry thinks of its
responsibility. Here is a quote from the United Transportation Union
Newsletter dated May of 2000:
The legislation also requires that the railroads would be
responsible if the trust fund falls below a certain level. If
this happens, a tax would automatically be placed solely on
the carriers in order to replenish the fund. In order to add
a final assurance to the integrity of the fund, it is still
bound by the full faith and credit of the United States
government. They would be required to pay the obligations of
the fund if, for some reason, the other safety nets in place
were insufficient.
Earlier this year, the Lincoln Journal Star [8/15/01] reported:
Other unions and the Association of American Railroads are
promoting the bill as a self-financed shoo-in. In fact, the
U.S. government would still back the retirement fund,
acknowledged Obie O'Bannon, vice president of legislative
affairs for the association. But, he pointed out, the
``automatic tax ratchet'' would require the railroads to kick
in more money any time the fund's balance falls below four
times annual benefits, so that's protection that would mean
all U.S. railroads would face insolvency before the federal
liability applies.
Let me repeat the last sentence because some of my colleagues might
have missed its implication. The article says, ``all railroads would
face insolvency before the federal liability applies.''
That statement might seem overly dramatic until you take a look at
the estimates prepared by the Railroad Retirement Board. According to
the actuaries, the bill would increase the employer payroll tax by
nearly 70 percent over the next twenty-five years. That's an increase
the railroads readily admit they cannot afford to pay.
Finally, those who support this bill will insist they only want to
let the railroads invest their own funds--so-called Tier II--like
everyone else. Unlike other private sector pension plans that must
comply with the funding requirements of the Employee Retirement Income
Security Act (ERISA), this bill would allow the railroads to reduce
their payroll taxes and increase their benefits before they ever earn a
single penny on Wall Street.
Moreover, it should be noted that despite claims to the contrary, the
bill would not be limited to the use of Tier II funds. The National
Association of Retired Veteran Railroad Employees (NARVE) continues to
tell its members--
. . . not a dime of Tier 1 money is used for railroad early
retirement, either under current law or under our reform
bill. The money for early retirement is paid for entirely by
rail workers and employers through Tier 2 taxes. . . .
In reality, the amendment requires all of the funds remaining in the
Social Security Equivalent Benefit Account (Tier I) at the end of each
year be transferred to the new railroad investment account and used to
pay for Tier II benefits. That means, Social Security funds will be
used to pay early retirement benefits for railroad workers.
Now, don't get me wrong, I'm not opposed to railroad workers retiring
at age 60, or any other age they can afford. But, I am opposed to using
social security funds to pay for non-social security benefits. That is
exactly what this bill does. I understand the frustration railroad
workers must feel having to come to Congress to ask for legislation to
improve their retirement benefits. However, the railroad retirement
program is not just an industry pension fund. It is also a federal
entitlement program that is ultimately backed up by the U.S. taxpayer.
Congress has a duty and a responsibility not only to consider what is
best for the railroads, but also what is fair to the taxpayers. As
currently written, this bill would essentially allow the railroads to
borrow $15 billion--interest free--from their own pension fund to pay
for lower taxes and higher benefits and then try to make them pay it
back at a rate they cannot afford. Fixing this bill would require a
number of changes. Foremost among these changes would be the
requirement that the railroads actually earn a higher rate of return on
their investments before they reduce their taxes and increases their
benefits.
I believe railroad workers deserve the opportunity to invest in the
stock market and earn a higher rate of return. I would like to help
develop a plan to accomplish this goal. Unfortunately, the bill before
us today is fundamentally flawed. I would urge my colleagues who care
about the future of Railroad Retirement to vote against this bill.
Railroad workers deserve better and we can do better.
{time} 1845
Mr. CLEMENT. Mr. Speaker, I yield myself such time as I may consume.
We have fully debated this. I hear the gentleman from Michigan's (Mr.
Smith) point of view. I do not agree with it.
Mr. OBERSTAR. Mr. Speaker, our long struggle to improve the lot of
the Nation's 250,000 railroad workers and 700,000 retirees and to
provide relief for our Nation's financially ailing railroad industry is
finally coming to an end. The Senate is to be congratulated for
expeditiously considering the railroad retirement reform legislation
and for passing it overwhelmingly, 90-9. The Senate-passed bill, H.R.
10, is identical to H.R. 1140, enacted by the House on July 31, 2001,
by an equally strong vote of 384-33.
This bill is the product of an historic agreement reached by railroad
labor and management following two years of often-difficult
negotiations. The benefit improvements and tax cuts are made possible
by changing the current law that limits the investment of Railroad
Retirement Trust Fund assets to government securities.
The proposed changes in the law governing how Railroad Retirement
Trust Fund assets can be invested will not affect the solvency of the
Railroad Retirement system. The Tier I portion of the program, which
provides Social Security level benefits, will continue to be invested
only in government securities. Only Tier II funds, the part of the
system that provides pension plan type benefits above Social Security
benefit levels, will be eligible for investment in assets other than
government securities. The projected increases in trust fund income
from these changes are based on fairly conservative forecasts of the
rates of return that could be earned from such a diversified
portfolio--about two percentage points above the return on government
securities. Most importantly, if the investments fail to perform as
well as expected, workers' pensions are further protected as this
legislation requires that the railroads absorb any future tax increases
that might be necessary to keep the system solvent. Ultimately, the
Federal government continues to be responsible for the security of the
Railroad Retirement System.
[[Page H9166]]
The proposed legislation provides the first major benefit
improvements in railroad retirement in more than 25 years. The primary
benefit improvement are:
(1) The age at which employees can retire with full benefits is
reduced from 62 years to 60 years with 30 years of service as it was
before changes made in 1983.
(2) The number of years required for vesting in the Railroad
Retirement System is reduced from ten years to five years similar to
most other pension plans.
(3) The benefits of widows and widowers are improved so that a
surviving spouse's annuity would be guaranteed to be no less than the
amount the retiree was receiving in the month before his or her death,
and
(4) If the retirement plan becomes overfunded, benefits are
automatically improved.
H.R. 4844 also reduces significantly the payroll taxes paid by the
railroads. By the third year following passage of this bill, the
railroads stand to gain nearly $400 million annually for lower payroll
taxes. All of these savings go directly to the railroads' bottom lines
and can be used to make investments needed in the railroad
infrastructure and to improve the wages and working conditions of
railway workers.
It is important to note that nothing in this legislation alters the
fundamental nature of the program. Railroad retirement benefits will
continue to be guaranteed, in the final analysis, by the United States
Government.
Last year, the House passed this bill overwhelmingly, but the Senate
failed to act before the 106th Congress ended. This year the House,
once again passed this important measure by an overwhelming margin--and
this time the Senate has acted. Only the bill number is different from
what the House has already passed.
This is a good bill. It is good for workers, it is good for retirees
and their survivors, it is good for the railroads, and it is good for
the country. I urge all Members to support it today so we can get it to
the President before the holiday seasons.
Mr. RAHALL. Mr. Speaker, I am pleased that the House will finally
have the opportunity to send the ``Railroad Retirement and Survivors'
Improvement Act of 2001'' to the White House to be enacted into law. We
will send this bill to President Bush for his signature shortly.
In the Third District of West Virginia, I represent 8,300 citizens
who will benefit from this bill. This ranks southern West Virginia
seventh in the nation. The bill will double benefits for widows of
railroad retirees, reduce the retirement age from 62 to 60 years of age
with 30 years of service, and allow a person to be vested in the system
after five years of service, rather than 10 years, as currently
required.
I constantly hear from anxious constituents asking when the bill will
be enacted. Projections suggest benefits, which are modest to begin
with, will nearly double after this bill passes. This bill means a lot
to railroad retirees. It is an example of the type of legislation in
which people can see direct benefits to improve their daily lives and
quality of life.
We have endured a long, rough road getting to this day. This bill
includes the exact provisions of H.R. 4844, which I helped to write in
the 106th Congress, and which passed the House by an overwhelming bi-
partisan vote of 391-25 on September 7, 2000.
My constituents were disappointed and frustrated last year when the
bill was not enacted into law, especially since it is a product of two
years of negotiation between railroad workers and management of the
railroad industry.
Now, in the 107th Congress, we have done our job in the House. We
passed the House version of Railroad Retirement bill H.R. 1140, on July
31st by another overwhelming bi-partisan vote of 384-33.
Finally, the Senate passed the bill last week, on December 5, 2001,
by a vote of 90-9.
When this bill becomes law, it will enable railroad retirees and
widows to enjoy a better quality of life, by receiving the increased
benefits they greatly deserve, and which they have worked so long to
earn. They spent their working lives paying into their retirement, and
they deserve decent, adequate benefits to live comfortably in their
retirement years.
Mr. Speaker, I have no further requests for time, and I yield back
the balance of my time.
The SPEAKER pro tempore (Mr. Cooksey). The question is on the motion
offered by the gentleman from New York (Mr. Quinn) that the House
suspend the rules and concur in the Senate amendments to the bill, H.R.
10.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. SMITH of Michigan. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
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