Retirement Board (RRB) is an independent agency in
the executive branch of the United States government created in
1935 to administer a social insurance program providing retirement
benefits to the country's railroad workers.
The RRB serves U.S. railroad workers and their families, and
administers retirement, survivor, unemployment, and sickness benefits.
Consequently, railroad workers do not participate in the United States
Social Security program. The RRB's headquarters are in Chicago,
Illinois, with field offices throughout the country.
In connection with the retirement program, the RRB has administrative
responsibilities under the Social Security Act for certain benefit
payments and railroad workers' Medicare coverage.
During fiscal year 2009, retirement survivor benefits of some $10.5
billion were paid to about 589,000 beneficiaries, while net
unemployment-sickness benefits of $160 million, including over $10
million in temporary extended unemployment benefits under the American
Recovery and Reinvestment Act of 2009, were paid to more than 40,000
At the end of fiscal year 2017, the average annuity paid to career
rail employees was $3,415 a month, compared to $1,370 a month under
Railroad retirement benefit payments are financed primarily by payroll
taxes paid by railroad employers and their employees. Since 2002,
funds not needed immediately for benefit payments or administrative
expenses have been invested by an independent National Railroad
Retirement Investment Trust, which qualifies as non profit 501(c)(28).
As of September 30, 2009, Trust-managed assets and RRB assets held in
reserve totaled almost $25 billion.
Unemployment Insurance Act
3.1 Benefit Year
4 Organization and functions
Long Island Rail Road
Long Island Rail Road disability controversy
6 See also
8 External links
See also: Social Security (United States)
The assignment, furlough, and recall of most railroad employees was
based on seniority. When work became scarce, employees with the least
seniority were the first to be laid-off. The majority of railroaders
were covered by pension plans, but private pension payments could be
reduced if revenues were down, and many had been cut drastically by
This practice created a conflict between older employees, who
preferred the certainty of a paycheck to an unreliable pension, and
younger employees, who saw opportunity for increased job security if
superannuated workers could be induced to retire by guaranteeing them
a decent pension.
Railroad workers formed an association to agitate for government
action. The Department of Labor proposed its own plan in response,
eventually compromising with the workers to produce the Railroad
Retirement Act of 1934. This legislation anticipated the Social
Security Act of 1935, which covered most other employees, and was
tailored to address the specific concerns of railroad workers.
The 1934 Act was soon found unconstitutional, but President Roosevelt
intervened to push for a lasting compromise. This pressure resulted in
Retirement Act of 1935, which set up a staff retirement
plan providing annuities based on an employee’s creditable railroad
earnings and service, and
Retirement and Carrier Taxing Acts
of 1937, which made railroad employees the only private-sector workers
outside the Social Security system to have a separate, federally
administered pension plan. More than 95,000 elderly and disabled
railroad employees applied for pension benefits by the end of 1937.
Since passage of the
Retirement Acts of the 1930s, numerous
other railroad laws have subsequently been enacted.
While the railroad retirement system has remained separate from the
social security system, the two systems are closely coordinated with
regard to earnings credits, benefit payments, and taxes. The financing
of the two systems is linked through a financial interchange under
which, in effect, the portion of railroad retirement annuities that is
equivalent to social security benefits is coordinated with the social
security system. The purpose of this financial coordination is to
place the social security trust funds in the same position they would
be in if railroad service were covered by the social security program
instead of the railroad retirement program.
Legislation enacted in 1974 restructured railroad retirement benefits
into two tiers, so as to coordinate them more fully with social
security benefits. The first tier is based on combined railroad
retirement and social security credits, using social security benefit
formulas. The second tier is based on railroad service only and is
comparable to the pensions paid over and above social security
benefits in other industries.
The railroad unemployment insurance system was also established in the
Great Depression demonstrated the need for unemployment
compensation programs, and state unemployment programs had been
established under the Social Security Act in 1935. While the state
unemployment programs generally covered railroad workers, railroad
operations which crossed state lines caused special problems.
Unemployed railroad workers were denied compensation by one state
because their employers had paid unemployment taxes in another state.
Although there were cases where employees appeared to be covered in
more than one state, they often did not qualify in any.
A federal study commission, which reported on the nationwide state
plans for unemployment insurance, recommended that railroad workers be
covered by a separate plan because of the complications their coverage
had caused the state plans. Congress subsequently enacted the Railroad
Unemployment Insurance Act in June 1938. The Act established a system
of benefits for unemployed railroaders, financed entirely by railroad
employers and administered by the RRB. Sickness benefits were added in
Retirement Act, retirement and disability annuities
are paid to railroad workers with at least 10 years of service. Such
annuities are also payable to workers with 5 years of service if
performed after 1995.
Full age annuities are payable at age 60 to workers with 30 years of
service. For those with less than 30 years of service, reduced
annuities are payable at age 62 and unreduced annuities are payable at
full retirement age, which is gradually rising from 65 to 67,
depending on the year of birth. Disability annuities can be paid on
the basis of total or occupational disability. Annuities are also
payable to spouses and divorced spouses of retired workers and to
widow(er)s, surviving divorced spouses, remarried widow(er)s,
children, and parents of deceased railroad workers. Qualified railroad
retirement beneficiaries are covered by Medicare in the same way as
social security beneficiaries.
As noted, the RRB pays retirement annuities to employees, as well as
their spouses and/or divorced spouses, if the employee had at least 10
years of railroad service, or 5 years if performed after 1995.
However, for survivor benefits, there is an additional requirement
that the employee’s last regular employment before retirement or
death was in the railroad industry. If a railroad employee or his or
her survivors do not qualify for railroad retirement benefits, the RRB
transfers the employee’s railroad retirement credits to the Social
Security Administration, where they are treated as social security
Payroll taxes paid by railroad employers and their employees are the
primary source of funding for the railroad retirement-survivor benefit
Railroad retirement taxes, which have historically been
higher than social security taxes, are calculated, like benefit
payments, on a two-tier basis.
Railroad retirement tier I payroll
taxes are coordinated with social security taxes so that employees and
employers pay tier I taxes at the same rate as social security taxes.
In addition, both employees and employers pay tier II taxes which are
used to finance railroad retirement benefit payments over and above
social security levels. These tier II taxes are based on the ratio of
certain asset balances to the sum of benefit payments and
Revenues in excess of benefit payments are invested to provide
additional trust fund income. The National
Investment Trust manages and invests railroad retirement assets.
Railroad retirement funds are invested in non-governmental assets, as
well as in governmental securities.
Additional trust fund income is derived from the financial interchange
with the social security trust funds, revenues from federal income
taxes on railroad retirement benefits, and appropriations from general
treasury revenues provided after 1974 as part of a phase-out of
certain vested dual benefits.
Unemployment Insurance Act
Unemployment Insurance Act, unemployment insurance
benefits are paid to railroad workers who are unemployed but ready,
willing, and able to work and sickness benefits to railroad workers
who are unable to work because of illness or injury. The RRB also
operates a placement service to assist unemployed railroaders in
A new unemployment-sickness benefit year begins every July 1, with
eligibility generally based on railroad service and earnings in the
preceding calendar year. Up to 26 weeks of normal unemployment or
sickness benefits are payable to an individual in a benefit year.
Additional extended benefits are payable to persons with 10 or more
years of service.
The railroad unemployment-sickness benefit program is financed by
taxes on railroad employers under an experience-rating system. Each
employer's payroll tax rate is determined annually by the RRB on the
basis of benefit payments to the railroad's employees.
Organization and functions
Retirement Board is headed by three members appointed by
the President of the United States, with the advice and consent of the
Senate. One member is appointed upon the recommendation of railroad
employers, one is appointed upon the recommendation of railroad labor
organizations and the third, who is the Chairman, is appointed to
represent the public interest. The Board Members' terms of office are
five years and are scheduled to expire in different years. The
President also appoints an Inspector General for the RRB.
The primary function of the RRB is the determination and payment of
benefits under the retirement-survivor and unemployment-sickness
programs. To this end, the RRB employs field representatives to assist
railroad personnel and their families in filing claims for benefits,
examiners to adjudicate the claims, and information technology staff,
equipment and programs to maintain earnings records, calculate
benefits and process payments.
The RRB also employs actuaries to predict the future income and
outlays of the railroad retirement system, statisticians and
economists to provide vital data, and attorneys to interpret
legislation and represent the RRB in litigation. The Inspector General
employs auditors and investigators to detect any waste, fraud, or
abuse in the benefit programs.
Long Island Rail Road
Long Island Rail Road disability controversy
In contrast to the single disability program offered by Social
Retirement offers two types of disability
annuities. The Total Disability, or "Disability Freeze" as it is
called, is based on guidelines similar to Social Security Disability.
The Occupational Disability only requires that applicants possess
certain ailments which are deemed by law as an inability for them to
safely perform their particular regular job.
Railroad employees applying for either disability annuity must end any
compensated service within 90 days from the date of filing. Employees
either quit their jobs, retire or exhaust sick benefits before
applying for either disability. Because of this requirement and the
work restrictions while receiving a disability annuity, most
annuitants had worked for carriers that already awarded them private
In 2008, more than 90% of
Long Island Rail Road
Long Island Rail Road retirees were
receiving occupational disability payments. A former LIRR pension
department manager was arrested and charged with official misconduct
for allegedly "taking money to help railroad employees find a doctor
and fill out paperwork for federal disability payments". All
charges of corruption and official misconduct were dismissed by
Supreme Court Judge Kase on December 11, 2009, who stated the
prosecution had misled the Grand Jury in the indictment. In October of
that year the Board voted to strengthen its oversight of disability
A report produced in September 2009 by the U. S. Government
Accountability Office disclosed that five federal agencies which
investigated and audited the disability awards found no evidence of
fraud or wrongdoing by either the
Retirement Board or the
retirees who applied for those awards. Its investigation did state,
however, that "a nearly 100-percent approval rate in a federal
disability program is troubling, and could indicate lax internal
controls in RRB's decision-making process, weaknesses in program
design, or both." The report found no fraud or wrongdoing, but noted
that in "prior work, we found that numerous claims with evidence from
the same doctors can be an indicator of potential fraud or abuse";
unlike Metro-North, LIRR disability evidence was provided primarily by
one of three doctors.
In March 2010, the New York Attorney General's Office announced that
the LIRR had agreed to appoint an independent examiner and implement
other reforms to address abuses of the occupational disability
benefits by its retirees and to help ensure that benefits are
available only to those who truly are disabled.
Another series of 11 federal arrests on Oct 27, 2011, included two
doctors and a former union official. In September 2012 four
retirees pleaded guilty to fraud. In February 2014, physician
Peter J. Lesniewski was charged for providing "fraudulent medical
narratives in support of the disability applications of at least 230
Title 20 of the Code of Federal Regulations
Retirement Board Building
Retirement Works Publications International, Ltd., the
Editors of. "The
Retirement Board." 18 April 2008.
HowStuffWorks.com. February, 6th 2010.
^ A Disability Epidemic Among a Railroad’s Retirees New York Times,
20 September 2008
^ Ex-Manager Charged in L.I.R.R. Disability Probe New York Times,
November 17, 2008
^ Judge dismisses most charges against LIRR official Newsday, December
^ International Business Times US
Retirement Board approves
Retirement Board: Review of Commuter
^ NBC New York, 2011 Oct 27 11 Charged in Massive LIRR Disability
^ "Manhattan U.S. Attorney Announces
Pension Disability Fraud Charges
Against 11 Defendants Associated with the Long Island
Could Cost $1 Billion". FBI – New York Field Office. October 27,
^ Two More Plead Guilty in LIRR
Pension Fraud Newsday, Sept 19, 2012
10:28 PM, By JOHN RILEY
^ "Disability Doctor Peter J. Lesniewski Sentenced in Manhattan
Federal Court to Eight Years in Prison for His Role in Long Island
Railroad Fraud Scheme". FBI – New York Field Office. February 21,
Retirement Board in the Federal Register
Causes and legacy
New Deal Coalition
American Liberty League
Emergency Banking Act
Agricultural Adjustment Act
Civilian Conservation Corps
Civilian Conservation Corps (CCC)
Civil Works Administration
Executive Order 6102
Homeowners Refinancing Act
Farm Credit Administration
Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation (FDIC)
Federal Emergency Relief Administration
Frazier–Lemke Farm Bankruptcy Act
National Industrial Recovery Act
National Housing Act
National Recovery Administration
National Youth Administration
Public Works Administration
Public Works Administration (PWA)
Public Works of Art Project
Reciprocal Tariff Act
Tennessee Valley Authority
Tennessee Valley Authority (TVA)
Second New Deal
Works Progress Administration
Works Progress Administration (WPA)
Federal Project Number One
Federal Energy Regulatory Commission
Farm Security Administration
Judicial Procedures Reform Act
National Bituminous Coal Conservation Act
National Labor Relations Board
National Labor Relations Board (Act)
Rural Electrification Act
Rural Electrification Administration
United States Housing Authority
Franklin D. Roosevelt
Harold L. Ickes
Henry Morgenthau, Jr.
Robert F. Wagner<