TN 9 (10-12)

A. Background of the RR Act

The RR Act developed from private pension systems established by various railroads. The RR Act created a uniform system of benefits for railroad retirement (RR) employees, their dependents, and survivors. The RR Act, as amended, provides for the coordination of Social Security (SS) and RR benefits to offer retirement, auxiliary, survivor, and disability benefits based on an individual's work in the RR industry and on employment and self-employment covered by the SS Act.

The RR Act contains provisions that may affect the payment of SS benefits when RR employment is involved; similarly, the SS Act contains provisions that may affect payment of annuities under the RR Act.

B. Highlights of the RR Act

1. RR life benefit claims

In 1951, RR compensation and SS earnings were first coordinated for life benefits. If the RR worker had less than 120 months of RR service at the time of retirement or disability onset, the RRB transferred the compensation earned to the Social Security Administration (SSA) to treat as wages for title II insured status and benefit computations.

If a RR worker met insured status under both programs, each agency awarded benefits. However, the 1974 amendments drastically changed the way the RRB and the SSA pay retirement benefits.

2. RR survivor benefit claims

In 1974, RR compensation and SS earnings were coordinated for survivor benefits. If the deceased RR worker had 120 or more months of RR work and a current connection (for additional information on current connection, see RS 01601.100B.6), the SSA transferred the SS earnings to the RRB. If the deceased RR worker had less than 120 months of RR work or no current connection, the RRB transferred the RR compensation to the SSA. Only one agency can award survivors benefits on a deceased RR worker's record.

3. Effect of the 1974 amendments to the RR Act

The RR Act of 1974 restructured the RR system to assure its long-term actuarial soundness. It represented a major change in the relationship and coordination of RR and SS benefits.

The most significant change for the SSA was the certification, under certain conditions, of SS benefits to the RRB rather than to Treasury. When the SSA certifies payment to the RRB, the RRB offsets the tier I annuity amount to account for entitlement to SS benefits and pays a single combined benefit check.

In certain cases, the SSA certifies SS benefits to the RRB even when the claimant is not concurrently entitled to a RR annuity, but is potentially eligible for a future annuity. In such cases, the claimant receives only the full SS benefit certified to the RRB, which in turn the RRB certifies to Treasury for payment.

NOTE: Prior to 1975, a person entitled to benefits under both RR and SS received two checks, one from each agency, even though there was a limited SS offset in effect at that time.

4. Effect of the 1981 amendments to the RR Act

The 1981 amendments to the RR Act of 1974:

• provided for RR annuities for divorced spouses and certain divorced widow(er)s,

• altered some annuity computations, and

• included various other changes, some of which affected SSA’s coordination with RRB.

5. Effect of the 2001 amendments to the RR Act

The 2001 amendments to the RR Act of 1974 eased the minimum vesting requirement for RR benefits for RR workers and their survivors. Effective January 01, 2002, RR workers and their survivors meet the minimum vesting requirement for RR benefits, if the RR worker had:

• 10 years (120 months) of RR covered service under the RR Act; or

• at least 5 years (60 months) of RR service, all of which accrued after December 31, 1995.

6. Effect of the 2006 amendment to the RR Act

The Pension Protection Act of 2006 provides for the payment of a RR annuity to an independently entitled divorced spouse effective August 17, 2007.

C. RRB and SSA benefit comparisons

Benefit categories under both Acts are the same, with the following exceptions:

1. RRB pays retirement and spouse’s claims, under certain conditions, at age 60.

2. RRB’s dependent parent benefits are limited to the amount SSA would pay a widow(er) or surviving child of the RR employee.

3. RRB does not pay benefits to a remarried divorced spouse in a life claim.

4. RRB life claims do not cover children; however, RRB increases the RR annuity for an annuitant with dependent children. Families do not receive less money than they would receive under SS. For a discussion of the minimum guaranty annuity, see RS 01601.125F.

D. Effect of SSA amendments on the RR Act

Any amendments to the SS Act that ease eligibility requirements for a class of beneficiaries provided for in the RR Act also apply to annuitants under the RR Act, if the change benefits the annuitant. A change in the eligibility requirements to a class of beneficiaries not provided for in the RR Act, however, will have no effect on RR annuitants.

Any new class of beneficiaries created in the SS Act may apply to the RR Act. The RRB will determine if a new class of beneficiaries applies to the RR Act.

E. Effect of SSA court decisions on the RR Act

Court decisions that change the eligibility requirements for any type of SS beneficiary or create a new class of beneficiary do not automatically apply to the RR Act. The RRB will determine if the decision applies to the RR Act.