Amtrak and the Railroad Retirement program

[MARC Rider]

I was looking at a summary of a Congressional Research Service summary of the Amtrak Reform and Accountability Act of 1997, and there was an item in a footnote that caught my attention:

Federal law requires Amtrak and its employees to participate in the railroad employee retirement program (made up primarily of freight railroads and their employees) rather than having their own retirement program, causing Amtrak to pay about $140 million more annually than its retirees get. Amtrak employees pay more too. The reason railroad retirement costs Amtrak and its employees more than Amtrak retirees get is that, compared to Amtrak, freight railroads have more retirees per current employee, coupled with the fact that most retirement contributions go to current retirees, rather than being saved for the benefit of future retirees.

This report was written in 1999. Has this situation changed since then? It seems that $140 million per year isn't a large fraction of Amtrak's annual budget, but wouldn't it be enough to pay to get rid of flex dining, and maybe reopen some of the staffed stations that have been closed?

 

[jis]

I was looking at a summary of a Congressional Research Service summary of the Amtrak Reform and Accountability Act of 1997, and there was an item in a footnote that caught my attention:

This report was written in 1999. Has this situation changed since then? It seems that $140 million per year isn't a large fraction of Amtrak's annual budget, but wouldn't it be enough to pay to get rid of flex dining, and maybe reopen some of the staffed stations that have been closed?

I have not looked at what they are doing in current appropriations, but in the past the RR Retirement contribution from Amtrak has been appropriated as a separate dedicated line item that is not fungible into anything else. It is appropriated from general funds and stashed away into the RR Retirement program.

So we the general taxpayers (many of whom BTW enjoy no retirement plan of their own) get to fund the retirement of railroad workers - or a small part of it - in a manner of speaking, just to support the mere existence of Amtrak. I am sure this is an unintended consequence of the convoluted ways of retirement funding, or something that the Congress people thought was a fair way to shove a problem under the rug.

 

[Acela150]

It seems that $140 million per year isn't a large fraction of Amtrak's annual budget, but wouldn't it be enough to pay to get rid of flex dining, and maybe reopen some of the staffed stations that have been closed?

Don't mess with my retirement! Don't even hint at touching RRB! The GOP party has tried and FAILED multiple times. Don't give anyone another reason to try to touch it! This is NOT a sarcasm post. I get pretty ticked off at people who think RRB is easy to "do away with". How would you feel if you worked for the RR for 30 Plus Years dealing with the crap that we deal with to earn a great pension just for some idiot to try and take it away.

 

[TrackWalker]

Thank you Acela150! I haven't cooled down enough to comment!

 

[jis]

I don't think the Amtrak RRRB payment has ever been at risk. As I said, it is what amounts to a commitment that was written into the Amtrak charter for all practical purposes and it is appropriated as a self standing separate item that is not re-assignable, no matter how much MARC Rider may want to lay his hands on it.

Of course the folks in Congress can do whatever, but so far they have not changed it.

 

[Dutchrailnut]

RRB is pretty much self funding , it has better base than Social Security.

 

[Bob Dylan]

RRB is pretty much self funding , it has better base than Social Security.

I'd rather have RRT, most Retired RRs make more than Social Security folks do!( I know poor folks getting $700-$800 a month from Social Security!)

 

[TrackWalker]

RR workers pay almost twice as much into RR retirement than those Social Security folks do, too. (Averaged around 180% for me looking at several old pay stubs.)

 

[PVD]

Sadly, Americans have been dumbed down into accepting the increasing disappearance of defined benefit retirement. American workers are a lot like the frog put in the pot of cold water, and then slowly gets boiled.

 

[jis]

One thing to remember too is that the RR Retirement Plan is essentially an employment pension plan, whereas Social Security is more of a safety net. It is not a substitute for a pension or 401K plan. Unfortunately way too many jobs do not really provide any pension plan defined benefit or defined contribution any more. And even those that provide a defined contribution plan, way too many have onerous restrictions placed on them, and even those that don't, apparently most people are not quite capable of managing those in a way that they will work out well specially in the face of wild swings in the market.

 

[TrackWalker]

An overview of the RR retirement program from the Social Security Administration, no less.

An Overview of the Railroad Retirement Program

 

[MARC Rider]

Don't mess with my retirement! Don't even hint at touching RRB! The GOP party has tried and FAILED multiple times. Don't give anyone another reason to try to touch it! This is NOT a sarcasm post. I get pretty ticked off at people who think RRB is easy to "do away with". How would you feel if you worked for the RR for 30 Plus Years dealing with the crap that we deal with to earn a great pension just for some idiot to try and take it away.

As a retired Fed, the last thing I would ever want to do is mess with anyone's generous retirement plan. Please excuse me if I gave the impression that was my intention.

 

[MARC Rider]

An overview of the RR retirement program from the Social Security Administration, no less.

An Overview of the Railroad Retirement Program

Ah, I see. The $140 million is basically just the money Amtrak would have to pay as the employer's contribution in taxes to Railroad Retirement. If they didn't have that appropriation, they'd have to pay the money out of their revenue, which would make Amtrak's finances look even worse than they are and probably require some fare increases.

Railroad Retirement benefits appear to be a similar concept to the Civil Service Retirement System that Feds who came on board before 1983 had. Railroad employees are not covered by Social Security, but they (and their employers) pay into a fund that provides benefits similar to that of Social Security, plus a defined benefit pension, plus some other social benefits. The Civil Service retirement Plan was a very generous defined benefit pension, but the Civil Servants received no Social Security (including, in most cases, not being eligible for a spousal benefit or survivor benefit from their spouse on Social Security.) The Current Federal Employee retirement plan is Social Security, plus a small defined benefit pension, plus a 401(k) style plan with some employer match.

 

[neroden]

This report was written in 1999. Has this situation changed since then?

So the situation at the time was that freight railroads had massively reduced their number of employees, so they had a lot of retirees (from the days when every train had a fireman and hundreds of clerks shuffled paper) but few current employees. Because *only* railroads are part of the RRB system, this meant Amtrak, who hadn't downsized as much, was paying a larger proportion of the costs, while freight railroads were receiving most of the benefit and profiting from that.

It's similar to millennials paying for all the retired Boomers in Social Security -- millennials paid higher social security taxes than the Boomers did and are getting less for it in the form of higher retirement ages -- and for the same demographic reason.

It's been 20 years since that report. The downsizing of US freight payrolls took place mostly in the 80s. The retirees from the 1970s and before, from the period when freight railroads had far more employees, are now mostly dead, frankly. So now the proportion that Amtrak pays into RRB vs. the freight railroads -- based on current employees -- is also about the same as the proportion of retired employees. In short, the situation has changed as time passed.

 

[Dakota 400]

For a long serving employee of any concern, tinkering with one's pension plan generally does not serve the best interest of those employees. Just ask some of the Delphi retirees. In Ohio, we have a contested election for two retiree representatives on the STRS Ohio Board this Spring. The issue: (without going into details which most AU members would not be interested) Tinkering that was done in 2017 dealing with our COLA. The "tinkering" was in response to our General Assembly's "tinkering" that required the Board to meet "their requirements" for the pension system.

 

[bms]

If someone worked hard at a dangerous, essential, and customer-facing railroad job for 20 or 30 years, then they well deserve the payments from the Railroad Retirement Program. I have no problem with appropriating taxpayer money to pay for this program. We wouldn't have the modern economy and the United States as we know it without the people who gave their lives to this difficult job.