Like a wildfire, a huge response--letters, phone calls,
faxes, e-mail, computer talk--was generated by the Ronald Friend letter which was
published in the February 1998 issue of the Journal. The primary proposal in
his letter--retirement at age 55 or 30 years (360 months) of service--received
overwhelming support. Many simply signed on to Friend's letter and others made additional
comments:
"This concerns the article in the Journal by Ronald Friend, Lodge 741, I
thought this was one of the better pieces to appear in the Journal and I agree
with you all the way. I would like to hear other comments on this."
E-mail from Ranger 182
"Dear Brothers at Grand Lodge,
We the members of Lodge 783 feel very strongly about an issue that has appeared in the
BMWE Journal recently. This issue, which we favor, is lowering the retirement age
to 55 and/or retiring with 30 years of service.
Our main reason for wanting the retirement lowered basically boils down to our health.
After putting our bodies through 30 years of abuse on the railroad, we feel we deserve a
break. The new, modern railroad has developed many new tools to make our job easier and
safer, but are they really? We now have to wield 50 pound hydraulic tampers from tie to
tie; our wrists, arms and backs take a pounding from a variety of impact tools. We have to
climb up and down a ballast line that would make a billy goat proud, plus we get to do our
job "safely" in every conceivable kind of weather. The size of our work force
has decreased and the average age has increased, only making our jobs more difficult.
In the past 10 years, we've had 15 members of our lodge leave the service of the
railroad. Five of those members actually retired, ten of those members left with a
disability, that is not a very pleasant thought to the rest of our members. The odds of us
actually retiring healthy seem stacked against us.
We feel Grand Lodge and the Maintenance of Way Political League should lead the fight
to accomplish this goal. Members of Lodge 783 appreciate your time and concern towards
this matter and hopefully this letter can be printed in the BMWE Journal."
G. W. Garbo
Colchester, IL
One member gave qualified support and struck a note of caution:
"Dear Editor:
I was going over my most recent BMWE Journal, the other day and read the
letter from the brother who would like to see 30 years/55 years old and out. While that
might be a great idea to many, let us look into the harsh realities about this issue which
has been floating around for some time. First off, how much do you think the tax on your
railroad retirement would be? The brother mentions that the railroad would most likely
hire more people, I wonder if he really believes that would happen? With the many mergers,
cuts and contractors on the properties this will not happen and the tax left would be so
high, our fellow brothers and sisters could not afford to work in the railroad industry.
If anything we should be pushing for a better health plan to cover the cost when our
people retire and something that will help them when they reach Medicare age. We will
still be able to retire with full benefits if we have 360 months at 62 years old. So let's
put our efforts together to get better benefits when we retire so we will not have to
suffer as some of our brothers and sisters have in the rail labor movement. Their
sacrifices paved the better way for all of us.
Tom Nall
Westerly, RI
In answer to the question, how much would your railroad retirement tax be--an increase
of between 6.5 percent and 8.5 percent in tier II employment tax, according to an analysis
of the Railroad Retirement Board's chief actuary. This is up from a 5.4 percent to 7.8
percent increase which was estimated in 1993 following the introduction of
"55/30" legislation in Congress.
In his letter providing this information to interested members, General Chairman Perry
Geller, who fully supports the change, also noted that changes in the Railroad Retirement
Act can only be made by statute. His opinion is "that it would take a great deal of
work to accomplish this, however, didn't someone say 'never say never?'"
A similar proposal, basically calling for 30 years and out, was originally submitted by
Subordinate Lodge 2825 and passed as Resolution 13 by the delegates to the 1994 Grand
Lodge Convention. The biggest challenge to making Resolution 13 or the current proposal a
reality, says President Mac A. Fleming, "is the lack of unity within rail labor
around our common issues such as railroad retirement." Citing last year's battle to
save the occupational disability benefit from the attacks of the railroads, he said,
"one thing for certain, if we are to be successful in reducing the retirement age
under the Railroad Retirement Act, it will take all of rail labor--not just the
BMWE--acting in unison to make it a reality." Fleming urges all members to work
diligently with the members of other crafts and their leadership to bring about this
change.
In the July 1996 issue of the Journal, we printed an article about the changes
in retirement age starting with the year 2000 that resulted from Social Security
legislation enacted in 1983. The following questions and answers explaining these future
changes (as things stand now) have been excerpted from that article.
What are the railroad retirement age requirements and early retirement
reductions for employees?
Employees with 10 to 29 years of creditable service are eligible for regular
annuities based on age and service the first full month they are age 62. Early retirement
reductions are now applied to such annuities awarded before age 65. Starting in the year
2000, the age at which full benefits are payable increases in gradual steps until it
reaches age 67. Reduced annuities will still be payable at age 62, but the maximum
reduction will be 30% by the year 2022, rather than the current 20%. However, if an
employee had any creditable railroad service before August 12, 1983, the early retirement
reduction for tier II purposes will remain 20%.
Employees with 30 or more years of service are eligible for regular annuities
based on age and service the first full month they are age 60. The early retirement
reductions described above are applied only to tier I benefits and only
to annuities awarded before age 62.
Does this mean that the annuities of 30-year employees retiring at age 62 are
not affected by the future change in age reductions?
Yes, age reductions are not applied to the annuities of 30-year employees retiring at
age 62.
Will these changes in age reductions affect employee disability annuities?
No, employee annuities based on disability are not subject to age reductions.
How is the change in the maximum age reduction being phased in starting with
the year 2000?
The full retirement age for employee and spouse benefits increases from 65 to 66 and
from 66 to 67 at the rate of two months per year over two separate six-year periods, as
indicated in the following chart. Full retirement age is the earliest age at which
unreduced retirement benefits can be received.
YEAR OF BIRTH FULL RETIREMENT AGE
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-54 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67
How would these future changes in retirement age affect the amounts payable to
employees retiring at age 62 with 10-29 years of service?
Take the example of an employee born on June 2, 1950, who retires in 2012 at the age of
62. In terms of today's dollars and current benefit levels, not counting future increases
in creditable earnings, assume this employee is eligible for monthly tier I and tier II
benefits, before age reductions of $800 and $500, respectively, for a total monthly
benefit of $1,300.
Upon retirement at age 62, the employee's tier I benefit would be reduced by 25%, the
maximum age reduction applicable in 2012, which would yield a tier I monthly benefit of
$600; the employee's tier II benefit would also be reduced by 25%, providing a tier II
amount of $375 and a total monthly rate of $975. However, if the employee had any rail
service before August 12, 1983, the tier II benefit would be subject to a maximum
reduction of only 20%, providing a tier II amount of $400, and a total monthly rate of
$1,000.
For an employee eligible for a total monthly benefit, before age reductions, of $1,300,
but who retires in 2022 at age 62 with no service before August 12, 1983, and with a 30%
reduction applied to both tier I and tier II benefits, the net total annuity would be
$910.
Currently, 30-year employees who retire at ages 60 or 61 have their tier I
benefits permanently reduced by 20%, the maximum age reduction for employees. How will the
changes in the maximum age reduction affect this calculation?
The maximum age reduction in effect in the year the employee attains age 62
would be used in computing his or her initial tier I benefit.
For example, an employee was born on June 2, 1942, and retires in 2002 at age 60. His
gross tier I monthly benefit is $1000. In 2004, the year in which he attains age 62, the
maximum age reduction will be 24.17%, which yields an initial net tier I amount of $758.
This tier I benefit would be frozen until the first month throughout which the employee
is age 62. It would then be re-computed to reflect interim increases in national wage
levels and would also become subject to future cost-of-living increases. After this
re-computation, the gross tier I benefit of the employee would then be reduced by 24.17%.
How did these changes in future retirement benefits come about?
These 1983 changes to social security law, incorporated into the Railroad Retirement
Solvency Act enacted later in that year, were recommended by a bipartisan social security
commission as a funding measure on the basis of the increasing number and longevity of
social security beneficiaries. |