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With all the recent talk of Social Security reform, concern is beginning to surface about the prospect that the Bush Administration will see to wrap Railroad Retirement into the Social Security Administration. This could save the government money in by reducing parallel agencies and headcount. Also, grabbing the RRB funds could give Social Security a shot in the arm. Of course, the problem with all this is that both employer and employee contributions to RRB are much higher that corresponding SSA payroll taxes. This is because when the Railroad Retirement System was formed it was intended to not only provide a SS type benefit but also replace existing company pension plans. RRB Tier 1 payments are the equivalent of SS while RRB Tier 2 is the larger portion designed to replace the former company pensions. Obviously a raid on RRB would have railroaders carrying a disproportionate share of payroll taxes while depriving our industry of the federally administered retirement plan which is probably the single largest factor in railroads being able to retain employees over the long term. This is potentially very negative situation for railroaders individually and our industry as a whole. Even if payroll taxes were reduced in the RR industry, a whole new set of pension or retirement plans would have to be put in place for RR employees which are unlikely to be nearly as favorable as the existing system. In any event, if the status quo is changed it will be negative for all in the system as the security of a government run pension with defined benefits will be destroyed. LC
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