If there are fewer Railroad Workers who pay in US RR retirement, Them how will it stay solvent?

[Anonymous]

If Todays RR workers are paying for todays retirees then what does that mean
when there are more railroad retirees then workers? Sounds like Social Security were todays workers pay for todays retirees?

[jeaton]

That is just about the way it works, except the tier two portion of railroad retirement where the employees and railroads pay a greater percentage of wages into the plan than is taken for Social Security participants. That part of the deal is in lieu of union retirement plans, such as those sponsored by the Teamsters and many other unions.

Unless you are a railroad, railroad employee or retired railroad employee, don't worry about it. If you are under 55, you may be able to get into a "fixed" Social Security program that will let you invest some of your SS tax into "personal accounts". Then you can worry about the marketing going into the tank in the week before you retire.

Jay

[arbfbe]

When Railroad Retirement was recently overhauled to allow retirement at 60 with 30 years service the railroads guaranteed to make up any funding shorcomings in the future. I don't know if I really trust them to come through but that is what they told Congress about it.

Alan

[K. P. Harrier]

There are a few at this forum that see the writing on the wall. From what I can see, railroads do not want to solve thorny problems, such as what Dunkirkeriestation has inquired about. Any visionary efforts may be toward secret visions of how to get stockholders out of railroading.

[tree68]

It's a problem for virtually all retirement systems now. One of the reasons that GM has unloaded EMD was to help keep their retirement system solvent. The federal government figures that a substantial segment of its current workforce will be retiring in the next 5 years.

A big part of the problem is that some people are retiring earlier (especially when that's how a business downsizes), and usually living longer. The math isn't looking good.

[dharmon]

Round up the hobos.....sell off their organs....invest the money in bonds....it's the only way.

[jeaton]

Dan

U.S. Government Bonds?

I think I'd go with stock in the railroads that are screwing captive shippers with immoral duopoly pricing practises and making huge profits. Either that or the rail car builder that has the patent right to build cars that carry 20 foot containers sideways.

Jay

[dharmon]

You're right bad idea....I was looking for relative market stability for the investment


how about sell of the organs, turn the rest into soylent green and place the profits into building a big nuclear powerplant in Mexico and sell the juice to SoCal...then distrubute the profits equally, minus admin fees of course..and .00001% of each transaction to me for the idea.

[ericsp]

QUOTE: Originally posted by dharmon

You're right bad idea....I was looking for relative market stability for the investment


how about sell of the organs, turn the rest into soylent green and place the profits into building a big nuclear powerplant in Mexico and sell the juice to SoCal...then distrubute the profits equally, minus admin fees of course..and .00001% of each transaction to me for the idea.

So, that is the real purpose of the boxcars with shackles.

[jeaton]

Dan-That's the ticket. Let's start a web site and invite investers. I'll just take my admin fees off the investments.

[Anonymous]

Maybe a railroad retirement bailout will get rolled into the Social Security reform? I'm very suspicious that the 'solution' for the baby-boom retirement issue is a National Sales Tax. A consumption tax will shift the burden back onto the retirees.

[Anonymous]

QUOTE: Originally posted by tree68

It's a problem for virtually all retirement systems now. One of the reasons that GM has unloaded EMD was to help keep their retirement system solvent. The federal government figures that a substantial segment of its current workforce will be retiring in the next 5 years.

A big part of the problem is that some people are retiring earlier (especially when that's how a business downsizes), and usually living longer. The math isn't looking good.

There seems to be plauge of pension funds cannabilising present workers by pushing for more layoffs in the companies that they own for present retirees. Pesion funds own huge blocks of stock on behalf of workers. This is worse then Orwells Animal Farm

[edblysard]

What?
You cant mean the Stack N' a Half?

[:D]

QUOTE: Originally posted by jeaton

Dan

U.S. Government Bonds?

I think I'd go with stock in the railroads that are screwing captive shippers with immoral duopoly pricing practises and making huge profits. Either that or the rail car builder that has the patent right to build cars that carry 20 foot containers sideways.

Jay

[greyhounds]

QUOTE: Originally posted by up829

Maybe a railroad retirement bailout will get rolled into the Social Security reform? I'm very suspicious that the 'solution' for the baby-boom retirement issue is a National Sales Tax. A consumption tax will shift the burden back onto the retirees.

You may be right. "Social Security" was a Ponzi Scheme from the get go. In 13 years its cash flow goes negative and they'll have to divert income tax revenues to "Social Security" payments. If you think the current Federal budget cuts are bad, it's nothing compared to what they'll have to do when they have to use income tax funds to pay "Social Security" benifits - which is going to happen in 13 years.

And there is no "Social Security Trust Fund" to draw on. The money has already been spent. They're going to have to do something - and taxing our purchases after they've already taxed our earnings just may be that "something". I'll be 67 in 13 years.

[Anonymous]

A part of the problem is that there are more and more NON RAILROADERS (employees of outside firms) performing railroadmen's work on railroad property.
Case in point is AMtrack's DOWNEASTER which runs between Portland, ME and Boston MA. The food service employees working the AMCAFE on this train are not RR employees but empolyees of a catering firm.
Also, the mechanical people that service this train in Portland are outside contractors, not RR employees.
Ditto for the people who stock the food service cars in Amtrak's NEC, and some of those who service the ACELA (although that may have changed by now).
All these people mentioned above are replacing legitimate RR employees who once paid into the system and if retireed, are now collecting. These "outsiders" are NOT paying into the system.
The math on this is not good if RRs continue to deploy NON railroaders to perform railwayman's work.

[Justicar]

http://www.chron.com/cs/CDA/ssistory.mpl/politics/3070383

March 5, 2005, 9:49PM

Railroad pension barrels along

RRB investments on Wall Street outpace earnings of Social Security
By TIMOTHY SPENCE
Copyright 2005 Hearst News Service

WASHINGTON - White House officials and members of Congress looking for a way to invest some Social Security money in the stock market might check out a little-known federal retirement program that covers railroad workers.

A portion of the pensions paid by the 70-year-old Railroad Retirement Board comes from a fund that invests in Wall Street. The fund returned 13.3 percent last year and nearly 20 percent in 2003 — far more than the earnings from the Treasury bonds that are the backbone of Social Security.

Last year, the RRB paid nearly $9 billion to 649,000 beneficiaries.

Congress overhauled the RRB system in 2001 for reasons eerily similar to the current debate over Social Security. The railroad pension program was facing insolvency because of an escalating number of retirees and a shrinking number of workers — the same demographic trends in the Social Security system.

In trying to find a way to increase RRB revenues without raising taxes, Congress changed investment rules so that up to 65 percent of the railroad system's trust funds could be invested in the stock market. The changes involved "collective investment" of the funds rather than individual investment.


Investment focus
President Bush has proposed a broad overhaul of Social Security, with individual investment accounts as a centerpiece. He wants to offer younger workers the option of diverting up to 4 percentage points of annual wages from Social Security payroll taxes to a private, self-directed investment account for each individual.

The president is now on his second round of whistlestop tours trying to sell the proposal amid stiff opposition from Democrats, and a lukewarm response from congressional Republicans.

Railroad retirees receive two tiers of payments. The first, financed through the same 12.4 percent payroll tax that all other workers and employers share, provides identical benefits to Social Security. The second tier — the one invested in the markets — is financed by a slightly higher payroll tax, 12.6 percent paid by employers and 4.4 percent by employees.


Collective approach
Under the 2001 overhaul, assets held in the Social Security-equivalent fund must be invested in fixed-income Treasury bonds, but the second-tier assets can be invested in a mix of government bonds and private-market index funds and stocks.

AARP chief William Novelli, who opposes Bush's plan for individual investment accounts as "risky, hugely expensive and unnecessary," has endorsed the collective approach for Social Security investments in the stock market.

AARP, formerly known as the American Association of Retired Persons, is a major lobbying force on retirement issues in Washington. The group is under fire from Republicans for attacking the Bush administration's proposal.

The RRB changes under the 2001 law brought together an unusual coalition of labor unions and railroad companies, with both sides wanting to avoid huge payroll tax increases. Democrats and Republicans coalesced behind the changes, giving roles to both organized labor and corporations in managing the investments.

Congress created the National Railroad Retirement Investment Trust, an independent body comprising rail industry and labor union representatives, to manage investments that topped $27 billion in 2004.