DwightBranch Murphy Siding: Why can't the railroad industry change the retirement program over to 401k type program with employer contributions like other industries? Is there some advantage to having Uncle Sam involved? It appears there may be some disadvantges to having the federal government involved. Risk, or rather the lack of risk. It would be very difficult for a person in their seventies to go back into the workforce when their 401k is either exhausted or the private company backing it goes under, and so a plan that provides all retirees with a guaranteed, defined benefits is key. The US government,on the other hand, is the longest continuously existing government (that is to say, without a change in the basic law of the land, in our case, the US Constitution). The US government is very unlikely to go bankrupt in a Madoff-style scheme, to say the least.
Murphy Siding: Why can't the railroad industry change the retirement program over to 401k type program with employer contributions like other industries? Is there some advantage to having Uncle Sam involved? It appears there may be some disadvantges to having the federal government involved.
Why can't the railroad industry change the retirement program over to 401k type program with employer contributions like other industries? Is there some advantage to having Uncle Sam involved? It appears there may be some disadvantges to having the federal government involved.
Risk, or rather the lack of risk. It would be very difficult for a person in their seventies to go back into the workforce when their 401k is either exhausted or the private company backing it goes under, and so a plan that provides all retirees with a guaranteed, defined benefits is key. The US government,on the other hand, is the longest continuously existing government (that is to say, without a change in the basic law of the land, in our case, the US Constitution). The US government is very unlikely to go bankrupt in a Madoff-style scheme, to say the least.
Numbers. There is strength in numbers. One person's account does not yield as much as ten thousand people's account. Costs as much to make one investment as it does to make 10,000. Plus the bigger the size of the investment, the bigger the yield. And instead of all the invstment going into one buy it is divided enough so that if one is low it won't bring the others down; and if one is high,it might help lift others. It is like a mutual fund, a giant mutual fund.
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Murphy Siding Why can't the railroad industry change the retirement program over to 401k type program with employer contributions like other industries? Is there some advantage to having Uncle Sam involved? It appears there may be some disadvantges to having the federal government involved.
There are several reasons RR began...remember first, there was no Social Security and, in reality, virtually no pension systems as we know them if any at all. Railroad workers often retired early because of injuries but many worked until death. Unions and management realized there had to be a program to allow older workers ease out and younger guys learn and move up all the while maintaining an organized operating unit that would work with and without the most senior and most junior of skilled employees. It also allowed for survivors of employees to not become indigent.. It was progressive and worked for the safety and benefit of both labor and railroad. Railroad employees in the late 19th and early 20th Centuries were the largest employee group, and thus the strongest assembled group, and often the best paid employee group.
Also note that any and all other pension programans, 401Ks, personal retirement accounts, employee pension plans, etc., are not tied to RR or SS in anyway, are seperate agreements between employers and their chosen employees (could be all or just managers or...whatever).
I would guess that RRB was established and took over the handful of private pension plans that existed on a few Class 1's at the time in part to cover all railroaders and in part because of the not uncommon practice at the time for railroaders to move from one road to another to follow the work.
A few weeks ago at our last union meeting, we had a representative from RRB to explain benefits, etc. From what she said, RR retirement is in better shape than Social Security. Eventually it too, will run into some of the same problems, but barring major changes to the status quo (like politicians tinkering or major employment losses, etc) that date is farther out.
Most discussions about any possible changes being made make it look like just the unions are upset and worried. The companies also don't want to see any changes. Management also receive RRR when they retire.
Murphy, UP does have a 40lk program for employees. I think non-agreement employees do receive matching contributions from the company. Agreement employees do not at this time.
Jeff
Phoebe Vet A really good pension package is like golden handcuffs. It keeps your people with 10 or 15 years of training and experience from one day saying "I don't want to do this anymore".
A really good pension package is like golden handcuffs. It keeps your people with 10 or 15 years of training and experience from one day saying "I don't want to do this anymore".
That, and having to start over on the vacation time ladder.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Phoebe Vet In the not too distant future this country is going to deeply regret the move from defined benefit retirement plans to individual 401-k type accounts. With that said, we have beat this to death, I am going to move on.
In the not too distant future this country is going to deeply regret the move from defined benefit retirement plans to individual 401-k type accounts.
With that said, we have beat this to death, I am going to move on.
Thanks for stopping by.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Dave
Lackawanna Route of the Phoebe Snow
Convicted One I believe that if someone is in ANY industry for the retirement plan alone, then they are likely in the wrong business.
I believe that if someone is in ANY industry for the retirement plan alone, then they are likely in the wrong business.
Thanks to Chris / CopCarSS for my avatar.
If your pension fund is fully funded, you can sometimes avoid having to lay people off by asking your most senior (& highest paid) people: "How would you like to retire a few years early?" thus moving their cost from the payroll to the retirement fund.
To get back to Zug's original question, if it wasn't for the benefits, would people in the industry stick around....
For me, the answer would be maybe yes, maybe no, simply because I can make the same money if I went back as an investigator for the Attorney General, State of Texas, and the retirement package there isn't all that bad....not as good as RR retirement, but better than a lot of private sector packages.
That plus weekends off with my family, and allowances for fuel and travel would sway me a lot.
I would miss the times railroading can be fun, and those time are a lot more often than the days you wonder why oh why did you ever decide to do this for a living, but the knowledge that my investment plan plus my railroad retirement will allow my wife and I to live, while not in the lap of luxury, at least comfortably enough to do a lot of things and go a lot of places we want is pretty much the thing that holds me here.
Add in the fact that my wife still works for the agency, and only has a few years left before she can pull the plug, sticking here makes sense.
Plus, if I went back to the AG's office, I would have to deal with the scum of the earth on a daily basis again, which is way beyond the stress anything railroad can throw at you.
So, all things considered, the retirement does play a big part of my staying, but is not the only factor.
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diningcar Are you acknowledging that the employee and company contributions to Social Security are NOW COMINGLED with other tax receipts, while they ONCE WERE SEPARATED???
Absolutely not. Did you even read the link? The trust fund is invested in government securities as it has been since the 1930s. You can buy the same securities if you like. It is NOT co-mingled with the general fund. The 1968 "unified budget" was just a deceptive way to report the deficit to make it look smaller than it really was. The various dedicated funds were never rolled into the general fund, their surpluses were just reported together with the general fund to make the general fund deficit look smaller. It is no longer used.
FYI, the PBGC, a government program, protects many members of private sector pension plans in much the same way that the FDIC protects your bank deposits.
http://www.pbgc.gov/about/who-we-are.html
[quote user="Phoebe Vet"]
diningcar: Phoebe Vet, I am not aware that people deliberately lie at this site, but they may be mistaken. So please tell us where the SS money is at this time. I believe that the checks are written from the general appropriations and not from a separate account. If I am mistaken I am sure you can document my mistake.
Phoebe Vet, I am not aware that people deliberately lie at this site, but they may be mistaken. So please tell us where the SS money is at this time.
I believe that the checks are written from the general appropriations and not from a separate account. If I am mistaken I am sure you can document my mistake.
http://www.ssa.gov/history/BudgetTreatment.html
Your mistake is hereby documented.
As far as where is the money now: Where is the money you have in your savings account or your 401-k? Is it in a drawer at the bank or your broker? No; it is in an account and the institution owes it to you. That is how the economy works.
Are you acknowledging that the employee and company contributions to Social Security are NOW COMINGLED with other tax receipts, while they ONCE WERE SEPARATED???
diningcar Phoebe Vet, I am not aware that people deliberately lie at this site, but they may be mistaken. So please tell us where the SS money is at this time. I believe that the checks are written from the general appropriations and not from a separate account. If I am mistaken I am sure you can document my mistake.
Reminder to keep the topic within policies of the site which I understand can be tough based on the subject matter but it is the rules we have to live under and that I am to enforce as one of your Moderators...
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Darren (BLHS & CRRM Lifetime Member)
Delaware and Hudson Virtual Museum (DHVM), Railroad Adventures (RRAdventures)
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Dakguy201 According to today's Newswire the budget passed by the House contained NO actual change to the RR Retirement system. Rather, there was an accompanying report that listed possible areas for reform, including RR Retirement. In addition, this budget is going nowhere in the Senate, and I think most people believe it would face a certain veto if enacted. I feel like a sucker for participating in the discussion of something that isn't going to happen!
According to today's Newswire the budget passed by the House contained NO actual change to the RR Retirement system. Rather, there was an accompanying report that listed possible areas for reform, including RR Retirement.
In addition, this budget is going nowhere in the Senate, and I think most people believe it would face a certain veto if enacted.
I feel like a sucker for participating in the discussion of something that isn't going to happen!
Just because something doesn't happen in on session of Congress (or your State Legislature or City Council) doesn't mean that it won't be tried again in the next session.
Never too old to have a happy childhood!
Dakguy201 I feel like a sucker for participating in the discussion of something that isn't going to happen!
Why?
Won't happen this year, but RRT will be in the cross-hairs yet again in the future.
diningcar I now have it confirmed from another site that it was in the Lyndon Johnson administration that Congress and the President were responsible for transfering the Social Security Funds to the Genreal Fund. The Democrats controlled both houses at that time.
I now have it confirmed from another site that it was in the Lyndon Johnson administration that Congress and the President were responsible for transfering the Social Security Funds to the Genreal Fund. The Democrats controlled both houses at that time.
That is not true. The Social Security fund was never transferred into the general fund. Your "other site" lied to you.
No one raided anything. The Social Security trust fund has always been invested in federal government securities. It's the way the law was written in the 1930s. It was right after the stock market crash and government instruments were considered safer. They just never thought they would have to cash those securities.
What President Johnson did was a little slight of hand called the "Unified Budget". It put all of the trust funds, with their surpluses, into the single budget so that the budget looked balanced even though the general fund was in serious deficit because of the Viet Nam war. It was reversed several years later.
Thanks for posting Ed.
The RR retirement fund is administered by the RR Board, a government agency that manages the fund.
The RRB is paid for by the contributions of the members, it is part of the tier 2 tax we pay.
Tier 2 taxes are the contributions we railroaders make to the fund, and the carriers also contributions.
The fund invests in things like bonds, CDs, boring stuff.
When I retire, because I worked outside the railroad industry I have a SS account, along with my RR retirement.
By law, I have to draw from the account which has the most money in it, until that account is exhausted, and then I can draw from the other, but not both at the same time.
3 guesses which one I will draw from!
The amount in the fund is made up from the contributions of the railroaders and the carriers.
On the other hand, I do pay tier 1 taxes, which is referred to as the Social Security Benefit Equivalency tax, basically my part of Medicare/Medicade and such, none of this goes into my SS account.
The laws changed a few years ago, allowing for railroaders to retire at 60 years of age, if, and only if they have 30 or more years of service total.
If I wait and retire after 30 years,(at 68) I will draw approximately 80% of my then current salary.
My spouse can draw 50%, and if she outlives me, she is entitled to my 80% along with her SS benefits.
If I outlive her, I cannot draw her SS benefits.
There has been attempts to fold RR retirement into SS, but it will not happen, as it is a private fund.
http://en.wikipedia.org/wiki/Railroad_Retirement_Board
pretty accurate info.
http://www.rrb.gov/aandt/eri/Part1/chapter5.asp
Should help you out some...
Somehow the SS Administration was given the job of administering RRR but only the transaction to the recipient and gets "paid" by RRR for the service. But as far as the government having any way of touching the RRR money, no, it has no authority. As for RRR having its own financial problems, could be simply because there are so fewer contributing because of there being fewer railroaders. Also there is something about railroaders income not subject to RRR but SS (work not done for a railroad) being accessable, etc. and at one point there was talk of railroad employees being able to choose between SS and RRR. But those are the misty minded factoids I recall. The article on the newswire indicates that the unions and the railroads have stated there are no problems with RRR and the government has no claim on the money.
henry6 If the story on Trains Newswire today..Tue 4-24-12...there is nothing wrong with Rairoad Retirement.
If the story on Trains Newswire today..Tue 4-24-12...there is nothing wrong with Rairoad Retirement.
My impression is that it has made promises that it cannot keep. Is there any truth to the assertions that RRR has been "bailed out" by the taxpayers in the past?
Prior to government-provided Social Security the poverty rate for the elderly was much higher than for the general population, I have seen estimates of around 80% in 1920. It is now lower than the average population. If we return to a Third World social safety net ("If you want a retirement income, you figure out the private financial system that even people who work there don't understand, Mr. Engineer") there will be many poor retired railroaders.
henry6 If the story on Trains Newswire today..Tue 4-24-12...there is nothing wrong with Rairoad Retirement. It is a program between railroad and employees and is not a government program like SS, etc.
If the story on Trains Newswire today..Tue 4-24-12...there is nothing wrong with Rairoad Retirement. It is a program between railroad and employees and is not a government program like SS, etc.
I am not so sure of that. From what I can discern, it is indeed a goverment program.
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