INTERNATIONAL ASSOCIATION of MACHINISTS
and AEROSPACE WORKERS
District Lodge No.19
ROBERT L. REYNOLDS
Presidcnt - Dir. Gcn. (Chairman
Ill Park Road
Paducah KY 42003
Telephone: (502)898-4198
(502) 8984199
Fax; (502)898-8414
March 22, 1999
To:Recording Secretaries of Local Lodges Affiliated with District Lodge 19
Dear Sirs and Brothers:
In the last several weeks, quite a bit has been said and written by a number of individuals concerning desired changes to the benefit provisions of the Railroad Retirement Act.
The proposed changes to the benefit provisions of the Railroad Retirement Act which have been discussed and studied are as follows:
1. Unreduced benefits at age 55 with 30 years service.
2. Unreduced benefits at age 60 with 30 years service.
3. Minimum widow's annuity guaranteed to be no less than the employee was receiving in the month before death.
Enclosed for the benefit of the members of your respective Local Lodge is a copy of an analysis by the Railroad Retirement Board of the financial impact of each of the proposed changes to the benefit provisions of the Railroad Retirement Act previously referred to herein.
Your review of the enclosed analysis will reflect that Proposals No.1 and 2 would place an impossible financial burden on the Railroad Retirement Funds: however, improving the widow's benefit is something that could possibily be achieved without jeopardizing the financial stability of the system.
In any event, trusting the enclosed information will be beneficial, I remain,
Sincerely and fraternally yours
Robert Reynolds
President Directing General Chairman
cc M. Filipovic All District Lodge 19 General Chairmen (via fax)
OFFICE OF The GENERAL VICE PRESIDENT
File: Railroad Retirement Board
March 16, 1999
Subj: Financial Impact Of Proposed Changes
To the PRESIDENT AND DIRECTING GENERAL CHAIRMAN and to all GENERAL CHAIRMEN Affiliated with District lodge 19
Dear Sirs and Brothers:
This has further reference to my presentation on February 27,
1999 regarding the financial impact of proposed changes to the benefit provision of the Railroad Retirement Act.
As information, I have received an analysis. which is attached1 based on the cash flow and the financial impact of the following:
1) Unreduced Benefits at Age 55 with 30 Years of Service: Under this proposal; retirees would be eligible for unreduced Tier 1 and Tier 2 benefits at age 55 with 30 years of service. Spouses of 30 year service employees would also be eligible for unreduced Tier I and Tier 2 at age 55, provided the employee has retired.
Table 1 shows the progress of the Railroad Retirement Account and Soda! Security equivalant benefits under current law.
Table 2 shows the impact of the proposed change.The cost of the additional benefits over a 75 year projected period may fully be offset by an additional (7.2% increase in Tier 2 inayroll taxes
2) Unreduced Benefits at Age 60 with 30 Years Service: Under this proposal, employees would be eligible for unreduced Tier I and Tier 2 benefits at age 60 with 30 years of service. Spouses of 30 year service employees would be eligible for unreduced Tier 1 and Tier 2 benefits at age 60, provided the employee has attained age 60 and is retired.
Table 3 shows the impact of proposed changes. The cost of additional benefits of 75 year projected period may be fully offset by 1.9% increase in Tier 2 payroll taxes.
3) Minimum Widows Guarantee Under This Proposal: The widow's annuity is guaranteed to be no less than the annuity the employee (retired) was receiving in the month before death. This proposal applies only to the aged (60 years of age or more) widow/widower and disabled widow/widower. Remarried and divorced
widow/widowers would not be eligible for this benefit.
Table 4 shows the impact of the proposed change. The cost of the additional benefits may be fully offset by a 0.6 % increase in Tier 2.
This information was provided to us by the Chief Actuary of the Railroad Retirement Board. I trust it will provide some insight into the benefit proposals.
With best wishes, I remain
Fraternally
Mark Filipovic
RAILROAD COORDINATOR