REIP Statement

Statement for the Coalition of Rail Employees
for Improved Pensions (REIP)


Robert A. Scardelletti, International President
Transportation Communications International Union,

On the Introduction of:
The Railroad Retirement and Survivors’ Improvement Act of 2001

            This is an historic opportunity for our industry and, speaking on behalf of the 17 unions supporting this legislation, I am very pleased to join with my colleagues from the management side in thanking Chairman Young, Representative Oberstar, Chairman Quinn, and Representative Clement for their support of the Railroad Retirement and Survivors’ Improvement Act of 2001. 

            Calling this an historic opportunity really doesn’t do it justice.  Not only do we have great cooperation and unity on this legislation within the industry, we also have the enthusiastic support of those in our railroad community who have retired.  We also know, from last year’s effort, that we will have a very large bipartisan base of support in Congress for passage of this legislation.

            There are good reasons for that support. This legislation will greatly improve benefits for retirees and their families. It will resolve a serious concern regarding the benefit for widows and widowers under Tier II.  Under current law, while the retired employee is alive, the couple receives a Tier II benefit equal to 145% of the retiree’s benefit.  Unfortunately, when the retiree dies, the spouse is left with a benefit of only 50% of the retiree’s benefit — a reduction of almost two-thirds. This can be a most unwelcome surprise at a time of sadness.  It is also not good retirement security policy. Under this bill, the surviving spouse will receive a Tier II benefit equal to that received by the retiree, preventing what for some is a devastating reduction in survivor income.

            The bill also returns us to the retirement age at which full benefits can be received to what existed prior to 1984.  So it will be possible for railroad workers to retire at age 60 with 30 years of service, and I believe it is important to note that labor and management have agreed as a separate matter to revise our national collective bargaining agreement to conform the eligibility for retiree health benefits to age 60 as well, as soon as this legislation is adopted. This is measurable progress in an industry characterized by demanding physical labor over many years and a strong statement about the strength of the system now and under this legislation.

            There are other benefits as well, such as modernizing the vesting requirement from ten years to five years — five years is now considered the national norm.

            This is a system which has been around since the depths of the Great Depression.  In some respects it has served us well.  However, in some ways it has become outdated.  We are finally, through this legislation, bringing modern investment concepts into play on behalf of all of us who pay for and benefit from this system. For the first time, railroad employees’ pensions will have the benefit of market-based rates of return on our invested funds.  Instead of settling for the lower rates of return mandated by investments only in government bonds, Railroad Retirement will invest for the future in the way proven by other major industries over many years. 

            The negotiations between labor and management that led to this legislation were long and tough.  For our part, we had no intention of creating a new system that would not ensure sufficient funds to meet the obligations of Railroad Retirement. That is why the automatic tax adjustment feature of the bill is so important.  It stands behind the new investment concept, and removes the burden from Congress to act if the trust fund reserve dips below a conservative four- year benchmark by automatically adjusting employers? taxes.   It also rewards the system, and all of us who pay for it, if, as we hope, we exceed the conservative rates of return upon which the bill has been based. 

          Two other points.  First, there are more than 673,000 beneficiaries of Railroad Retirement and nearly 245,000 active employees in the system.   This bill provides an important opportunity to improve their lives and retirement security.  Last year, with 305 bipartisan co-sponsors in the House and 83 members of the Senate on record in support, we fell victim to the legislative calendar and the unique circumstances of an election year.

            Each month that goes by we estimate that more than 65,000 retirees and surviving spouses are losing out on substantial amounts of much-needed benefits, and employees who want to retire with full annuities are delaying their plans.  We can?t let them down this year.

            Second, and finally, in my view this bill is the best example of an innovative joint labor-management effort and truly constructive Congressional bipartisanship.  This legislation has benefited from a great deal of input from all the key committees. This bill gives us a chance to prove that by working together, good things can happen.

The Coalition of Rail Employees for Improved Pensions (REIP) is comprised of the following unions: International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers (IBB); International Brotherhood of Electrical Workers (IBEW); National Conference of Firemen and Oilers – SEIU; Hotel Employees & Restaurant Employees International Union (HERE); International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers (Iron Workers); Brotherhood of Locomotive Engineers (BLE); International Longshoremen?s Association (ILA); International Association of Machinists and Aerospace Workers (IAM); Seafarers International Union of North America (SIU); Service Employees International Union (SEIU); Sheet Metal Workers International Association  (SMWIA); Brotherhood of Railroad Signalmen (BRS); American Train Dispatchers Department (ATDD); Amalgamated Transit Union (ATU); Transport Workers Union of America (TWU); Transportation Communications International Union (TCU); and the United Transportation Union (UTU)

 For Information Contact:  Dennis Boston at 202/628-5935.

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