Administration

The railroad retirement system is based on three Federal laws: the Railroad Retirement Act, the Railroad Unemployment Insurance Act, and the Railroad Retirement Tax Act. The first two of these Acts are administered by the Railroad Retirement Board, and the third, by the Internal Revenue Service of the U.S. Treasury. The Board also participates in the administration of the Federal Medicare health insurance program. In past years, the Board assisted in the administration of certain employee protection provisions of the Regional Rail Reorganization Act, the Northeast Rail Service Act, the Milwaukee Railroad Restructuring Act, and the Bankrupt Railroad Service Preservation and Employee Protection Act.

An independent agency in the executive branch of the Federal Government, the Board is administered by three members appointed by the President, with the advice and consent of the Senate. By law, one member is appointed upon recommendation of railroad labor organizations, one upon recommendation of railroad employers, and the third member, the Chairman, is, in effect, independent of employees and employers and represents the public interest. The terms of office are five years and are arranged so as to expire in different calendar years. The President also appoints an Inspector General for the Board.

The primary function of the Board is the determination and payment of benefits under the retirement-survivor and unemployment-sickness programs. To this end, the Board employs field representatives to assist railroad personnel and their families in filing claims for benefits, examiners to adjudicate the claims, and information technology staff to operate the data processing equipment and administer the automated programs needed to maintain earnings records, calculate benefits and process payments.

The Board also employs actuaries to predict the future income and outlays of the railroad retirement trust funds, statisticians and economists to provide vital data, and attorneys to interpret legislation and represent the Board in litigation. Internal administration requires a procurement staff, a budget and accounting staff, and personnel specialists. The Inspector General employs auditors and investigators to detect any waste, fraud or abuse in the benefit programs.

The headquarters of the Board is located at 844 North Rush Street, Chicago, Illinois 60611-2092 and the Board maintains field offices across the United States in localities easily accessible to large numbers of railroad workers.

Relations Between the Board and Other Government Agencies

As an independent agency in the executive branch of the Federal Government, the Board has many dealings with a number of other Federal agencies and with some State agencies. Its dealings with some of these agencies, such as the President’s Office of Management and Budget, the Office of Personnel Management, the Government Accountability Office, and the Department of the Treasury, are similar to the dealings of other executive branch agencies with these units. The Board’s relations with certain others—principally, the Social Security Administration, the Centers for Medicare & Medicaid Services, State employment security departments and, on a smaller scale, the Department of Labor—are related directly or indirectly to the various benefit programs.

The Board’s relationship with the Social Security Administration is particularly extensive because of the coordination between the two systems. Railroad retirement annuities may be based in part on social security credits and social security benefit amounts awarded after 1974 to railroad retirement annuitants are made through the Board as part of combined railroad retirement-social security monthly benefit payments.

The Board and the Social Security Administration have an interagency agreement providing for system-to-system access between the two agencies. This allows Board computer systems to access information as it is needed, thus improving customer service and reducing errors.

Relations Between the Board and Congress

The Board has numerous contacts with the Congress as a whole and with its individual members and committees. It sends the President and Congress an annual report on its operations and, on request, supplies additional information on the Board’s programs. Officials of the Board testify at congressional hearings on proposed legislation to amend the Railroad Retirement and Railroad Unemployment Insurance Acts, and the Board prepares reports on such legislation. Congress has jurisdiction over the amounts available to the railroad retirement system for benefit payments and for administration.

Relations Between the Board and Railroads

The administrative organization of the Board fosters close relations with railroad employers, employees and their representatives. As mentioned earlier, two of the Board’s three members are appointed on the recommendations of railway labor and management associations, and labor and management officials have been active in the development of the railroad retirement and unemployment insurance programs since their inception.

In addition, the Board relies on labor groups and railroad employers for assistance in keeping railroad personnel informed about the Board’s benefit programs. The Board conducts informational programs for railroad labor and management officials to acquaint them with the details of the benefit programs and their reporting responsibilities. These officials, in turn, educate railroad workers as to their benefit rights and responsibilities.

Railroad employers and railway labor groups also cooperate with the Board in a joint placement program to find jobs for unemployed personnel. These joint placement efforts help to reduce the costs of the unemployment insurance program.

The Board has direct contact with railroad employees through its field offices where its personnel explain benefit rights and responsibilities on an individual basis, assist employees in applying for benefits, provide related services for annuitants and answer any questions related to the benefit programs.

Through various publications and press releases, the Board disseminates, as widely as possible, information on its operations and the provisions of the laws it administers. Its publications include annual reports, triennial actuarial valuations, and benefit booklets and leaflets.

Relations Between the Board and the National Railroad Retirement Investment Trust

The National Railroad Retirement Investment Trust was established by the Railroad Retirement and Survivors’ Improvement Act of 2001. The sole purpose of the Trust is to manage and invest railroad retirement assets. The Trust is a tax-exempt entity independent from the Federal Government.

The Act authorizes the Trust to invest the assets of the Railroad Retirement Account in a diversified investment portfolio in the same manner as those of private sector retirement plans. Prior to the Act, investment of Railroad Retirement Account assets was limited to U.S. government securities.

The Trust has no powers or authority over the administration of benefits under the Railroad Retirement Act. The Trust is required to act solely in the interest of the Railroad Retirement Board, and through it, the participants and beneficiaries of the programs funded under the Railroad Retirement Act. The Act does not delegate any authority to the Railroad Retirement Board with respect to day-to-day activities of the Trust, but the Act does provide that the Board may bring a civil action to enjoin any act or practice of the Trust that violates the provisions of the Act or to enforce any provision of the Act.

Budget Estimates

Each year, Congress specifies in an appropriation act how much of the money derived from employer and employee taxes the Board may spend to administer the benefit programs. The appropriation is based on budget estimates prepared by the Board. The requested appropriation is sent to the Congress at the same time it is sent to the President’s Office of Management and Budget. In addition, as explained in the retirement financing chapter, the level of certain dual benefit payments for a fiscal year is determined by the Federal budget and appropriations process.

Relation of Administrative Costs to Benefit Payments

The Board has always had an exceptionally good record of administrative economy. Total administrative expenses currently average about one percent of benefit payments, despite the complexity of the Railroad Retirement Board’s programs.

Keeping Beneficiaries Informed

The Board conducts informational programs to keep railroad employees informed of their benefit rights and responsibilities under the Railroad Retirement and Railroad Unemployment Insurance Acts, with emphasis on the necessity of prompt application for benefits. Yet cases still occur in which qualified railroad employees or their family members forfeit benefits either because they do not know that these benefits are available or because they are unaware of the steps they themselves must take to claim them.

The Railroad Retirement Act limits the retroactivity of retirement and survivor annuity applications. Depending on the type of annuity application, the retroactivity can be as long as one year or there can be no retroactivity at all. The Board’s regulations do allow the granting of an earlier annuity beginning date if an annuitant can establish that he or she was deterred from filing an application at an earlier date by some action or statement of a Board employee. However, while the Board attempts to keep potential annuitants informed of their rights under the Railroad Retirement Act through press releases, informational bulletins and booklets, that information might not reach everyone. This is especially true when an individual left the railroad industry well in advance of retirement. Ultimately, the burden falls on the individual to secure benefit information.

Likewise under the Railroad Unemployment Insurance Act, while the Board may permit retroactive registration beyond the normal period when it can be shown that the employee was not at fault and that failure to apply for benefits was due to circumstances beyond the employee’s control, it cannot approve delayed claims if the only reason for a delay in filing was lack of knowledge of the law.

Program Integrity

Railroad employees, by and large, are honest and law-abiding, but any large group may include a few persons who either deliberately or through lack of knowledge seek benefits to which they are not entitled. Various procedures for detecting and discouraging such actions include reviews of employer records for work on days claimed as days of unemployment or sickness and checks with State agencies to detect duplication of benefit payments. The Board has wage matching agreements with all 50 States, the District of Columbia and Puerto Rico, covering the entire rail population. Electronic data exchange programs with railroads as well as Federal and State agencies have significantly enhanced the Board’s capability to detect fraud and abuse of the railroad unemployment and sickness insurance system. A 75-day disqualification is applied in all cases in which fraud is discovered. In some cases, prosecution is also recommended.

Other program activities designed to protect the railroad retirement trust funds include the investigation of uncashed annuity checks, matches with the Social Security Administration and the Centers for Medicare & Medicaid Services, and development of an online system to monitor railroad retirement/social security trust fund transfers. In addition to conducting audits of the Board’s operations, the Inspector General’s Office identifies and refers cases for prosecution of individuals who commit fraud against the Board’s benefit programs.

Administrative Improvements

The Board has implemented a number of other initiatives to improve operations, make the most of financial resources and provide the best possible service to the public. These include a toll-free Help Line (800-808-0772), an Internet Web site (www.rrb.gov), e-mail and voice mail in all field offices, and other technological improvements for better customer service.

Customer Service Plan

The Board's Customer Service Plan is centered on the following principles of customer service:  standards; openness; accessibility; and accountability.  In arriving at this plan, the Board considered the findings of a customer satisfaction survey, the results of focus group research, and responses received on point-of-service evaluation forms.  The plan described here is periodically reviewed and updated to ensure that the agency is providing realistic service delivery expectations to its customers. (Click here to access the Customer Service Plan.)