Pensions for Railroaders

Pensions for Railroaders

Three years ago when the Social Security Act was still just an eleemosynary gleam in Franklin Roosevelt's eye, Congress, which got its early training in industrial legislation working on the railroads, passed a pension law for the 1,500,000 railroad employes of the U. S. In May 1935 the Supreme Court threw out that first Railway Pension Act along with NRA. Before the summer was out Congress tried again. The District of Columbia Supreme Court found the second law unconstitutional. So although the Social Security Act has been debated, passed and in force for a year, there is yet no railroad pension law in operation. Last week it appeared that one soon would be, but not until a third pension plan had Congressional approval.

After ten weeks of negotiation, undertaken at President Roosevelt's request, the Association of American Railroads and the 21 standard brotherhoods and rail unions finally agreed on a way to take care of superannuated employes. Most important feature of this agreement between management and labor was that the railroads promised to drop their lawsuits so that when the third railroad pension law goes through Congress it will stick on the statute books. The roads were willing to do so because the new plan provides that 1) some $50,000,000 of taxes which are due under the second law will never be collected; 2) the taxes proposed under the new plan will begin by costing the railroads $20.000,000 less per year than those of the present law; 3) the Federal Government, in, return for the taxes to be imposed, will assume the burden of the railroads' existing private pension systems, paying these pensions up to a maximum of $120 a month.

If the roads had something to be thankful for so did railroad workers. Compared to ordinary wage earners who will be pensioned under the Social Security Act, railroad labor would be considerably better off. Under the Social Security Act employers and employes are each taxed 1% on every salary up to $3,000 a year (a maximum of $30 a year) and the tax will increase gradually until each pays 3% in 1948. Under the railroad pension plan each would pay 2 1/2% on every salary up to $300 a month (a maximum of $90 a year) and the tax will step up gradually to 31% each in 1949. But this increased cost would be amply offset by increased benefits:

P:The maximum railway pension will be $120 a month instead of $85 under the Social Security Act.

P:As under the Social Security Act, retirement age is 65. Railroaders would retire at any time after 30 years' service if physically or mentally disabled, or if in good health and having 30 years' service as early as 60 (sacrificing one-fifteenth of their pension for each year they retire before 65). Or they could even continue working after 65.

P:If they died before retirement their estates would receive 4% of their aggregate salaries in a lump sum (under Social Security it is 3 1/2%).

P:It would be possible for them to accept reduced pensions in return for which after their death their widows would be given annuities.

P:Most important of all, under the Social Security Act no wage earner can be pensioned until 1942 and then his pension will depend not upon the number of years he has worked but on the amount of Social Security taxes he has paid. Thus there can be no full $85-a-month Social Security pensions until about 1980. But the railway plan, because it takes over the private pension systems of the roads, would begin granting some full pensions at once. In fact it is estimated that some 70,000 railroad workers would be eligible to retire as soon as the new law is passed.

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