COMPUTATION OF ANNUITIES

The method of computing an annuity is the same in the bill (sec. 3 (a)) as in the present act (sec. 217)—that is, by multiplying the "years of service" by an amount equaling the total resulting from adding 2 percent of the first $50 of the average monthly compensation, 11⁄2 percent of the next $100, and 1 percent of the next $150. For example, if a person's average monthly compensation should be $250, and his "years of service" 30, we should then add 2 percent of the first $50; or $1, 11⁄2 percent of the next $100, or $1.50; and 1 percent of the next $100 or $1, and this would make a total of $3.50. If we then multiply this amount ($3.50) by 30, the result would be the amount of the annuity-that is, $105.

For service which may have been rendered after December 31, 1936, or what is called in the bill subsequent service, the average moninly compensation shall be determined by taking the actual payroll average for such service rendered after December 31, 1936. For prior service that is, for service rendered prior to January 1, 1937the average monthly compensation shall be the average monthly compensation earned by the employee in calendar months in his years of service in the years 1924-31.

The bill contains a provision to the effect that if his service in the period 1924-31 shall be, in the judgment of the Board, insufficient to furnish a fair and equitable basis for determining his average compensation, then the Board shall determine the monthly compensation in such manner as the Board shall deem just and equitable.

YEARS OF SERVICE

The present act (sec. 217) provides that the period of service which shall be included in the computation of the annuity shall include all years of service not exceeding 30, whether rendered before or after the enactment date (Aug. 29, 1935). No distinction is made between a person who was an employee on the enactment date and a person who became an employee thereafter. For example, under the present law, a person with 20 or 30 years of railroad service may have separated from the railroad industry at 50 years of age, worked elsewhere for 10 years, reentered railroad service after August 29, 1935, and, on reaching retirement age, receive an annuity based on all his years of service in the railroad industry.

According to the terms of the pending bill (sec. 3 (b) (1)), service which may have been rendered prior to January 1, 1937, will be included only in the cases of persons who may have been employees on the enactment date, August 29, 1935. It is not necessary under the pending bill that persons should have been actually engaged in compensated service on the enactment date. Prior service is allowed those on furlough or leave of absence or absent on account of sickness on such date, even though they may not have resumed compensated service since the enactment date. The bill includes in the years of service all service subsequent to December 31, 1936. If prior service should be included in order to make up the service period, the number of years so included is limited by the bill so as to prevent the total service period from exceeding 30 years.

MAXIMUM AND MINIMUM ANNUITY

The present act (sec. 217) limits the "years of service" to 30, whether prior to or subsequent to the enactment date, or both, thus limiting the annuity to $120. The pending bill (sec. 3 (b) (1)) places no limit on service after December 31, 1936, and therefore does not fix such maximum limitation upon the annuity.

The present act stipulates no minimum as to an annuity. The pending bill (sec. 3 (e)) makes the following provision:

Persons who may be employed when they shall have attained the age of sixtyfive years and shall have completed twenty years' service, shall be entitled to a minimum annuity of $40 per month: Provided, however, That if the monthly compensation on which his annuity may be based should be less than $50, the annuity shall be 80 per centum of such monthly compensation, unless such 80 per centum should be less than $20, in which case the annuity shall be either $20 or if such monthly compensation should be less than $20 then the annuity shall be equal to such monthly compensation. The bill also provides that the value of the annuity shall not be less than the value of the old-age benefit he would receive under title II of the Social Security Act if his service as an employee after December 31, 1936, were included in the term "employment" as defined in the Social Security Act.

JOINT AND SURVIVOR ANNUITY

Both the present act (sec. 219) and the bill (sec. 4) provide that an employee shall have the right to take a smaller annuity for himself and leave an annuity following his death to his spouse, if surviving. The bill provides regulations and conditions for the exercise of such rights by employees and their spouses.

DEATH BENEFIT

The present act provides, for the widow or dependent next of kin, an annuity for 1 year, equal to one-half of the annuity which the deceased may have been receiving or entitled to receive at the time of his death. Under the present law the widows or estates of those who may die before receiving or becoming entitled to receive annuities receive nothing.

The pending bill provides that upon the death of any employee at any time, there shall be paid his widow, or, if there be no widow, to the person or persons designated by the employee, a sum equal to 4 percent of the total compensation (not exceeding $300 in any 1 month) paid to the employee on and after January 1, 1937, less any amount which may have been paid as an annuity to the employee or his spouse.

PERSONS ON CARRIER PENSION ROLLS

The present act (sec. 221) makes it the duty of the Retirement Board, at the earliest time practicable, to make a special report with recommendations regarding the desirability and practicability of substituting, for pension plans maintained by carriers prior to the enactment of the railroad retirement law of 1935, the provisions for annuities and other benefits to employees contained in said retirement law.

PROVISION FOR PAYMENT OF STATUTORY PENSIONS IN THE AMOUNT ALLOWED BY CARRIERS TO EMPLOYEES PRIOR TO MARCH 1, 1937

The bill (sec. 6) provides for the payment of pensions from and after July 1, 1937, to each person, who, on March 1, 1937, was on the pension or gratuity roll of an "employer." The bill provides for payment, from and after July 1, 1937, of the amount allowed such person as a pension by the employer on or before March 1, 1937, and that such payment shall be without any diminution by reason of the general reduction or readjustment made subsequent to December 31, 1930. No pension in excess of $120 per month is to be paid but the terms of the bill permit the payment by an employer of the amounts by which such company pensions or gratuities may exceed annuities or pensions payable under the bill.

Persons on the carrier pension rolls, who, on July 1, 1937, were eligible for annuities based in whole or in part on service rendered prior to January 1, 1937, shall from and after July 1, 1937, be paid an annuity under the Retirement Act and shall not be carried as pensioners transferred from the carrier pension rolls. In order, however, to avoid delay and confusion in qualifying such persons under the Retirement Act, provision is made to continue them as pensioners transferred from the carriers pension rolls until October 1, 1937, or to the date, prior to that time, on which they shall have qualified under the Retirement Act.

ADMINISTRATION

The administrative provisions of the present law are continued in the bill (secs. 8-13) without change or addition except in respects which are deemed calculated to make the administration of the act simpler and more efficient.

RAILROAD RETIREMENT ACCOUNT

A railroad retirement account, in the Treasury of the United States, is provided for by the pending bill. The bill also provides for appropriations to said account, as an annual premium, "for each fiscal year, beginning with the fiscal year ending June 30, 1937, of an amount sufficient, with reasonable margin for contingencies, to provide for payment of all annuities, pensions, and death benefits in accordance with the provisions of this act."

PART II

In addition to the effect heretofore indicated, part II (sec. 205) provides that certain employees of the Retirement Board, with railroad experience, who, in the judgment of the Board, are qualified to do the work required of them, may be retained although not having a strictly technical civil-service status. There are approximately 100 of such persons out of a total of 700 persons employed in accordance with the terms of the "Railroad Retirement Act of 1935."

In view of the experience of these persons not only in railroad service but in the service of the Board, a provision making possible their retention was considered by the committee to be entirely in harmony with the spirit and purpose of the civil-service laws.

MAXIMUM AND MINIMUM ANNUITY

The present act (sec. 217) limits the "years of service" to 30, whether prior to or subsequent to the enactment date, or both, thus limiting the annuity to $120. The pending bill (sec. 3 (b) (1)) places no limit on service after December 31, 1936, and therefore does not fix such maximum limitation upon the annuity.

The present act stipulates no minimum as to an annuity. The pending bill (sec. 3(e)) makes the following provision:

Persons who may be employed when they shall have attained the age of sixtyfive years and shall have completed twenty years' service, shall be entitled to a minimum annuity of $40 per month: Provided, however, That if the monthly compensation on which his annuity may be based should be less than $50, the annuity shall be 80 per centum of such monthly compensation, unless such 80 per centum should be less than $20, in which case the annuity shall be either $20 or if such monthly compensation should be less than $20 then the annuity shall be equal to such monthly compensation. The bill also provides that the value of the annuity shall not be less than the value of the old-age benefit he would receive under title II of the Social Security Act if his service as an employee after December 31, 1936, were included in the term "employment" as defined in the Social Security Act.

JOINT AND SURVIVOR ANNUITY

Both the present act (sec. 219) and the bill (sec. 4) provide that an employee shall have the right to take a smaller annuity for himself and leave an annuity following his death to his spouse, if surviving. The bill provides regulations and conditions for the exercise of such rights by employees and their spouses.

DEATH BENEFIT

The present act provides, for the widow or dependent next of kin, an annuity for 1 year, equal to one-half of the annuity which the deceased may have been receiving or entitled to receive at the time of his death. Under the present law the widows or estates of those who may die before receiving or becoming entitled to receive annuities receive nothing.

The pending bill provides that upon the death of any employee at any time, there shall be paid his widow, or, if there be no widow, to the person or persons designated by the employee, a sum equal to 4 percent of the total compensation (not exceeding $300 in any 1 month) paid to the employee on and after January 1, 1937, less any amount which may have been paid as an annuity to the employee or his spouse.

PERSONS ON CARRIER PENSION ROLLS

The present act (sec. 221) makes it the duty of the Retirement Board, at the earliest time practicable, to make a special report with recommendations regarding the desirability and practicability of substituting, for pension plans maintained by carriers prior to the enactment of the railroad retirement law of 1935, the provisions for annuities and other benefits to employees contained in said retirement law.

PROVISION FOR PAYMENT OF STATUTORY PENSIONS IN THE Amount ALLOWED BY CARRIERS TO EMPLOYEES PRIOR TO MARCH 1, 1937

The bill (sec. 6) provides for the payment of pensions from and after July 1, 1937, to each person, who, on March 1, 1937, was on the pension or gratuity roll of an "employer." The bill provides for payment, from and after July 1, 1937, of the amount allowed such person as a pension by the employer on or before March 1, 1937, and that such payment shall be without any diminution by reason of the general reduction or readjustment made subsequent to December 31, 1930. No pension in excess of $120 per month is to be paid but the terms of the bill permit the payment by an employer of the amounts by which such company pensions or gratuities may exceed annuities or pensions payable under the bill.

Persons on the carrier pension rolls, who, on July 1, 1937, were eligible for annuities based in whole or in part on service rendered prior to January 1, 1937, shall from and after July 1, 1937, be paid an annuity under the Retirement Act and shall not be carried as pensioners transferred from the carrier pension rolls. In order, however, to avoid delay and confusion in qualifying such persons under the Retirement Act, provision is made to continue them as pensioners transferred from the carriers pension rolls until October 1, 1937, or to the date, prior to that time, on which they shall have qualified under the Retirement Act.

ADMINISTRATION

The administrative provisions of the present law are continued in the bill (secs. 8-13) without change or addition except in respects which are deemed calculated to make the administration of the act simpler and more efficient.

RAILROAD RETIREMENT ACCOUNT

A railroad retirement account, in the Treasury of the United States, is provided for by the pending bill. The bill also provides for appropriations to said account, as an annual premium, "for each fiscal year, beginning with the fiscal year ending June 30, 1937, of an amount sufficient, with reasonable margin for contingencies, to provide for payment of all annuities, pensions, and death benefits in accordance with the provisions of this act."

PART II

In addition to the effect heretofore indicated, part II (sec. 205) provides that certain employees of the Retirement Board, with railroad experience, who, in the judgment of the Board, are qualified to do the work required of them, may be retained although not having a strictly technical civil-service status. There are approximately 100 of such persons out of a total of 700 persons employed in accordance with the terms of the "Railroad Retirement Act of 1935."

In view of the experience of these persons not only in railroad service but in the service of the Board, a provision making possible their retention was considered by the committee to be entirely in harmony with the spirit and purpose of the civil-service laws.