United States

Railroad Retirement Board

844 North Rush Street

Chicago, Illinois 60611-2092

www.rrb.gov
U.S. Railroad Retirement Board

Mission Statement

The Railroad Retirement Board’s mission is to administerretirement/survivor and unemployment/sickness insurance benefit

programs for railroad workers and their families under the Railroad Retirement

Act and the Railroad Unemployment Insurance Act. These programs provide

income protection during old age and in the event of disability, death or temporary unemployment and sickness. The Railroad Retirement Board also administers aspects of the Medicare program and has administrative responsibilities

under the Social Security Act and the Internal Revenue Code.

I

n carrying out its mission, the Railroad Retirement Board will pay benefits to the right people, in the right amounts, in a timely manner, and

will take appropriate action to safeguard our customers’ trust funds. The

Railroad Retirement Board will treat every person who comes into contact with

the agency with courtesy and concern, and respond to all inquiries promptly,

accurately and clearly.

www.rrb.gov

If you have any comments or suggestions regarding the presentation of information

in this publication, please let us know. You can fax us at 312-751-7154, 

e-mail us at opa@rrb.gov or write us at the following address: 

Public Affairs, U.S. Railroad Retirement Board

844 North Rush Street, Chicago, IL 60611-2092
UNITED STATES

RAILROAD RETIREMENT BOARD

2010 Annual Report

For Fiscal Year Ended September 30, 2009

THE REPORT IN BRIEF 1

A REVIEW OF OPERATIONS 7

ADMINISTRATIVE DEVELOPMENTS 35

LEGAL RULINGS 45

STATISTICAL TABLES 49
THE REPORT IN BRIEF

1

Benefits and Beneficiaries

B

enefits paid under the Railroad Retirement and Railroad Unemployment

Insurance Acts totaled almost $10.7 billion in the fiscal year ending 

September 30, 2009. Retirement and survivor benefits were paid by the Railroad

Retirement Board to about 589,000 beneficiaries during the fiscal year, of whom 552,000

were on the Board’s annuity rolls at the end of the year. Over 40,000 railroad employees

were paid unemployment and/or sickness insurance benefits. More than 3,000 beneficiaries received payments under both the Railroad Retirement Act and the Railroad

Unemployment Insurance Act.

Retirement and survivor benefit payments of $10.5 billion during the 2009 fiscal year

were $468.7 million more than payments in the prior year. Employee and spouse annuitants were paid over $8.3 billion, accounting for 79 percent of the total payments.

Employees received about $4.8 billion in age annuities, $2.2 billion in disability annuities

and $60.4 million in supplemental annuities, while spouses and divorced spouses received

about $1.3 billion. Survivors were paid $2.2 billion in annuities and some $3.5 million in

lump-sum benefits. The total number of beneficiaries who received retirement and 

survivor benefits declined by nearly 9,000 from fiscal year 2008.

Railroad retirement and unemployment insurance benefits totaling almost 

$10.7 billion were paid by the Railroad Retirement Board to about 626,000 

beneficiaries in fiscal year 2009. Financial reports issued in 2009 on the solvency 

of the railroad retirement and railroad unemployment insurance systems were both

favorable. Total railroad retirement system assets equaled $24.6 billion 

as of September 30, 2009. 

Statistics are presented on the cash basis of accounting instead of the accrual

basis of accounting for much of the Report. However, with the exception of the

first paragraph on page 2, the Federal Income Tax Transfers section on page 10

and the accompanying table on page 11, which are also presented as cash, the

information on pages 2, 7-15 and 27-29 is presented on the accrual basis of

accounting. The primary difference between the two bases of accounting is that

the cash basis recognizes revenue and expenditures only when cash is received

and paid. The accrual basis, on the other hand, recognizes revenue when it is

earned and expenses when they are incurred.
Gross unemployment and sickness benefits paid in fiscal year 2009 totaled 

$190.0 million. Net benefits totaled some $159.8 million after adjustment for recoveries

of benefit payments, including injury settlements, some of which were made in prior

years. Total gross and net benefit payments increased by about $79.4 million and 

$79.7 million, respectively, from the preceding year as the economic recession affected

the railroad industry during the fiscal year. Gross unemployment benefits totaling

$116.6 million ($111.7 million net), including $10.4 million ($10.2 million net) in 

temporary extended benefits under the American Recovery and Reinvestment Act of

2009, were paid to 23,700 claimants, while gross sickness benefits of $73.4 million 

($48.1 million net) were paid to 18,100 claimants.

Financial Reports

The Board’s 2010 railroad retirement financial report to Congress, which addressed

the period 2010-2034, was generally favorable, concluding that, barring a sudden, unanticipated, large decrease in railroad employment, or substantial investment losses, the

railroad retirement system will experience no cash-flow problems during the next 23

years. Cash-flow problems arise only under the Board’s most pessimistic employment

assumption, and even then not until 2033. The long-term stability of the system, 

however, is still not assured. Under the current financing structure, actual levels of 

railroad employment and investment return over the coming years will largely determine whether corrective action is necessary.

The Board’s 2010 railroad unemployment insurance financial report was also generally favorable. Even as projected maximum benefit rates increase 39 percent from $64

to $89 from 2009 to 2020, experience-based contribution rates maintain solvency. While

small, short-term cash-flow problems may occur in 2010 and 2011, projections show

quick repayment of loans, even under the most pessimistic employment assumption.

The report also predicted average employer contribution rates well below the maximum

throughout the projection period. A 1.5 percent surcharge, in effect in calendar year

2010 in order to maintain a minimum account balance, will likely increase to 2.5 percent

(optimistic employment assumption) or 3.5 percent (intermediate and pessimistic

assumptions) in 2011.

The National Railroad Retirement Investment Trust’s annual management report

for fiscal year 2009 stated that, as of September 30, 2009, the market value of the Trustmanaged assets was $23.3 billion. This represented a decrease of $2.0 billion over the

year, which included a transfer of $1.6 billion to the U.S. Treasury for the payment of

railroad retirement benefits. Total railroad retirement system assets, including those

maintained at the Treasury, equaled $24.6 billion.

The 2010 railroad retirement and railroad unemployment insurance financial reports

and the National Railroad Retirement Investment Trust’s 2009 annual management

report are available at www.rrb.gov.

2 2010 Annual Report, U.S. Railroad Retirement Board
THE REPORT IN BRIEF 3

Service Delivery

Customer Satisfaction

The Board’s most recent survey under the American Customer Satisfaction Index

(ACSI) was conducted in fiscal year 2009. This survey focused on recent railroad retirees,

the largest component of the agency’s entitlement base and the same group first surveyed

using the ACSI approach in 2001. In the most recent survey, the Board earned a score of

88, which was 6 points higher than the previous one. In addition, the score was 19 points

higher than the average for surveys at other federal agencies.

Customer Service Plan

In fiscal year 2009, customers received benefit services within the timeframes

promised in the Board’s Customer Service Plan 99.2 percent of the time.

Service Enhancements

The Board completed the expansion of its document imaging system to all of the

agency’s field offices in fiscal year 2009. This technology enables all 53 field offices to

quickly access documents processed in those offices, which also provides valuable support

to the recently implemented nationwide toll-free telephone service.

In addition, the agency’s new Employer Reporting System (ERSNet), which allows rail

employers to complete various pre- and post-payment verification activities over the

Internet, became available in 2009. This new system is more convenient and secure than

paper-based forms submitted via mail.

Economic Recovery Activities

The American Recovery and Reinvestment Act of 2009 authorized up to 13 more weeks

of special extended unemployment benefits for certain railroad workers who exhausted

their rights to benefits normally provided under the Railroad Unemployment Insurance

Act. President Obama subsequently signed the Worker, Homeownership, and Business

Assistance Act of 2009 into law on November 6, 2009, which extended these benefits for

another year. 

Office of Inspector General

During fiscal year 2009, the Office of Inspector General continued its independent

oversight of agency operations and its efforts to combat fraud, waste, and abuse. This

included the issuance of five audit reports that identified operational weaknesses and 

recommended improvements to agency management.

Investigative activities resulted in 48 criminal convictions, 78 indictments and 

informations, 29 civil judgments and more than $7 million in recoveries, restitutions, 

fines, civil damages and penalties. 
4 2010 Annual Report, U.S. Railroad Retirement Board

Selected Data on Benefit Operations

Fiscal Year Fiscal Year

Retirement-Survivor 2009 2008

Employee age annuities

Number awarded 10,300 9,800

Number being paid at end of period 190,300 191,200

Average being paid at end of period $2,126 $1,982

Employee disability annuities

Number of total disability annuities awarded 1,100 1,100

Number of total occupational disability

annuities awarded 2,100 2,300

Number of total disability annuities being paid 

at end of period 20,300 20,200

Number of occupational disability annuities

being paid at end of period 63,500 63,800

Average total disability annuity

being paid at end of period $1,488 $1,392

Average occupational disability annuity

being paid at end of period $2,423 $2,285

Supplemental employee annuities1

Number awarded 7,000 7,100

Number being paid at end of period 120,800 120,800

Average being paid at end of period $42 $42

Spouse and divorced spouse annuities

Number awarded, total 10,900 10,100

Number being paid to divorced

spouses at end of period 3,700 3,600

Number being paid at end of period, total 136,500 136,300

Average being paid to divorced spouses

at end of period $492 $458

Average being paid at end 

of period, total $795 $742

Survivor annuities

Number awarded to aged widow(er)s 6,300 6,500

Number awarded, total 7,900 8,200

Number being paid to aged widow(er)s

at end of period 119,500 124,100

Number being paid at end of period, total 148,900 154,200

Average being paid at end of period to

Aged widow(er)s $1,294 $1,222

Disabled widow(er)s $1,084 $1,025

Widowed mothers (fathers) $1,597 $1,529

Remarried widow(er)s $879 $816

Divorced widow(er)s $867 $804

Children $935 $879

Partition payments2

Number being paid at end of period 300 100

Average being paid at end of period $289 $320

Lump-sum survivor benefits awarded

Number of lump-sum death benefits 3,700 4,200

Average lump-sum death benefit $905 $905

Number of residual payments 3/ 3/

Average residual payment $2,052 $2,447
THE REPORT IN BRIEF 5

Selected Data on Benefit Operations (Continued)

Fiscal Year Fiscal Year

Employees and Earnings4 2009 2008

Average employment 225,000 235,000

Creditable earnings, Railroad Retirement

Act (billions):

Tier I $15.43 $16.05

Tier II $14.28 $14.84

Creditable earnings, Railroad

Unemployment Insurance Act (billions) $3.63 $3.66

Benefit Year Benefit Year

Unemployment-Sickness 2008-2009 2007-2008

Qualified employees 255,500 255,200

Unemployment benefits

Net amount paid (millions) 5

$77.8 6($111.7) $32.2

Beneficiaries 21,400 6

(23,700) 10,100

Number of payments 139,100 64,600

Normal benefit accounts exhausted 3,100 2,000

Average payment per 2-week registration period $520 $519

Sickness benefits

Net amount paid (millions) $45.2 6

($48.1) $46.1

Beneficiaries 17,600 6

(18,100) 18,400

Number of payments 117,200 122,400

Normal benefit accounts exhausted 3,100 3,300

Average payment per 2-week registration period $538 $520

1 Excludes supplemental benefits paid to partitioned spouses and partitioned divorced spouses where the employee 

is deceased. Averages are after court-ordered partitions. Fiscal year 2009 average includes 100 supplemental 

annuities, averaging $66, awarded under the 1937 Act. 

2 Limited to payments to partitioned spouses and partitioned divorced spouses where the employee is deceased or 

not otherwise entitled to an annuity. Partitioned payments from employees on the rolls are included with the 

employees’ annuities.

3 Fewer than 50.

4 Except for fiscal year 2008 employment, all figures in this section are preliminary.

5 Starting in June 2009, includes $1.1 million in temporary extended unemployment benefits authorized by the 

American Recovery and Reinvestment Act of 2009.

6 Data in parentheses are for fiscal year (October 1, 2008 - September 30, 2009). Unemployment benefits include 

$10.2 million in temporary extended unemployment benefits authorized by the American Recovery and 

Reinvestment Act of 2009.
A REVIEW OF OPERATIONS

RAILROAD RETIREMENT AND 

SURVIVOR PROGRAM

As of September 30, 2009, total railroad retirement system assets, including

those maintained in U.S. Treasury accounts and those maintained by the

National Railroad Retirement Investment Trust (the “Trust” or “NRRIT”), equaled

$24.6 billion, a decrease of over $2.1 billion during the fiscal year. Amounts in the

Railroad Retirement (RR) Account not needed to pay current administrative expenses

and amounts in the Social Security Equivalent Benefit (SSEB) Account not needed to

pay current benefits and administrative expenses are transferred to the NRRIT whose

Board of seven trustees is empowered to invest Trust assets in non-governmental

assets, such as equities and debt, as well as in governmental securities. 

FINANCIAL OPERATIONS - U.S. TREASURY ACCOUNTS

During fiscal year 2009, railroad retirement and survivor benefit payments were

financed through four U.S. Treasury accounts.

The SSEB Account, established in fiscal year 1985, pays the portion of railroad

retirement benefits equivalent to a social security benefit from various income sources

related to these benefits. The RR Account funds retirement, survivor and disability

benefits, in excess of social security equivalent benefits, from payroll taxes on employers

and employees and other income sources. Supplemental benefit payments are also paid

from the RR Account. The Dual Benefits Payments (DBP) Account and Federal

Payments (FP) Account, funded by congressional appropriations from general revenues,

finance the phase-out costs of certain vested dual benefits and interest on unnegotiated

checks, respectively. The four accounts together incurred $10.5 billion in benefit obligations (excluding $1.3 billion in social security benefits which were reimbursed by the

Social Security Administration) during fiscal year 2009.

At the end of fiscal year 2009, total railroad retirement system assets equaled 

$24.6 billion. During fiscal year 2009, benefits totaling approximately $10.9 billion were

paid under the Railroad Retirement and Railroad Unemployment Insurance Acts.

Retirement and survivor benefits accounted for almost all of this amount. 

Net unemployment and sickness benefits totaled $164.5 million. 

7
8 2010 Annual Report, U.S. Railroad Retirement Board

Financing Sources

Payroll Taxes

The primary source of income to the railroad retirement and survivor program is

payroll taxes levied on covered employers and their employees. Payroll taxes amounted

to $4.7 billion, 43.5 percent of total financing sources (which excludes a decrease of

$1.97 billion, mostly due to a change in NRRIT net assets) and $217.7 million less than

in fiscal year 2008.

Railroad employees and employers pay tier I taxes which, by law, are the same as

social security taxes. The rate of 7.65 percent is split between 6.20 percent for retirement and 1.45 percent for Medicare hospital insurance. The maximum amount of earnings subject to the 6.20 percent rate in calendar year 2009 was $106,800, and all earnings were subject to the 1.45 percent Medicare tax. In calendar year 2008, the maximum amount subject to the 6.20 percent tax was $102,000, with all earnings subject to

the 1.45 percent Medicare tax. Both employees and employers also pay a tier II tax to

finance railroad retirement benefit payments over and above social security levels.

This tax, on earnings up to $79,200 in 2009 and $75,900 in 2008, was 3.9 percent on

employees in both 2009 and 2008. It was 12.1 percent on employers in both 2009 and

2008.

Tier I and tier II taxes for fiscal year 2009 amounted to $2.4 billion and $2.3 billion,

respectively. 

Financial Interchange Transfers

The second major source of income to the railroad retirement and survivor program

consists of transfers from the social security trust funds under a financial interchange

between the two systems. The financial interchange is intended to place the Social

Security Old-Age, Survivors and Disability Insurance and Hospital Insurance Trust

Funds in the same position in which they would have been had railroad employment

been covered by the Social Security and Federal Insurance Contributions Acts. This

involves computing the amount of social security taxes that would have been collected

on railroad employment, and computing the amount of additional benefits which 

social security would have paid to railroad retirement beneficiaries during the 

same fiscal year.

In the computation of the latter amount, credit is given for any social security benefits actually paid to railroad retirement beneficiaries. When benefit reimbursements

exceed payroll taxes, the difference, with an allowance for interest and administrative

expenses, is transferred from the Social Security Trust Funds to the SSEB Account. If

taxes exceed benefit reimbursements (this has not happened since 1951), a transfer

would be made in favor of the Social Security Trust Funds. The net financial interchange transfer to the SSEB Account during fiscal year 2009 amounted to $4.0 billion.
A REVIEW OF OPERATIONS 9

Financing Sources - Fiscal Year 2009 (In Millions) 

GROSS TOTAL: $10,830.01

Costs - Fiscal Year 2009 (In Millions)

TOTAL: $10,947.6

RETIREMENT AND SURVIVOR PROGRAM

Note.--Percentages may not add to 100 due to rounding.

Benefit Payments 97.5%

$10,673.8

Interest 

Expense 1.5%

$160.2

Salaries and 

Expenses 1.0%

$114.6

Other < .1%

($1.0)

1Excludes a decrease of $1,964.2 million as detailed under Other Financing Sources on page 14.

Payroll Taxes 43.5%

$4,709.1

Financial Interchange 37.0%

$4,003.7

National Railroad 

Retirement 

Investment Trust

Transfers-In 14.3%

$1,553.0

Interest on 

Investments 0.3%

$34.7

Federal Income 

Taxes 3.0%

$321.0

General 

Appropriations 1.9%

$208.5
Interest on Investments and Other Revenue

Interest revenue decreased from $40.0 million in fiscal year 2008 to $34.7 million in

fiscal year 2009. Interest revenue was also earned from financial interchange

advances.

Federal Income Tax Transfers 

Legislation enacted in 1983 subjecting social security and railroad retirement benefits to Federal income taxes also provided for a transfer of the tax revenues to the social

security and railroad retirement systems for the payment of benefits. Most of the revenue from income taxes on social security equivalent railroad retirement benefits is

transferred to the SSEB Account, although a portion attributable to higher-income 

taxpayers is transferred to the Federal Hospital Insurance Trust Fund. Revenue

derived from taxing regular railroad retirement benefits in excess of social security

equivalent benefits is transferred to the RR Account. Revenue from taxing the vested

dual benefits funded by the general revenue appropriations previously described is

transferred to the DBP Account.

At the beginning of each quarter, income tax transfers are made from Treasury 

general funds to the SSEB, RR and DBP Accounts. These transfers are estimates of

expected tax revenues for the quarter. Adjustments are made later to reconcile the

estimates for a taxable year with actual tax revenues for the year. On a cash basis,

original tax transfers for fiscal year 2009 amounted to $463 million during the year.

Original transfers for fiscal year 2008 totaled $470 million. Net income tax transfers

after adjustments were $321 million for fiscal year 2009, including a -$83 million

adjustment for calendar year 2004 and a -$59 million adjustment for calendar year

2005. Net transfers in fiscal year 2008 were $360 million, including -$110 million in

reconciliation adjustments. 

The information in the preceding paragraph is on a fiscal year basis, while the table

on the next page shows income tax transfers to the Accounts for taxable (calendar)

years 2000 through 2009, including reconciliation adjustments through 2005.

General Appropriations

General revenue appropriations were provided by the Railroad Retirement Act of

1974 to fund the phase-out costs of certain dual railroad retirement/social security 

benefits considered vested prior to 1975, and by the Railroad Retirement Solvency 

Act of 1983 to fund interest on unnegotiated checks. The total amounts appropriated

by the Congress for vested dual benefits were $72 million for fiscal year 2009 and 

$80 million for fiscal year 2008. These amounts include Federal income tax transfers

for 2009 and 2008. The amount appropriated for fiscal year 2009 was 10 percent less

than fiscal year 2008, reflecting the continuing decrease in eligibility for these benefits,

which are not increased for the cost of living. The total amounts appropriated by the

Congress for interest on unnegotiated checks were $150,000 for fiscal years 2009/2010

and also $150,000 for fiscal years 2008/2009. In addition, Congress appropriated

10 2010 Annual Report, U.S. Railroad Retirement Board

(text continued on page 14)
A REVIEW OF OPERATIONS 11

1

Includes non-SSEB portion of tier I.

2

Receives taxes on social security equivalent benefit (SSEB) portion of tier I.

3

Receives taxes on vested dual benefit component beginning October 1, 1988.

4

The year in parentheses is the year the adjustments were made.

Federal Income Tax Transfers by Recipient Account and 

Benefit Component, Taxable Years 2000-2009 (Millions)

Revenue from taxes on

RRA benefits

treated as RRA benefits treated as

SSA benefits private or public pensions

Taxable year SSEB Tier II and

tier I non-SSEB Vested 

benefits tier I benefits1 dual benefits

SSEB Account2 RR Account DBP Account3

Original transfers during the year

2000 $102 $245 $12

2001 94 229 10

2002 97 252 9

2003 97 283 9

2004 109 294 8

2005 117 301 7

2006 125 312 7

2007 135 334 6

2008 144 325 5

2009 144 304 3

Reconciliation adjustments4

2000 (2004) +3 +17 +1

2001 (2006) +6 +25 +1

2002 (2008) -4 -20 -1

2003 (2008) -12 -70 -3

2004 (2008) -18 -63 -2

2005 (2009) -8 -49 -2
Railroad Retirement and Survivor Program 

Consolidated Financing Sources, 

Costs and Net Position (Millions)1

For the Fiscal Year Ended September 30 2009 2008

Financing Sources:

Payroll Taxes $4,709.1 $4,926.8

Financial Interchange 4,003.7 3,633.2

Interest on Investments and Other Revenue 34.7 40.0

Federal Income Taxes 321.0 359.0

General Appropriations 208.5 80.4

Other (1,964.2) (7,326.2)

Transfers to the National 

Railroad Retirement Investment Trust --- ---

Transfers from the National 

Railroad Retirement Investment Trust 1,553.0 1,298.0

Total Financing Sources 8,865.8 3,011.2

Costs:

Benefit Payments 10,673.8 10,059.4

Interest Expense 160.2 177.1

Salaries and Expenses2 114.6 113.2

Other (1.0) 1.5

Total Costs 10,947.6 10,351.2

Financing Sources over Costs (2,081.8) (7,340.0)

Net Position - Beginning of Period 26,077.3 33,417.3

Net Position - End of Period $23,995.5 $26,077.3

1 Prepared on an accrual basis of accounting. 

2 Includes unemployment and sickness insurance salaries and expenses of approximately 

$15.9 million for fiscal year 2009, and $16.0 million for fiscal year 2008.

12 2010 Annual Report, U.S. Railroad Retirement Board
A REVIEW OF OPERATIONS 13

Market value of assets managed 

by NRRIT on September 30, 2009 $23.3 billion

Rate of return of investment portfolio 

managed by NRRIT for full year 

ended September 30, 2009 (0.67%)

Source: NRRIT 

All NRRIT annual management reports and quarterly updates are available on the Railroad

Retirement Board’s web site at www.rrb.gov.

National Railroad Retirement Investment Trust (NRRIT)

Fiscal Year 2009 Summary
14 2010 Annual Report, U.S. Railroad Retirement Board

$135.0 million in fiscal year 2009 for a one-time $250 payment to most railroad retirement annuitants under the American Recovery and Reinvestment Act of 2009, and $1.4

million for associated administrative costs under the law.

Other Financing Sources

Other financing sources consisted of $8.4 million to be provided by the Office of

Personnel Management to pay future retirement benefits to Railroad Retirement Board

employees and $14.6 million from the railroad unemployment trust funds in transfers-in

for current budget fiscal year salaries and expenses. These financing sources were offset

primarily by a decrease in NRRIT net assets of $1,975.1 million, as well as transfers-out

of $6.0 million for salaries and expenses of the Board’s Office of Inspector General, a loss

on contingency liability of $5.0 million, and a $1.1 million decrease in unexpended 

appropriations.

Costs

The Railroad Retirement Board pays all salaries and expenses under a single administrative fund (Limitation on Administration) for both the railroad retirement and survivor program and the unemployment and sickness insurance program. Consequently, of

the $114.6 million and $113.2 million shown on page 12 for salaries and expenses in fiscal years 2009 and 2008, respectively, about $15.9 million for fiscal year 2009 and 

$16.0 million for fiscal year 2008 were for the unemployment and sickness insurance

program. About $1.2 million in other costs for fiscal year 2009 and $1.2 million for fiscal

year 2008 were for the unemployment and sickness insurance program. 

Excluding $17.1 million from total costs of $10.9 billion for fiscal year 2009 and 

$17.2 million from total costs of $10.4 billion for fiscal year 2008, total costs for the railroad retirement and survivor program for fiscal year 2009 increased $596.4 million or 

5.8 percent.

Benefit Payments

In fiscal year 2009, railroad retirement benefit payments increased $614.3 million or

almost 6.1 percent to about $10.7 billion on an accrual basis, including $69.5 million in

vested dual benefits and $60.3 million in supplemental annuities.

Interest Expense

Interest expense of $160.2 million represents interest on the financial interchange

advances made by the U.S. Treasury during the fiscal year.

Salaries and Expenses

Excluding unemployment and sickness insurance salaries and expenses of 

$15.9 million for fiscal year 2009 and $16.0 million for fiscal year 2008, salaries and

expenses for the railroad retirement and survivor program were about $98.7 million for 
A REVIEW OF OPERATIONS 15

fiscal year 2009 and about $97.2 million for fiscal year 2008, a $1.5 million or 1.5 percent

increase. Adjusted by the $15.9 million in salaries and expenses and $1.2 million in

other costs for the unemployment and sickness insurance program, fiscal year 2009

administrative expenses for the railroad retirement and survivor program were about

0.89 percent of total costs.

Other Costs

Other costs consisted primarily of post-retirement benefits (pensions, health and life

insurance) for Railroad Retirement Board employees of $7.2 million for the railroad

retirement and survivor program and $1.2 million for the unemployment and sickness

insurance program. In addition, carrier refunds of $1.1 million were incurred. These

costs were offset by approximately $9.2 million in reimbursements from the Centers for

Medicare & Medicaid Services for Part B Medicare costs, as well as a reimbursement of

approximately $0.5 million from the Board’s Office of Inspector General for Boardincurred expenses, and various other revenues of approximately $0.8 million.

NATIONAL RAILROAD RETIREMENT 

INVESTMENT TRUST OPERATIONS 

Funds not needed immediately for benefit payments or administrative expenses are

invested through the National Railroad Retirement Investment Trust. The Trust was

established pursuant to section 105 of the Railroad Retirement and Survivors’

Improvement Act of 2001 for the sole purpose of investing railroad retirement assets.

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. Although the Trust was created by Congress to hold

and invest federal assets, it is not an agency or instrumentality of the federal government. It is a tax-exempt entity governed by a seven-member Board, three selected by

rail management, three selected by rail labor and one independent trustee selected by

the six rail trustees.

During fiscal year 2009, the net asset value of Trust-managed assets decreased from

$25.3 billion on October 1, 2008, to $23.3 billion on September 30, 2009. This includes

$1.6 billion that the Trust transferred to the U.S. Treasury for the payment of railroad

retirement benefits during the year. The rate of return on Trust-managed assets for the

year (net of fees) was -0.7 percent.

Total railroad retirement system assets (Trust-managed assets and reserves held in

Treasury accounts) grew from $20.7 billion in 2002 to $24.6 billion as of the end of fiscal

year 2009, after net transfers for benefit payments of approximately $7.9 billion over the

same time frame.

Trust operations are described in detail in the National Railroad Retirement

Investment Trust Annual Management Report for fiscal year 2009, which is available on

the Board’s web site at www.rrb.gov.
BENEFIT OPERATIONS

Retirement and survivor benefits paid, including vested dual benefits and supplemental employee annuities, totaled $10.5 billion in fiscal year 2009, $469 million more

than in fiscal year 2008. Benefits were paid to about 589,000 beneficiaries in fiscal year

2009. Nearly 552,300 beneficiaries were being paid at the end of the year. The table

shown below presents retirement and survivor benefit payments for fiscal years 2009

and 2008, by type of benefit, and the percent changes in payments between the 2 years.

Under the two-tier railroad retirement formulas, the tier I annuity portion approximates a social security benefit

and increases by the cost-ofliving percentage applied to

social security benefits. The 

tier II portion, which is comparable to retirement benefits

paid over and above social

security benefits to workers in

other industries, increases by 

32.5 percent of the social security percentage. Effective

December 2007, tier I portions

increased by 2.3 percent while

tier II portions increased by

0.7 percent. Increases of 5.8

percent for tier I and 

1.9 percent for tier II were

effective December 2008.

The December 2007 and

December 2008 cost-of-living

increases provided additional

benefit payments of about 

$349 million in fiscal year

2009, compared to payments

in fiscal year 2008.

Monthly retirement and survivor benefits being paid numbered more than 680,500

at the end of the 2009 fiscal year, about 6,100 less than at the end of the prior year.

Monthly beneficiaries on the rolls declined by more than 6,300 over the year, from

558,600 to 552,300. The number of monthly benefits paid is always greater than the

number of beneficiaries on the rolls, since many annuitants receive more than one type

of benefit. Although the second benefit is usually a supplemental employee annuity,

some employees also receive a spouse or widow(er)’s annuity.

Regular employee annuities in payment status at the end of fiscal year 2009 

16 2010 Annual Report, U.S. Railroad Retirement Board

Type of benefit

Amount (in millions)

Percent

change

Fiscal year 

2009

Fiscal year 

2008

Retirement benefits

Employee annuities

Age $4,750.9 $4,490.9 +5.8

Disability 2,217.2 2,116.7 +4.7

Supplemental1

60.4 60.6 -0.3

Spouse and divorced

spouse annuities 1,282.4 1,208.9 +6.1

Total 8,311.0 7,877.0 +5.5

Survivor benefits

Annuities 2,188.5 2,154.0 +1.6

Lump-sum benefits 3.5 4.1 -13.3

Total 2,192.0 2,158.1 +1.6

Partition payments20.9 0.1 +670.7

Grand total $10,504.0 $10,035.3 +4.7

1 Excludes supplemental benefits paid to partitioned spouses and partitioned divorced spouses where the employee is deceased. 

2 Limited to payments to partitioned spouses and partitioned divorced

spouses where the employee is deceased or not otherwise entitled to an

annuity. Partitioned payments from employees on the rolls are included

with the employees’ annuities.

 Note.--Detail may not add to total due to rounding.
A REVIEW OF OPERATIONS 17

numbered 274,100, about 1,100 less than at the end of the previous fiscal year. The

number of age annuities being paid dropped from 191,100 to 190,300 over the year,

while disability annuities decreased some 200 to 83,800. Supplemental annuities

being paid remained the same at 120,800 at the end of the year. The number of

divorced spouse annuities being paid rose about 200 to 3,700. Spouse and divorced

spouse annuities together increased by more than 100, totaling 136,500 at year-end.

Some 148,900 monthly survivor benefits were being paid at the end of fiscal year 2009,

a decrease of 5,300 from the previous year. Approximately 300 payments to partitioned spouses and partitioned divorced spouses where the employee is deceased or not

otherwise entitled to an annuity were being paid at the end of fiscal year 2009, an

increase of nearly 200 from the prior year.

Retirement

Regular employee annuities

Awards of regular employee annuities numbered 13,500 in fiscal year 2009, 

400 more than in fiscal year 2008. Data by type of annuity awarded during the year

are given in the table

on this page.

Railroad employees

with 10 to 29 years of

creditable service, or 5

to 9 years of service if

at least 5 years were

after 1995, are eligible

for regular annuities

based on age and

service at age 62.

Early retirement

annuity reductions 

are applied to annuities awarded before

full retirement age--

the age at which an

employee can receive full benefits with no reduction for early retirement. This ranges

from age 65 for those born before 1938 to age 67 for those born in 1960 or later, the

same as under social security. If an employee had any creditable railroad service

before August 12, 1983, the retirement age for tier II purposes will remain 65. The

reduction for early retirement is 1/180 for each of the first 36 months the employee is

under full retirement age when his or her annuity begins and 1/240 for each additional

month.

Rail employees with 30 or more years of service are eligible for regular annuities

based on age and service at age 60. Certain early retirement reductions are applied if

Average

Employee annuities 

awarded in 

fiscal year 2009 Number Percent

Monthly

amount

Years of 

service

Age at 

retirement

Age

Beginning at full 

retirement age or over

800 6 $2,208 22.7 67.4

Unreduced, beginning 

at age 60 to under full 

retirement age 6,500 48 3,304 35.9 60.7

Reduced, beginning 

at age 62 to under full 

retirement age 3,000 22 1,477 17.1 62.8

Disability 3,200 24 2,558 24.3 55.4

Total 13,500 100 $2,655 28.2 60.3

Note.--Detail may not add to total due to rounding.
18 2010 Annual Report, U.S. Railroad Retirement Board

the employee first became eligible for a 

60/30 annuity July 1, 1984, or later and

retired at ages 60 or 61 before 2002.

Employees who retire at 60 or older with

at least 30 years of railroad service are

referred to as 60/30 retirees.

Disability awards are based either

on total disability or on occupational disability. A total disability annuity is

based on disability for all employment

and is payable at any age to employees

with at least 10 years of railroad service.

Employees with 5-9 years of service, 

if at least 5 years were after 1995, may

qualify for tier I only before retirement

age on the basis of total disability if they 

also meet certain social security earnings

requirements. An employee is considered totally disabled if medical evidence shows that a permanent physical

or mental condition exists which prevents the performance of any regular

work. A condition is considered to be

permanent if it has lasted or may be

expected to last for at least 12 months.

An occupational disability annuity

is based on disability for the employee’s

regular railroad occupation and is

payable to employees with a current 

connection with the rail industry at age 60 

if the employee has 10 years of service, or at

any age if the employee has at least 20 

years of service. An employee is considered

occupationally disabled if the physical or

mental condition is such that the

employee is permanently disabled for

work in his or her regular railroad occupation, even though the employee may

be able to perform other kinds of work.

Of the year’s 3,200 disability awards,

1,100 averaging $1,694 per month were

for total disability and 2,100 averaging

$3,002 were for occupational disability.

288

143

180

274

136 149

2004

2009

Employee Spouse

(includes

divorced

spouses)

Survivor

$1,657

$620

$1,026

$2,147

$795

$1,294

2004

2009

Employee Spouse Aged widow(er)

$620

1 2

$5,805

$2 131

$7,029

$2 192

2004

2009

Employee Spouse Survivor

$1,072

$2,131

$1,282

$2,192

1 2

Number of monthly beneficiaries, 

September 30, 2004, and 2009 (thousands)

Amount of benefits paid,

fiscal years 2004 and 2009 (millions)

1

Includes $63.9 million in fiscal year 2004 and $60.4 million in fiscal year 

2009 for supplemental annuities. 2Includes divorced spouses.

1

Without supplemental annuity. 2Includes divorced spouses.

Average monthly amount,

September 30, 2004, and 2009
A REVIEW OF OPERATIONS 19

Many employees who are disabled for all employment but are otherwise qualified for an

occupational disability annuity are initially awarded occupational disability annuities

in order to expedite payment.

An estimated three-fourths of all employees recently awarded disability annuities

will meet the medical criteria for a disability freeze determination. The standards for

freeze determinations follow social security law and are comparable to the criteria for

granting total disability. Also, an employee granted a disability freeze may qualify for

early Medicare coverage and lower federal income taxes on his or her annuity.

Of the employees who were awarded regular annuities in fiscal year 2009, approximately 9,200, or 68 percent, last worked for a railroad either in the calendar year their

annuity began or in the preceding year. Such retirements are termed “immediate,”

while those that occur 2 or more calendar years after the year of last railroad employment are called “deferred.” As a group, immediate retirees represent career railroad

employees who worked in the industry until retirement. Awards based on immediate

retirement averaged $3,131 per month, compared to $1,636 for the 4,300 awards based

on deferred retirement. Immediate retirees averaged 33 years of railroad service, considerably more than the average of 18 years for deferred retirees. Of the year’s awards,

53 percent of normal age retirements were immediate. While 93 percent of all 60/30

retirements were immediate, only 13 percent of the reduced age awards to employees

with less than 30 years of service were immediate. Immediate retirements accounted

for 73 percent of the year’s disability awards.

The 274,100 retired employees on the rolls as of September 30, 2009, were being

paid regular monthly annuities averaging $2,147. The table on this page presents data

by type of annuity for

these benefits.

Of the 83,800 disability annuities being

paid, 20,300 were for

total disability and

63,500 for occupational

disability. The two

types of disability

annuities averaged

$1,488 and $2,423,

respectively. In fiscal

year 2009, over $361

million was paid in total disability annuities and $1,856 million in occupational disability annuities.

Some 190,500 employees on the rolls at the end of fiscal year 2009 were immediate

retirees and their regular annuities averaged $2,506 per month. Annuities of the

83,600 deferred retirees averaged $1,330. Although their average railroad retirement

annuity was much lower, a greater proportion of the deferred annuitants also received

Employee annuities in 

current-payment status 

on September 30, 2009 Number

Percent

Average

monthly

amount

Percent

immediate

retirements

Age

Beginning at full retirement 

age or over 22,900 8 $1,578 44

Unreduced, beginning at age 60

to under full retirement age 93,300 34 2,787 92

Reduced, beginning at age 60 

to under full retirement age 74,100 27 1,461 36

Disability 83,800 31 2,197 81

Total 274,100 100 $2,147 70

Note.--Detail may not add to total due to rounding.
20 2010 Annual Report, U.S. Railroad Retirement Board

social security benefits--30 percent compared to 4 percent for the immediate retirees.

Moreover, the average social security benefit paid to deferred retirees was higher than

that paid to immediate retirees. Combined railroad retirement and social security

benefits to deferred retirees who were dual beneficiaries averaged $1,531, while combined benefits to immediate retirees averaged $2,184. The table below presents numbers of beneficiaries and average benefit amounts for employees on the rolls who were

receiving social security benefits, and for those who were not, by type of retirement.

Regular employee annuities consist of as many as three components: tier I, tier II,

and a vested dual benefit. Reductions for early age retirement are made in all components in cases

where the employee

retired before full

retirement age with

less than 30 years

of railroad service.

The tier I component is based on the

employee’s combined railroad and

social security covered earnings, and

is reduced by the

amount of any social security benefit that the employee receives. The gross tier I

amounts of employees on the rolls at the end of fiscal year 2009 averaged $1,686 per

month. Tier I amounts of nearly 7,800 employees were completely offset by social

security benefits. Tier I amounts being paid averaged $1,536.

The employee tier II component is based solely on railroad earnings. Tier II

amounts being paid at the end of fiscal year 2009 averaged $654. Employees are eligible for vested dual benefits if, based on their own earnings, they met certain vesting

requirements and qualified for both railroad retirement and social security benefits at

the end of 1974, or, in some cases, at the end of an earlier year of last railroad service.

About 32,400 retirees were receiving vested dual benefits averaging $162 at the end of

the fiscal year.

Supplemental employee annuities

A supplemental annuity is payable to employees with a current connection with the

rail industry at age 60 if the employee has at least 30 years of service, or at age 65 if

the employee has 25-29 years of service. The employee must also have had some rail

service before October 1981.

Some 7,000 supplemental annuities were awarded in fiscal year 2009, about 

100 less than in fiscal year 2008. More than 5,300 of the awards (76 percent) began

concurrently with the employee’s regular annuity, while the remaining 1,700 were to

employees already receiving a regular annuity. Supplemental annuity awards averType of retirement

Dual benefit

status Total Immediate Deferred

Receiving social security benefit

Number 33,100 8,300 24,900

Average monthly amount:

Railroad retirement (regular) $620 $1,324 $386

Social security 1,073 859 1,144

Combined benefit 1,693 2,184 1,531

Not receiving social security benefit

Number 241,000 182,300 58,700

Average monthly amount $2,357 $2,559 $1,730

Note.--Detail may not add to total due to rounding.
aged over $41 per month after court-ordered partitions; 86 percent were at the current

maximum rate of $43. Supplemental annuities are reduced for any part of a private

railroad pension attributable to employer contributions. During the fiscal year, 1,800

supplemental annuities were not awarded because they were entirely offset by private

pensions. In a few cases, the supplemental annuity was partially offset by the pension,

or the supplemental annuity was not offset because the pension was reduced.

Supplemental annuities were being paid to almost 120,800, or 44 percent, of the

retired employees on the rolls at the end of the 2009 fiscal year. These annuities averaged $42 after court-ordered partitions; over 100 of them were paid under 1937 Act

amendments, which stipulated a maximum rate of $70.

Spouse and divorced spouse annuities

Annuity awards to spouses and divorced spouses of retired employees numbered

10,900 in fiscal year 2009, 800 more than in the previous year. The table on this page

presents numbers and average amounts of spouse and divorced spouse annuities

awarded during the year

and being

paid at the

end of the

year, by type

of annuity

and whether

subject to age

reduction.

If an

employee is

at least age

62 and

retires with

10-29 years of railroad service, or has 5-9 years of service and at least 5 years were

after 1995, the employee’s spouse is eligible for an annuity at age 62. Full retirement

age for a spouse is gradually rising from 65 to 67, depending on the year of birth.

Early retirement reductions are applied to the spouse annuity if the spouse retires

before full retirement age. The reduction for early retirement is 1/144 for each of the

first 36 months the spouse is under full retirement age when her or his annuity begins

and 1/240 for each month (if any) over 36.

If an employee retires with at least 30 years of service and is at least age 60, the

employee’s spouse is eligible for an annuity at age 60. Prior to 2002, certain early

retirement reductions were applied to the tier I component of such a spouse annuity if

the employee retired before age 62, unless the employee attained age 60 and completed

30 years of service prior to July 1, 1984. If a 30-year employee retired at age 62, no age

reduction applied to the spouse annuity. December 2001 legislation liberalized early

A REVIEW OF OPERATIONS 21

Monthly 

spouse benefits

Awarded in

fiscal year 2009

In current-payment 

status on 

September 30, 2009

Number

Average

amount Number

Average

amount

Beginning at full retirement age or over 1,100 $512 17,500 $429

With minor or disabled child in care 400 1,012 1,700 1,101

Unreduced, beginning at age 60 

to under full retirement age 5,700 1,302 60,400 1,147

Reduced rate 3,100 464 53,100 526

Total 10,300 955 132,700 803

Divorced spouse annuities 600 508 3,700 492

Grand total 10,900 $931 136,500 $795

Note.--Detail may not add to total due to rounding.
22 2010 Annual Report, U.S. Railroad Retirement Board

retirement benefits for 30-year employees retiring at ages 60 or 61 after 2001 and their

spouses. A spouse of an employee qualified for an age and service annuity is eligible for

a spouse annuity at any age if caring for the employee’s unmarried child, and the child

is under age 18 or the child became disabled before age 22.

Of the 3,100 reduced spouse annuities awarded in fiscal year 2009, 100 averaging

$711 per month were to spouses of 30-year employees and almost 3,000 averaging $456

were to spouses of employees with less than 30 years of service.

At the end of fiscal year 2009, about 132,700 spouse annuities averaging $803 per

month were being paid. More than 3,700 divorced spouse annuities averaging $492 per

month were also being paid. These included fewer than 50 averaging $559, where the

employee was not yet entitled to an annuity. Families with an employee and spouse on

the rolls were paid combined railroad retirement benefits averaging $3,070. This

included $2,267 in regular and supplemental employee annuities and $803 in spouse

annuities.

Approximately 52,400, or 38 percent, of the spouses and divorced spouses on the

rolls were also receiving social security benefits. Combined railroad retirement and

social security benefits to these annuitants averaged $1,212 per month, including $307

in railroad retirement benefits and $905 in social security benefits. Railroad retirement

annuities to the 81,900 spouses not receiving social security benefits averaged $1,111,

while railroad retirement annuities to the 2,100 divorced spouses not receiving social

security benefits averaged $674.

Like regular employee annuities, spouse annuities consist of up to three components. The tier I component equals one-half of the employee’s tier I amount before any

reduction for the employee’s social security benefit. The spouse tier I amount is reduced

for the spouse’s receipt of a social security benefit and may be reduced for a spouse’s

public service pension. The tier I portion may also be reduced if the spouse receives a

railroad retirement employee annuity, but this reduction is usually restored through an

addition to the spouse tier II amount. Divorced spouses receive only a tier I benefit.

The spouse tier II component equals 45 percent of the employee’s tier II amount.

Railroad retirement amendments in 1981 precluded further awards of vested dual 

benefits to spouses.

Of the 132,700 spouses on the rolls at the end of fiscal year 2009, 91,500 were being

paid tier I amounts averaging $711 per month. The tier I amounts of 41,300 spouses

were completely offset by other benefits also due. Spouse tier II amounts averaged

$339. Vested dual benefits averaging $140 were being paid to 500 spouses. The 3,700

divorced spouses on the rolls at the end of fiscal year 2009 were being paid tier I

amounts averaging $511 per month, not reflecting all annuity adjustments.

Lump-sum retirement benefits

A lump-sum benefit may be payable at retirement to employees who received separation or severance payments after 1984. This benefit approximates the tier II payroll
A REVIEW OF OPERATIONS 23

taxes deducted from separation or severance payments that did not yield additional service credits for retirement. Some $0.5 million was paid in separation/severance 

lump-sum benefits during fiscal year 2009.

Employees who have at least 10 years of railroad service and are not entitled to a

vested dual benefit may be eligible for a dual retirement tax refund if they had concurrent railroad retirement and social security earnings within the period 1951-74. The

refund is equal to the social security taxes that the employee paid on the combined railroad and social security earnings in excess of the annual railroad retirement creditable

earnings maximum. During the 2009 fiscal year, the Board paid nearly 1,500 dual retirement tax refunds averaging $78. Most of the payments were to employees retiring during

the year. Less than 50 refunds were to survivors, mostly widows, of employees who died

before receiving the refund. Employees entitled to dual retirement tax refunds for years

after 1974 may claim them on their Federal income tax returns.

Survivor 

Monthly benefits

Annuity awards to survivors of deceased railroad employees numbered 7,900 during

fiscal year 2009, 400 less than the previous year. About 148,900 survivor annuities were

being paid at the end of the fiscal year, including 300 temporarily paid at spouse or

divorced spouse annuity rates pending recomputation to widow(er)s’ rates. Almost

119,500, or 80 percent, of the survivor

annuities were to

aged widows and

widowers. 

The table on this

page presents numbers and average

monthly amounts of

survivor annuities,

by type, for those

awarded in the year

and those being paid

at the end of the

year. 

Survivor annuities, like regular

employee and

spouse annuities, consist of as many as three components: tier I, tier II and, for widows

and widowers only, a vested dual benefit. As with spouses, legislation in 1981 precluded

new awards of vested dual benefits to widow(er)s. The tier I component is computed

according to social security formulas and is based on the deceased employee’s combined

Monthly 

survivor benefits

Awarded in

fiscal year 2009

In current-payment status 

on September 30, 2009

Number

Average

amount Number

Average

amount

Aged widow(er)s’ 6,300 $1,708 119,500 $1,294

Disabled widow(er)s’ 200 1,443 4,300 1,084

Widowed mothers’ (fathers’) 100 1,709 800 1,597

Remarried widow(er)s’ 200 1,030 4,400 879

Divorced widow(er)s’ 600 996 9,500 867

Children’s:

Under age 18 300 1,301 1,900 1,264

Student * 1,475 100 1,336

Disabled 100 1,052 8,400 854

Parents’ * $1,011 * $907

Total 7,900 . . . 148,900 . . .

* Fewer than 50.

Note.--Detail may not add to total due to rounding.
24 2010 Annual Report, U.S. Railroad Retirement Board

railroad and social security earnings. A reduction is made for the survivor’s receipt of a

social security benefit. There may also be a tier I reduction if the survivor receives a

railroad retirement employee annuity or public pension. Remarried and divorced

widow(er)s receive a tier I benefit only. A dependent parent receives only a tier I

amount if another family member is also receiving benefits or if the parent has remarried.

Survivor tier II amounts are figured as a percentage of an employee tier II benefit.

Prior to 2002, the percentages were 50 percent for a widow(er), 15 percent for a child,

and 35 percent for a parent. The total tier II amount for a survivor family was subject

to a minimum of 35 percent and a maximum of 80 percent of the employee tier II benefit, and all survivor tier II amounts were proportionately adjusted when either limit

applied. December 2001 legislation established an “initial minimum amount” for

widow(er)s which provides a tier II benefit equal to 100 percent of the tier II amount of

the deceased employee. The maximum tier II amount payable to a family rose to 130

percent of the employee’s tier II amount. Widows and widowers are guaranteed a total

tier I and tier II amount not less than what they were paid as a spouse, any necessary

increase being added to tier II.

Aged widow(er)s, who are eligible for benefits at age 60, have their tier I and tier II

amounts reduced if the annuity begins before full retirement age. The eligibility age

for unreduced annuities is gradually rising from age 65 to age 67. The maximum age

reductions range from 17.1 percent to 20.36 percent, depending on the widow(er)’s date

of birth. Excluding about 300 annuities temporarily paid at spouse or divorced spouse

rates, aged widow(er)s’ annuities being paid at the end of the 2009 fiscal year included

55,800 which were reduced for age. Aged widow(er)s’ tier I amounts being paid averaged $1,109 per month. In more than 7,900 cases, the tier I amount was wholly offset

by reductions for other benefits. Some 39,900 aged widow(er)s were also receiving

social security benefits, and these averaged $841. Tier II amounts averaged $259.

Almost 1,600 vested dual benefits averaging $69 were being paid to aged widow(er)s.

The tier I and tier II amounts of disabled widow(er)s’ annuities, which begin at ages

50-59, are reduced 28.5 percent for age. Tier I amounts being paid to disabled

widow(er)s on the rolls at the end of fiscal year 2009 averaged $922 (in nearly 200

cases, the tier I amount was wholly offset by reductions). Social security benefits being

paid to more than 1,400 disabled widow(er)s averaged $804. Tier II amounts averaged

$202, while the 100 vested dual benefits being paid averaged $84.

Tier I amounts paid to widowed mothers and fathers (widows and widowers caring

for children) generally equal 75 percent of the full amount payable to an aged widow(er)

before any reductions, similar to a social security mother’s or father’s benefit. Eligible

children and grandchildren are paid this same tier I amount. However, if the sum of

the tier I amounts of all members of a survivor family exceeds the social security family

maximum, then tier I amounts are proportionately reduced so that the total equals the

maximum. Reductions for the family maximum usually occur when the family includes

three or more beneficiaries. Tier I amounts being paid as of the end of fiscal year 2009
A REVIEW OF OPERATIONS 25

averaged $1,206 for widowed mothers and fathers and $862 for children. Fewer than

50 mothers (fathers) and some 2,300 children received social security benefits averaging $1,053 and $565, respectively. Tier II amounts paid mothers (fathers) and children

averaged, respectively, $421 and $98. 

Lump-sum survivor benefits

A lump-sum death benefit can be payable at the time of an employee’s death only if

there are no survivors immediately eligible for monthly benefits. For survivors of

employees who had at least 10 years of railroad service before 1975, the lump-sum

death benefit is based on the employee’s earnings through 1974, with a maximum

amount of approximately $1,200. If the employee completed the 10th year of service

after 1974, the lump-sum death benefit is limited to $255, the maximum benefit

payable under social security law, and only the widow or widower living in the same

household is eligible for the benefit. More than 3,700 lump-sum death benefits averaging $905 were awarded during fiscal year 2009. Approximately 500 benefits were to

widow(er)s, while 3,200 were to other individuals who paid the funeral expenses.

Lump-sum benefits may also be payable to survivors of employees with less than 10

years of service, but at least 5 years after 1995, if the employee met the social security

insured status requirements.

Another lump-sum survivor benefit, the residual payment, can be made if no other

benefits based at least in part on an employee’s railroad service will be payable in the

future, and the total of prior benefit payments is less than what the employee paid in

pre-1975 railroad retirement taxes. Fewer than 50 residual payments were awarded in

the 2009 fiscal year; they averaged $2,052. 

Partition Payments

The Pension Protection Act of 2006, as amended, continues the court-ordered partitioned portion of the tier II, vested dual and supplemental benefit payments to former

spouses after the death of the employee. It also allows for payment of court-ordered

partitioned payments where the employee is not entitled to an annuity if (1) the

employee has 120 months of railroad service or 60 months of service after 1995, and 

(2) both the employee and spouse or divorced spouse are 62 for a full month, or, if the

employee is deceased, the employee would be 62 for a full month.

At the end of fiscal year 2009, there were 300 partitioned spouses and partitioned

divorced spouses receiving payments averaging $289 where the employee was deceased

or not otherwise entitled to an annuity. While all received a partitioned tier II benefit,

only 4 percent received a partitioned vested dual benefit and 23 percent received a 

partitioned supplemental benefit.
26 2010 Annual Report, U.S. Railroad Retirement Board

Medicare Enrollments

The Medicare program provides health insurance to persons ages 65 and older, as

well as persons under age 65 who have been entitled to monthly benefits based on total

disability for at least 24 months or who suffer from chronic kidney disease requiring

hemodialysis or transplant. In addition to the basic hospital insurance, or Part A, plan,

which is financed through payroll taxes, there is an elective supplementary medical

insurance, or Part B, plan for which monthly premiums are charged.

Eligible railroad retirement annuitants and social security beneficiaries whose benefits are payable by the Railroad Retirement Board are automatically enrolled under

both plans, but Part B may be declined by the annuitant or beneficiary. Eligible nonretired persons must apply in order to obtain Medicare coverage. The Board automatically enrolled over 22,700 beneficiaries for Medicare during fiscal year 2009. As of the end

of the fiscal year,more than 484,900 persons were enrolled in the Part A plan, and

about 468,000 (97 percent) of them were also enrolled in Part B.

Except for benefits for services in Canada, which are paid from the Railroad

Retirement Account, railroad enrollees are paid Part A benefits from the Federal

Hospital Insurance Trust Fund, the same as persons covered under the social security

system. Part B benefits are paid from the Federal Supplementary Medical Insurance

(SMI) Trust Funds. The carrier for Part B claims of railroad Medicare enrollees made

payments totaling $908 million in the 2009 fiscal year.

The regular monthly premium for medical insurance was $96.40 for coverage

throughout fiscal year 2009. Beneficiaries with modified adjusted gross incomes above

certain thresholds pay higher Part B premiums. The Board generally withholds

Medicare premiums for annuitants from their benefit payments, and at the end of the

fiscal year almost 440,400 annuitants were having their premiums withheld. Of the

remaining Part B enrollees, approximately 5,700 were paying premiums to the Board,

either directly or through an intermediary, and 21,900 had their premiums paid by

State agencies. The Board periodically transfers premiums to the SMI Trust Funds.
A REVIEW OF OPERATIONS 27

RAILROAD UNEMPLOYMENT AND SICKNESS 

INSURANCE PROGRAM

FINANCIAL OPERATIONS

Financing sources for the railroad unemployment and sickness insurance program

during fiscal year 2009 were less than costs by $63.5 million and the net position

decreased by $63.5 million from $109.9 million at the end of fiscal year 2008 to $46.4

million at the end of fiscal year 2009. For fiscal year 2009 as compared to fiscal year

2008, total financing sources for the railroad unemployment and sickness insurance

program increased by $20.8 million (25.9 percent) to $101.0 million.

Unemployment and Sickness Insurance Program

Consolidated Financing Sources, 

Costs and Net Position (Millions)1

For the Fiscal Year Ended September 30 2009 2008

Financing Sources:

Employer Payroll Taxes $92.9 $78.1

Interest Income 4.2 5.5

General Appropriations2 20.1 0.0

Other (16.2) (3.4) 

Total Financing Sources 101.0 80.2

Costs:

Benefit Payments:

Unemployment 116.4 35.4

Sickness 48.1 44.7

Total Costs 164.5 80.1

Financing Sources over Costs (63.5) 0.1

Net Position - Beginning of Period 109.9 109.8

Net Position - End of Period $46.4 $109.9

1 Prepared on an accrual basis of accounting. 

2 For payment of temporary extended unemployment benefits authorized under the American 

Recovery and Reinvestment Act of 2009. 

(text continued on p. 29)
28 2010 Annual Report, U.S. Railroad Retirement Board

Financing Sources - Fiscal Year 2009 

(In Millions)

GROSS TOTAL $101.0

UNEMPLOYMENT AND SICKNESS 

INSURANCE PROGRAM

1 Less Transfers-Out and carriers’ refunds of $16.2 million.

2 ARRA funding.

Employer 

Payroll Taxes1 75.9%

$76.7

Interest Income 4.2%

$4.2

General Appropriations2 19.9%

$20.1

Costs - Fiscal Year 2009 

(In Millions)

TOTAL $164.5

Benefit Payments 100%
A REVIEW OF OPERATIONS 29

Financing Sources

The primary financing source of the railroad unemployment and sickness insurance

program is a payroll tax on railroad employers, based on the taxable earnings of their

employees. The employees themselves are not taxed.

Each employer pays taxes at a rate which takes into consideration its employees’

actual incidence of benefit usage. Under experience rating, employers whose employees

have low incidences of unemployment and sickness pay taxes at a lower rate than those

with higher levels of benefit usage. Each employer’s rate also has a component for

administrative expenses and a component to cover costs shared by all employers. The

rate applies to monthly earnings up to an indexed maximum. In calendar year 2009,

the taxable earnings base was the first $1,330 of each employee’s monthly earnings.

The earnings base is indexed each year by a rate which is equal to approximately twothirds of the annual rate of increase in the maximum base for railroad retirement tier I

taxes.

In 2009, the basic tax rates on railroad employers, including covered commuter 

railroads, ranged from a minimum of 2.15 percent (which included a surcharge of 

1.5 percent) to a maximum of 12 percent. Most employers were assessed the minimum

rate in 2009. New employers in 2009 paid an initial rate of 2.61 percent.

Employer Payroll Taxes

Payroll taxes by employers totaled $92.9 million during fiscal year 2009. This was

an increase of 19.0 percent or $14.8 million more than the previous year.

Interest

Cash not needed immediately for unemployment and sickness insurance benefits 

or operating expenses is held in the Federal Unemployment Insurance Trust Fund and

invested by the Secretary of the Treasury. The fund earned an average rate of return of

4.6 percent in fiscal year 2009, of which the Railroad Retirement Board earned 

$4.2 million as its pro rata share.

Costs

Total costs for the railroad unemployment and sickness insurance program

increased by $84.4 million (105.4 percent) to $164.5 million. These costs consisted 

solely of benefit payments.

Benefit Payments

During fiscal year 2009, unemployment insurance benefit payments increased by

$81.0 million (228.8 percent) to $116.4 million. Sickness insurance benefit payments

increased $3.4 million (7.6 percent) to $48.1 million.
30 2010 Annual Report, U.S. Railroad Retirement Board

BENEFIT OPERATIONS

Net unemployment and sickness benefits totaling $123.0 million were paid in the

2008-2009 benefit year, $44.6 million more than in the prior year. Beneficiaries numbered 37,600, in comparison to the previous year’s total of some 27,700. Over 1,300

employees received both unemployment and sickness benefits during the 2008-2009

benefit year. The number of unemployment benefit claimants increased by more than

110 percent, while sickness benefit claimants decreased approximately 5 percent.

Total unemployment benefit payments increased by about 142 percent, while net sickness benefits decreased by some 2 percent. The substantial increases in unemployment

benefits and beneficiaries can be attributed to a national economic recession. The

number of employees qualified for benefits under the Railroad Unemployment

Insurance Act rose less than 1 percent to 255,500.

Benefits are payable for each day of unemployment or sickness in excess of 7 during

the first 14-day registration period in a benefit year. During benefit year 2008-2009,

there were 18,900 and 14,200 unemployment and sickness benefit waiting period

claims, respectively.

Unemployment

The effect of the national economic decline on the railroad industry is apparent by

the large increases in unemployment benefits and beneficiaries. Nearly 21,400 railroad workers were paid $77.8 million in unemployment benefits during the 2008-2009

benefit year, including $1.1 million in temporary extended benefits under the American

Recovery and Reinvestment Act of 2009 (ARRA). The number of benefit claimants

increased by 11,200 from the prior year total of 10,100, while the benefit amount rose

$45.6 million from the year-earlier total of $32.2 million. The claimant count increased

for the third straight year. The average number of compensable days per unemployment benefit claimant was 63 in benefit year 2008-2009 as compared to 64 in the previous benefit year.

The mid-month unemployment count in the 2008-2009 benefit year began with a

July count of 2,300 claimants. The count rose each month until it reached 9,400 in

February of 2009, then dropped and rose in the following months until it peaked at

10,300 in June of 2009 when claims under ARRA were first processed. For the 2008-

2009 benefit year as a whole, the weekly number of claimants averaged 6,100 in comparison to an average of 2,700 in the previous benefit year. The overall unemployment

benefit claimant rate, measured in relation to numbers of employees qualified to

receive benefits under the Railroad Unemployment Insurance Act during a particular

time period, increased to 8 per 100 qualified from the previous year’s level of 4 per 100

NOTE.--Railroad unemployment and sickness benefits are paid on the basis of benefit years beginning 

July 1 and ending June 30 of the following year. Consequently, operational data in this “Benefit

Operations” section are generally presented for this time span, rather than fiscal years beginning October 1

and ending September 30.
A REVIEW OF OPERATIONS 31

qualified, reflecting the impact of the national economic recession. The median age for

all unemployment benefit claimants was 38 years; it was 43 in the previous benefit year.

Sickness

The number of sickness benefit claimants during the 2008-2009 benefit year was

17,600, over 800 lower than in the previous year. The claimant count was the lowest

since sickness benefits began in benefit year 1947-1948. Gross sickness benefits of 

$71.7 million were paid, $0.6 million less than in the prior benefit year. Net sickness

benefits totaled $45.2 million, reflecting repayment of a large amount of benefits following settlements of suits for injuries. Benefits payable for an injury are recoverable if the

claimant is awarded damages or receives a settlement for the injury. Net benefits

decreased by $1.0 million in comparison with the previous year.

Major unemployment and sickness benefit operations,

benefit years 2008-2009 and 2007-2008

Item

Benefit year 2008-2009 Benefit year 2007-2008

Total

Unemployment1 Sickness Total

Unemployment Sickness

Applications 54,100 32,600 21,500 35,700 13,200 22,500

Claims 304,300 166,900 137,400 221,100 78,000 143,000

Claimants 2

37,600 21,400 17,600 227,700 10,100 18,400

Net amount of benefits $122,961,500 $77,803,800 $45,157,700 $78,327,000 $32,212,400 $46,114,600

Number of payments

Normal 237,900 132,000 105,900 171,400 60,300 111,100

Extended 18,400 7,100 11,300 15,600 4,300 11,300

Total 256,300 139,100 117,200 187,100 64,600 122,400

Average amount per 

2-week registration period

Normal $531 $522 $542 $522 $520 $524

Extended 482 457 497 486 492 483

Total 528 520 538 520 519 520

1 Starting in June 2009, includes $1.1 million in temporary extended unemployment benefits authorized by the American 

Recovery and Reinvestment Act of 2009. 

2 Benefits for both unemployment and sickness were paid to approximately 900 employees in benefit year 2007-2008 and 1,300 

employees in benefit year 2008-2009. Those claimants who had only a non-compensable waiting period are not included in the 

beneficiary counts since no benefits were paid.

(text continued on p. 33)
32 2010 Annual Report, U.S. Railroad Retirement Board

Unemployment and Sickness Benefit Claimants by Age, 

Benefit Year 2008-2009

Claimants under the Railroad Unemployment Insurance Act, 

Benefit Years 2004-2005 through 2008-2009

7,173

6,437

4,305

3,367

5,258

6,648

Unemployment

Sickness

1,170

2,200

152 68

1,915

258

Under 25 25-34 35-44 45-54 55-64 65 & Over

9,345 8,861

9,458 10,148

21,353

20,246 19,698 19,040 18,446 17,598

Unemployment

Sickness

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
A REVIEW OF OPERATIONS 33

The utilization rate for sickness benefits decreased for the fifth consecutive year and

was at a historically low level. The average

duration of sickness increased for the first

time since benefit year 2001-2002.

Among the most common causes of sickness were injuries that included fractures or

wounds (affecting 26 percent of beneficiaries),

arthritis and disk disorders (22 percent), circulatory and heart disease (8 percent), and

mental disorders, including drug and alcohol

addictions (10 percent). The median age of all sickness benefit claimants was 52 years;

it was 53 in the previous benefit year.

RAILROAD EMPLOYMENT

Average monthly railroad employment in fiscal year 2009 fell over 4 percent to

225,000 from the 235,000 average of the previous year. The first four months of the fiscal year experienced a normal pattern of employment with October 2008 having the

highest level of employment at 236,000. However, by February 2009 the nationwide

recession began to severely affect the railroad industry. The spring and summer quarters failed to rebound in the usual seasonal pattern. The number of employees declined

each month during the fiscal year except for July when employment remained

unchanged from the previous month. By September 2009 railroad employment had

descended to an all-time low of 217,000.

Employment in the railroad industry was affected by a reduction in rail traffic,

which can be attributed to declines in industrial production. Fiscal year 2009 railroad 

freight-ton-miles were 14 percent lower than the previous year, with the April-June

2009 quarter a full 21 percent lower than the same quarter of 2008. The last quarter of

fiscal year 2009 showed increased volumes but was still below the lowest point of fiscal

year 2008.

Benefit

Year

Utilization 

Per 100

Qualified 

Employees

Average

Compensable

Days

2005-2006 8.1 69

2006-2007 7.6 67

2007-2008 7.2 66

2008-2009 6.9 67
34 2010 Annual Report, U.S. Railroad Retirement Board

Average Railroad Employment

Fiscal Years 2005 through 2009

225,000

230,000

235,000

240,000

210,000

215,000

220,000

Note.--Numbers for 2009 are preliminary.

Sep-09
ADMINISTRATIVE DEVELOPMENTS

35

Performance Management

American Customer Satisfaction Index (ACSI)

The Board’s most recent ACSI survey was conducted in fiscal year 2009, with the

agency earning a score of 88. This was 19 points higher than the latest federal government average (69) and 6 points higher than the previous survey on the same segment.

The ACSI survey focused on recent railroad retirees, which is the largest component of

the agency’s entitlement base and was the very first group surveyed using the ACSI

approach in 2001. Results improved in all areas of measure since that initial survey.

The survey found the Board scoring highest (93) in the area of customer service, as

respondents praised the courtesy, professionalism, and responsiveness of agency employees, along with the accuracy of information provided. The retirement application process

received a score of 87, with most respondents pleased with the guidance provided during

the process. The Board also earned a confidence index score of 91 – up from 87 in the

2001 survey – indicating that its customers are very confident they will continue receiving

outstanding service in the future.

The Board will conduct an ACSI survey of visitors to its web site in fiscal year 2010.

Thus far, the agency has participated in five ACSI surveys, with the chart below 

summarizing the results.

The following describes some major issues addressed in 2009 and 2010 

as the Railroad Retirement Board continued efforts 

to improve agency operations and better serve its customers.

Fiscal

Year

Survey 

Group

Overall Federal

Government Score

RRB 

Score Difference

2009 Retirement benefits 69 88 +19

2006 Disability benefits 72 85 +13

2005 Survivor benefits 72 90 +18

2003 Unemployment benefits 70 75 +5

2001 Retirement benefits 69 82 +13
36 2010 Annual Report, U.S. Railroad Retirement Board

Customer Service Plan

The Board’s Customer Service Plan promotes the principles and objectives of 

customer-driven quality service agency-wide. The plan is both open and accountable to

the railroad public that the agency serves; and, it meets objectives of transparency set

by the administration. The plan specifies the level of service customers can expect,

measures performance, and obligates the Board to report annually on its performance.

An important part of the plan is to keep customers informed of how well the agency is

meeting the standards. The Board publicizes the plan and performance results and

posts them in all of its offices. The plan is reviewed and updated periodically based on

agency experience, customer feedback and comparison with similar best-in-business

models. 

The agency has developed an index to measure the overall timeliness of customer

service in four benefit areas: retirement applications; survivor applications; disability

applications and payments; and railroad unemployment and sickness benefit applications and claims. In addition, a composite indicator, based on a weighted average,

allows for a more concise and meaningful presentation of its customer service efforts in

these four areas. During fiscal year 2009, the overall benefit timeliness index was 

99.2 percent. This means that the Board provided benefit services within the 

timeframes promised in the Customer Service Plan 99.2 percent of the time. (The composite for 2008 was 98.6 percent.) In most areas, performance and processing times during fiscal year 2009 met or exceeded the levels in fiscal year 2008. The agency also met

or exceeded all customer service performance goals for the year in its Annual

Performance Plan except for disability applications.

Improper Payments Review

The Board reviewed the benefit payments made under the Railroad Retirement Act

for fiscal year 2008, as required by the Improper Payments Information Act of 2002.

The agency’s Performance and Accountability Report for fiscal year 2009 included the

results of that analysis, along with a description of the actions taken to address and

prevent improper payments, and projections of future improper payment levels. In

addition, the Board updated the fiscal year 2008 information on improper payments,

including a breakdown of the causes, over- and underpayment amounts and percentages of improper payments, on the Office of Management and Budget’s web site.

Overall, the analysis shows that the Board does not have significant improper payments as defined by guidelines for implementing the Improper Payments Information

Act. In January 2009, the Office of Management and Budget granted relief from

reporting improper payments under the Railroad Unemployment Insurance Act due to

the consistently low level of error over several years. Barring any unexpected changes

to the program or the rate, the agency will not need to report this information until 

fiscal year 2012. The Board constantly looks for operational improvements to minimize

improper payments in all of its benefit programs.
ADMINISTRATIVE DEVELOPMENTS 37

Economic Recovery Activities

The American Recovery and Reinvestment Act of 2009 (ARRA) contained two basic

provisions that impacted the Board. This included authorization of up to 13 weeks of

special extended unemployment benefits for certain railroad workers who exhausted

their rights to benefits normally provided under the Railroad Unemployment Insurance

Act (RUIA). Under this provision, employees who received normal unemployment benefits between July 1, 2008, and June 30, 2009, were eligible for the temporary extended

benefits, with the latest date an extended benefit period could begin set at 

December 31, 2009. President Obama subsequently signed the Worker, Homeownership, and Business Assistance Act of 2009 into law on November 6, 2009. That legislation authorized payment of special extended unemployment benefits to individuals who

received benefits under the RUIA through June 30, 2010, and set the latest date an

extended period could begin at December 31, 2010. The ARRA included an appropriation of $20 million to pay the extended benefits, while the later law provided an added

$175 million for this purpose, with payment of the extended benefits stopping if that

amount is exhausted.

The ARRA also included a one-time economic recovery payment of $250 to most 

railroad retirement beneficiaries. These payments were issued beginning in May 2009,

with the Board authorizing issuance to about 525,000 individuals. In addition, the

agency started issuing catch-up payments to individuals not initially identified as eligible in July 2009. This activity will continue on a quarterly basis through December

2010.

Service Enhancements

Document Imaging

In fiscal year 2009, the Board completed the expansion of its document imaging system to the agency’s field offices across the nation. This technology enables all 53 field

offices to quickly access documents processed in those offices. The imaging network

also provides valuable support to the recently implemented nationwide toll-free 

telephone service. It does this by providing documents online so staff in any office can

access them promptly, respond to telephone inquiries, and provide better customer service. In addition, new imaging servers and software were put into production in 2009.

This initiative, which involved moving almost 14 million imaged files to the new 

equipment, will improve reliability and response time while reducing storage costs. The

Board plans to expand the number of paper documents stored in an electronic format

during 2010.

Employer Reporting

The Board’s new Employer Reporting System (ERSNet), which allows rail employers to complete various pre- and post-payment verification activities over the Internet

as opposed to using paper-based forms via mail, became available in February 2009.
38 2010 Annual Report, U.S. Railroad Retirement Board

The Board is encouraging employers to use this new system because it is more secure

and greatly reduces the risk of an annuitant’s personal identifying information being

compromised. Currently, there are 77 rail employers participating in the online system. 

Medicare Processing Improvements

The Board participated in a joint workgroup with the Centers for Medicare &

Medicaid Services (CMS) to enable premium withholding for Medicare Parts C and D

from railroad retirement benefits. Work is continuing on detailed requirements and

system design, with implementation planned during 2010.

Cost-of-Living Adjustment

For the first time since the implementation of annual benefit increases based on

inflation in 1975, the Board did not pay a cost-of-living adjustment in December 2009

because there was no increase in the Consumer Price Index from the third quarter of

2008 to the third quarter of 2009. Similarly, while the monthly Medicare Part B premium increased from $96.40 in 2009 to $110.50 in 2010, a “hold harmless” provision

exempts most recipients from paying the increased amount if there is no cost-of-living

increase to their retirement benefits. 

Information Technology

System Modernization

The agency’s system modernization initiative is based on the need for the Board to

maintain the capability of its business functions in the face of staff reductions throughout the agency, including the information technology area. The goal is to eliminate

activities that are unnecessary or redundant, improve accuracy and security of agency

information systems and their transactions, make the systems more user-friendly for

Board employees and customers, improve interoperability and flexibility of systems,

and improve the ability to collaborate with agency partners. Through this effort, the

Board will be able to decrease the time and cost needed to develop and operate the systems and allow an increased focus on new initiatives.

Risk Management

Agency management certified and accredited the Board’s general support systems

and all major application systems, as required by the Federal Information Security

Management Act. In addition, the Federal Desktop Core Configuration, a standard

security configuration for Microsoft Windows personal computers mandated by the

Office of Management and Budget, was implemented agency-wide. The Board installed

an upgraded intrusion detection/prevention system and network access control monitoring system, which together serve as the principal computer security defenses protecting

the local area network against malware infections. The agency also acquired a log

analysis/security information and event manager system that automates the collection
ADMINISTRATIVE DEVELOPMENTS 39

and analysis of logs from all servers and other network devices, as required by the

National Institute of Standards and Technology.

RRB Vision

The Board continued to make use of its RRBVision system that allows users to view

video presentations with accompanying training materials, such as PowerPoint presentations or online screens. In 2009, the agency posted seven presentations for the public

to the Board’s web site. The topics included filing for sickness and unemployment benefits under the Railroad Unemployment Insurance Act, filing for retirement benefits

under the Railroad Retirement Act, completing a variety of compensation forms, and

navigating the web site to locate needed information. The Board also developed 38 presentations for viewing by its employees on the agency intranet. The agency plans to

further expand these capabilities in 2010 by upgrading its video equipment and studio.

Officials

Michael S. Schwartz continues to serve as Chairman of the Board, along with 

V.M. Speakman, Jr. as Labor Member and Jerome F. Kever as Management Member.

Mr. Schwartz was first appointed to the Board in 2003, while Mr. Speakman and 

Mr. Kever were both appointed in 1992. They are the longest-serving Labor and

Management Members in the history of the agency.

Workforce Management

Staffing/Training

The Board has continued to fill essential positions as funding levels permit. Also,

as increasing numbers of veteran employees become eligible for retirement, the agency

has placed a renewed emphasis on hiring for entry-level positions as a component of its

succession planning efforts. For example, the Board started training classes for both

retirement initial claims examiners and survivor initial claims examiners that will conclude in 2010. Additional training classes for claims examiners are planned for 2010.

Hiring Reform

In 2009, the Board took steps to implement the President’s hiring reform agenda as

directed by the Office of Personnel Management and the Office of Management and

Budget. This included the formation of an internal “SWAT” team comprised of hiring

managers and human resources officials. The mission of the SWAT team is to identify

barriers that the agency is encountering in reaching the government-wide standards

for the “End-to-End Hiring Roadmap.” This group was tasked with analyzing the root

causes of any barriers and identifying improvements. The team mapped out the

Board’s hiring process and created an action plan to reduce the time it takes to hire a

new employee. It also streamlined 10 vacancy announcements for use on the government-wide recruiting site, www.USAJobs.gov, in order to attract a broader range of

applicants. The agency must submit a human capital management report to the Office

of Personnel Management, detailing its activities and progress, by December 15, 2010.
40 2010 Annual Report, U.S. Railroad Retirement Board

Labor-Management Forums

In December 2009, President Obama issued Executive Order 13522 to establish

cooperative, productive labor-management relations throughout the executive branch.

The order requires each agency to establish an agency-level labor-management forum

by creating a council to evaluate and document changes in employee and manager satisfaction and organizational performance. Agencies are also required to submit an implementation plan outlining the actions needed to fulfill the order’s requirements. The

Board is working with the agency local of the American Federation of Government

Employees to accomplish these initiatives.

Employee Survey

Systematically surveying employees is a tool for measuring employees’ perceptions

of whether, and to what extent, conditions characterizing successful organizations are

present in their agencies. The Office of Personnel Management requires agencies to

administer such a survey every 2 years. To fulfill the requirement for the Board, the

agency’s Bureau of Human Resources conducted an online survey during the fall of

2009. Overall, responses to the survey, which was completed by 60 percent of agency

employees, were very positive. Based on guidelines for identifying notable results, the

Board scored especially high (greater than 65 percent favorable) on the majority of the

items measuring personal work experiences. The lowest scores were on items measuring performance culture and job satisfaction, although these scores represent a minority

of the employees who responded. As a result, the areas that the Board intends to concentrate on improving in the coming years are training and dealing with poor performance.

Work-Life Initiative

The Office of Personnel Management, in collaboration with the Office of

Management and Budget, has established a work-life initiative to improve employee

satisfaction and wellness. As a requirement of this initiative, the Bureau of Human

Resources reviewed the 2008 Federal Human Capital Survey results to identify: the ten

items on which the agency scored lowest compared to the rest of government; any

item(s) on which employee satisfaction decreased since the 2006 survey; and those

Human Capital Assessment and Accountability Framework indices in which the Board

scored lower than the rest of government. They used this information, along with feedback from the employees’ union, to create an action plan for improving employee satisfaction with the agency. The Board submitted this plan in September 2009, as part of

its fiscal year 2011 budget submission. Human Resources also submitted an inventory

of the agency’s wellness and fitness activities, and plans to enhance them, as part of the

Office of Personnel Management’s employee wellness initiative.
ADMINISTRATIVE DEVELOPMENTS 41

Office of Equal Opportunity

Diversity Program

During the year, the agency’s Office of Equal Opportunity’s employee committees

sponsored several events and activities to foster a diverse work environment and

enhance the understanding of disability issues. In addition, the Office released a

newsletter, Working Together, to all employees. The newsletter included articles

regarding diversity-related topics and the discrimination complaint process.

Equal Opportunity Policy and Procedures

The Office of Equal Opportunity content pages on both the Board’s web site and the

agency intranet were updated regularly to make certain that external customers and

agency employees have access to the latest information regarding equal employment

opportunity (EEO) policy and procedures. Also, to ensure management accountability,

an audit of the performance plans for supervisors and managers was conducted to

assess whether a diversity/EEO element was included. As a result of the review, model

language was developed to outline the role and responsibilities managers and supervisors have under the agency’s EEO program. This language will be used in future performance plans of all supervisory and management personnel.

Recruitment

The Office of Equal Opportunity worked cooperatively with the Bureau of Human

Resources to create a diverse pool of external job applicants by identifying sources for

the recruitment of individuals with disabilities, various underrepresented groups, and

disabled veterans. 

Public Information Activities

The Board maintains direct contact with railroad retirement beneficiaries through

its field offices located across the country. Field personnel explain benefit rights and

responsibilities on an individual basis, assist railroad employees in applying for benefits and answer any questions related to the benefit programs. The Board also relies

on railroad labor groups and employers for assistance in keeping railroad personnel

informed about its benefit programs.

At informational conferences sponsored by the Labor Member of the Board for railroad labor union officials, Board representatives describe and discuss the benefits

available under the railroad retirement-survivor, unemployment-sickness and

Medicare programs, and the attendees are provided with comprehensive informational

materials. Now in its 53rd year, in 2009 a total of 1,680 railroad labor union officials

attended 35 informational conferences held in cities throughout the United States. In

addition, railroad labor unions frequently request that Board representatives speak

before their meetings, seminars and conventions. In 2009, the Labor Member’s Office
42 2010 Annual Report, U.S. Railroad Retirement Board

was represented at ten union gatherings attended by 2,396 railroad labor officials.

Field personnel addressed 109 local union meetings with 5,077 members in attendance.

More than 120 rail industry reporting personnel from across the country attended

the National Rail Employer Training Seminar in Chicago during August 2009, hosted

by the Management Member’s Office. This was the seventh such seminar, which takes

place every 3 years. The attendees heard presentations by agency staff on initiatives in

the areas of Internet services and compensation reporting, payment procedures for

taxes and debts, Medicare legislation and changes to reporting forms. In addition, representatives from the National Railroad Retirement Investment Trust, the American

Short Line and Regional Railroad Association, the Board’s Office of Inspector General

and the Internal Revenue Service provided supplemental information on a variety of

topics related to the railroad retirement system and trust funds. At other seminars for

railroad executives and managers, Board representatives review programs, financing,

and administration, with special emphasis on those areas which require cooperation

between railroads and Board offices. During 2009, the Management Member’s Office

also made a presentation on railroad retirement benefits for 40 attendees at the

American Short Line and Regional Railroad Association annual meeting.

Office of Inspector General

During fiscal year 2009, the Office of Inspector General continued its mission to

promote economy, efficiency and effectiveness in the administration of agency programs, and to detect and prevent fraud, waste and abuse in such programs. To further

this mission, auditors completed five audits and issued their findings and recommendations to Board management. At the end of fiscal year 2009, there were 374 active criminal investigations, representing approximately $19.6 million in fraud against the

agency.

Audit Activity

Office of Inspector General auditors issued their opinion on the Board’s financial

statements for fiscal year 2008 and their related reports on internal control and compliance in a single document published with the agency financial statements in the

Board’s Performance and Accountability Report. Auditors issued an unqualified opinion on the agency’s fiscal year 2008 financial statements and began their audit of the

agency’s fiscal year 2009 statements. Their report on the Board’s internal control over

financial reporting and compliance disclosed material weaknesses in the areas of information security and financial accounting controls, with the accounting procedures considered a significant deficiency. However, it also showed that Board management had

completed action to strengthen controls over the social insurance fund balance.

In connection with the financial statement audit, the Inspector General issued a

statement entitled “Management and Performance Challenges Facing the Railroad

Retirement Board.” This statement was prepared pursuant to the Reports

Consolidation Act of 2000 and the requirements of Office of Management and Budget
ADMINISTRATIVE DEVELOPMENTS 43

Circular A-136. This circular requires Inspectors General to identify the most serious

management challenges facing their parent agencies and to briefly assess the agencies’

progress in addressing those challenges. The Inspector General identified oversight for

invested assets of the National Railroad Retirement Investment Trust, the railroad

retirement occupational disability program, financial reporting, information security,

safeguarding privacy, and improper payments as the most serious challenges facing

agency management. This statement was published in the agency’s Performance and

Accountability Report.

Notably, the first audit of the railroad Medicare program was completed since the

Consolidated Appropriations Act of 2008 lifted the 12-year prohibition on such oversight activities. Auditors concluded that more could be done to identify fraud and

abuse in the railroad Medicare program by strengthening the benefit integrity operations of the Part B carrier. 

The Office of Inspector General published its oversight plan for the Board’s implementation of the provisions of the American Recovery and Reinvestment Act and monitored the agency’s activities under that law related to the issuance of a one-time $250

benefit payment to qualified annuitants and special extended unemployment benefits. 

Pursuant to the requirements of the Federal Information Security Management Act

of 2002, auditors also conducted their annual evaluation of the agency’s information

security program and made specific recommendations to strengthen information 

security in each area in which a deficiency was identified.

Occupational Disability Program

The Board’s occupational disability program is a unique benefit available only to

qualifying railroad workers. The qualification standards for this benefit are different

than those needed to qualify for a total and permanent disability under the Social

Security Act. During fiscal year 2009, the Office of Inspector General continued to

devote investigative and audit resources to the oversight of this and other agency 

programs. 

In October 2008, the Board adopted Board Order 08-63, which described a five-point

plan for greater oversight of the occupational disability claims of Long Island Rail Road

(LIRR) employees following news reports that most career LIRR employees were applying for and receiving occupational disability benefits soon after retirement. During 

fiscal year 2009, the Office of Inspector General monitored the agency’s implementation

of this plan. 

Additionally, it made several recommendations, in connection with the occupational

disability program, to the agency’s three-member Board. These included sending all

future disability applicants for secondary medical screening prior to adjudication,

ensuring that an applicant’s immediate supervisor completes and certifies all required

forms, and requiring an annual certification from disability annuitants.
Criminal Investigations

Office of Inspector General investigators focus on identifying, investigating, and

presenting fraud cases for prosecution. They conduct investigations throughout the

United States relating to the fraudulent receipt of sickness, unemployment, disability,

retirement, or Medicare benefits. They also investigate railroad employers and unions

when there is an indication that they have submitted false reports to the Board, as well

as allegations regarding misconduct by or threats against agency employees.

During fiscal year 2009, six special agents worked in cooperation with various other

federal and local law enforcement agents as members of the Medicare Fraud Strike

Force in Houston, Texas. This team executed 12 search warrants and arrested 32 individuals indicted for various Medicare schemes. 

One special agent, along with other task force team members from various other

federal law enforcement agencies, received the Outstanding Prosecution Award from

the United States Attorney’s Office for the Southern District of Illinois. This award

was in connection with the successful prosecution of an ambulance company.

Investigative efforts can result in criminal convictions, civil penalties, program benefits recovery and/or administrative sanctions. During fiscal year 2009, investigative

efforts resulted in 48 convictions, 78 indictments and criminal informations, 29 civil

judgments and more than $7 million in recoveries, restitutions, fines, civil damages,

and penalties.

All Office of Inspector General audits and other public documents are available

online at www.rrb.gov/oig.

44 2010 Annual Report, U.S. Railroad Retirement Board
LEGAL RULINGS

45

Court Cases

One petition for review was pending at the beginning of fiscal year 2009, 

and five petitions for review of various types were filed during the year.

Four cases were decided during fiscal year 2009, and two petitions for

review were still pending at the end of the year. 

Legal Opinions

The following Legal Opinions are presented here because of their special significance or interest.

In Legal Opinion L-2009-02, a specific case led to a general rule for applying both

the regular employment test and the substantial earnings test for breaking a current

connection from railroad employment. In the case submitted, the railroad employee

had voluntarily left railroad employment in October of 2003 with 427 credited service

months. In 2008, the employee earned $575 working as a janitor and up to $500 as

payment from a volunteer fire department. The employee was planning on performing

both janitorial and volunteer fire services in 2009, and inquired with the Board whether

these activities would break his current connection to the railroad industry.

This opinion found that Section 1(o) of the Railroad Retirement Act directs that an

employee has a current connection if he or she worked for a railroad employer in 12 of

the previous 30 months immediately preceding the month the employee annuity begins

or the employee dies. An employee also retains a current connection if he or she has not

had regular and substantial nonrailroad employment between the end of the 30-month

interval and the month the annuity begins or the employee dies. The opinion further

explained that the Board’s regulations provide a separate test for regular employment

and for substantial employment (20 CFR 216.17(b)). Regular employment is employment performed in consecutive years after the end of the 30-month period, regardless of

income.

Employment is substantial if the employee earns at least $1,000 in any year after

the 30-month period, even if it is not earned in one of the two consecutive years. The

opinion pointed out to the employee that if his earnings from janitorial and volunteer

Four cases involving the Railroad Retirement Board were resolved by the courts 

during fiscal year 2009, and three significant legal opinions were issued.
46 2010 Annual Report, U.S. Railroad Retirement Board

fire services did exceed $1,000, he would have broken his current connection to the railroad industry. The opinion also pointed out that even if his earnings were below

$1,000, his current connection would be broken if he performed those services in 2009,

because that would constitute two consecutive years of employment. 

Legal Opinion L-200-13 clarified certain rules that allow an application at the

Social Security Administration (SSA) to protect a filing date for an annuity under the

Railroad Retirement Act. The opinion pointed out that section 217.7 of the Board’s

regulations provides that an application for benefits at SSA is an application for an

annuity under the Railroad Retirement Act if certain conditions are met. Specifically,

this opinion addressed the instance where an employee has less than 10 years of creditable railroad service at the time of SSA filing, but subsequently became entitled to a

Railroad Retirement Act annuity. The employee at issue filed for SSA benefits on

December 15, 2001, and was a 5-year vesting individual based on the provisions of the

Railroad Retirement and Survivors' Improvement Act of 2001 (RRSIA). The employee

had more than 60 months of creditable railroad service after 1995.

The opinion referenced prior legal opinions that indicated pertinent regulations

which have yet to be revised should be interpreted to comply with current law.

Therefore, an individual who files an application with SSA may have his application

date protected for the purposes of Railroad Retirement Act benefits, as amended by the

RRSIA. The opinion also highlighted paragraph A.2 of Section 5.1.4 of the Retirement

Claims Manual that set forth a procedure which indicated that an application with

SSA would protect the filing date under the Railroad Retirement Act for those individuals with at least 60 months of railroad service after 1995.

Legal Opinion L-2009-14 analyzed a specific subsection of the remarried disabled

widow's annuity section of the Railroad Retirement Act (see 45 USC 231a(d)(1)(v)). In

summary, a widow was trying to qualify for a remarried disabled widow's annuity, but

there was a question as to whether she met the requirement under part (3) of the

exceptions to the rule. The Board needed to determine if the disabled widow remarried

in her fifties, was still in her fifties, and was disabled at the time of her remarriage.

The widow at issue was rated disabled as of May 23, 1997, under the Social Security

Act, and attained age 50 in 2001. She remarried in 2003 and her disability insurance

benefit under the Social Security Act terminated in 2006. She then applied for a disabled widow’s annuity under the Railroad Retirement Act, alleging a disability onset

date of February 29, 2008. The issues focused on whether or not the widow was disabled at the time of her marriage in order to qualify for a remarried disabled widow's

annuity under the Railroad Retirement Act.

The widow performed a trial work period in 1999 through 2000. Her benefits were

suspended in September of 2000, but reinstated when her earnings fell below the substantial gainful earnings level effective May 2001. The widow continued to move above

and below the substantial gainful earnings level for the next several years, with her

final extended period of eligibility ending in March 2006, the last month of payment of
LEGAL RULINGS 47

the disability insurance benefit. In order to qualify for the remarried widow's annuity,

the Board had to find that the widow was disabled at the time of the remarriage so that

the marriage could be deemed to not have occurred.

The opinion determined that the motivating factor behind the remarried disabled

widow's annuity benefit was to ensure that disabled widows were treated the same as

aged widows when it came to remarriage. If the disabled widow remarried after disability began and after attaining eligibility age, she should not be precluded from being

eligible for a disabled widow's annuity. The trial work periods were found to occur during a period of disability and the remarriage was found to have occurred during the

same period of disability; therefore, the opinion concluded that the remarriage could be

deemed not to have occurred according to the controlling statutes. The trial work periods and prior applications for disability did not change the fundamental factors of

determining eligibility.

Appeals

Any claimant for benefits under the Railroad Retirement or Railroad Unemployment Insurance Acts may appeal a determination he or she feels is not justified. This

appeal must be filed within certain time frames. Appeals are heard and decided by the

Bureau of Hearings and Appeals. An appellant who is dissatisfied with the decision on

his or her appeal may further appeal the case to the three-member Board within a 

prescribed period of time.

Railroad Retirement Act

During fiscal year 2009, 496 appeals were filed with the Bureau of Hearings and

Appeals under the Railroad Retirement Act, and the Bureau rendered decisions in 465

appeals. The initial or reconsideration decision was sustained in 183 cases. In 282

appeals the decision was favorable to the claimant in whole or in part.

Sixty-eight appeals were filed with the Board in fiscal year 2009, which, added to

the 30 appeals carried over from the previous year, brought the total to be considered to

98. Of 68 decisions, 52 sustained previous rulings of the hearings officer, five were

reversed, two were remanded to the Office of Programs, four were remanded to the

Bureau of Hearings and Appeals, one was affirmed in part and allowed in part, and

four were dismissed. At the end of the year, 30 appeals were pending before the Board. 

Railroad Unemployment Insurance Act

During fiscal year 2009, 30 appeals were filed with the Bureau of Hearings and

Appeals under the Railroad Unemployment Insurance Act, and the Bureau rendered

decisions in 27 appeals. The initial or reconsideration decision was sustained in 20

cases. In seven appeals the decision was favorable to the claimant in whole or in part.
One appeal was filed with the Board in fiscal year 2009, which, added to the one

carried over from the previous year, brought the total to be considered to two. The

Board rendered decisions in two cases of appeals from the decision of the referee,

affirming the decision in one of them and dismissing one. At the end of the year, 

no appeals were pending before the Board.

48 2010 Annual Report, U.S. Railroad Retirement Board
STATISTICAL

TABLES
Total1 Retirement2 Survivor2 Unemployment3 

BENEFICIARIES (in thousands)2000....................................................... 755 499 237 14 

2001....................................................... 737 483 228 18 

2002....................................................... 719 475 219 17 

2003....................................................... 699 465 211 15 

2004....................................................... 677 456 203 12 

2005....................................................... 659 448 194 10 

2006....................................................... 643 441 187 9 

2007....................................................... 641 444 180 10 

2008....................................................... 623 433 174 11 

2009....................................................... 626 430 167 24 

BENEFIT PAYMENTS (in millions)2000....................................................... $8,373.3 $6,254.1 $2,040.3 $36.4 2001....................................................... 8,506.2 6,352.6 2,058.8 43.2 

2002....................................................... 8,742.1 6,535.9 2,107.5 49.2 

2003 8 957 3 6 726 0 2 136 9 44 3 

Fiscal year

Table 1.--Beneficiaries and benefits paid under the Railroad Retirement Act and the Railroad Unemployment Insurance 

by fiscal year, 2000-2009, cash basis

2003....................................................... 8,957.3 6,726.0 2,136.9 44.3 

2004....................................................... 9,091.3 6,876.9 2,131.3 37.7 

2005....................................................... 9,254.0 7,051.6 2,129.5 29.2 

2006....................................................... 9,513.7 7,294.0 2,146.9 30.8 

2007....................................................... 9,871.5 7,641.1 2,156.4 27.8 

2008....................................................... 10,115.4 7,877.0 2,158.1 35.1 

2009....................................................... 10,663.8 8,311.0 2,192.0 111.7 

NOTE.-- Number of beneficiaries represents all individuals paid benefits in year. In total number for each year, beneficiaries are counted only once, even threceived more than one type of benefit. In fiscal year 2009, 8,400 individuals received both retirement and survivor benefits, 1,400 employees received both sickness benefits, and 3,000 employees received benefits under both the Railroad Retirement Act and the Railroad Unemployment Insurance Act. These figestimated, and totals for earlier years are similarly adjusted.1 Beginning in fiscal year 2008, beneficiaries and benefit payments include payments to partitioned spouses and partitioned divorced spouses where the em or not otherwise entitled to an annuity. Benefit payments also include a small amount of payments for hospital insurance benefits for services in Canada.2 Retirement benefits include vested dual benefit and supplemental annuity payments. Survivor benefits include vested dual benefit payments.3 Includes temporary extended unemployment benefits under the American Recovery and Reinvestment Act of 2009. 
Item 2000 2001 2002 2003 2004 2005 2006 2007 

RAILROAD RETIREMENT ACCOUNT5

Receipts

Tax transfers 1..................................................................$2,928.6 $2,819.2 $2,743.1 $2,651.4 $2,611.0 $2,606.6 $2,674.8 $2

Interest and profit on investments 2.................................... 1,298.9 2,027.2 1,875.8 291.8 15.1 15.8 19.6 

Transfers from the National RR Investment Trust 3............... ........ .... .... .... .... 300.0 1,564.0 809.0 947.0 1

Transfers from the SSEB Account 3.................................... ........ .... .... .... .... ........ 223.0 149.0 38.0 Loan repayments from RUI Account 4................................. ........ ........ ........ 8.2 ........ ... ..... ... ..... ... Transfer from RR Supplemental Account 5........................... ........ ........ 0.1 ........ ... ..... ... ..... ... ..... ... 

Expenditures

Benefit payments 6............................................................$2,958.8 $2,971.4 $3,240.7 $3,504.1 $3,602.4 $3,679.0 $3,808.8 $4

Financial Interchange adjustment 7.................................... (50.5) (52.9) 140.9 72.1 36.6 (137.4) (85.9) 

Net transfers to administration.......................................... 55.9 54.7 64.9 64.0 65.3 73.7 69.9 

Transfers to the National RR Investment Trust 3.................. ........ ........ 1,431.6 17,750.0 586.0 ........ .... .... .... 

Loans to RUI Account...................................................... ........ ........ 7.8 ........ ... ..... ... ..... ... ..... ... 

Table 2.--Status of the Railroad Retirement Act accounts and trust funds, by fiscal year, 2000-2009 (in millions

Fiscal Year

Balance at end of period 8......................................................$17,032.9 $18,907.2 $18,640.4 $502.2 $625.6 $591.1 $479.4 $

SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT 9

Receipts

Tax transfers 1..................................................................$2,208.5 $2,134.0 $2,134.7 $2,128.0 $2,240.8 $2,370.8 $2,462.5 $2

Interest and profit on investments 2.................................... 118.8 105.5 71.6 59.1 20.0 23.3 28.0 

Transfers under financial interchange 10.............................. 3,697.6 3,282.8 3,646.8 3,747.3 3,843.5 3,917.3 3,846.3 4

Advances against financial interchange 11........................... 3,005.1 3,145.2 3,153.9 3,236.1 3,245.7 3,256.0 3,241.3 3

Expenditures

Benefit payments............................................................ $5,091.4 $5,215.2 $5,243.8 $5,229.5 $5,288.7 $5,395.8 $5,536.1 $5

Financial Interchange adjustment 7.................................... 50.5 52.9 (140.9) (72.1) (36.6) 137.4 85.9 

Net transfers to administration.......................................... 27.1 25.0 26.1 22.8 22.9 24.1 24.3 Transfers under financial interchange 10.............................. 465.3 469.7 424.7 426.3 418.6 444.9 471.5 

Repayment of advances against financial interchange 12...... 3,190.1 3,222.2 3,385.3 3,342.4 3,409.9 3,399.6 3,419.7 3

Transfers to the National RR Investment Trust/RR Account 3 ........ .... .... .... .... 1,438.0 223.0 149.0 38.0 

Balance at end of period......................................................... $2,140.3 $1,822.7 $1,890.9 $674.6 $698.2 $714.8 $717.4 $

See footnotes at end of table.
Item 2000 2001 2002 2003 2004 2005 2006 2007 

NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST 13

Cash and investment balance at end of period 14..................... ........ .... .... $1,420.7 $23,016.5 $25,019.7 $27,636.6 $29,327.9 $32,63

RAILROAD RETIREMENT SUPPLEMENTAL ACCOUNT 5

Receipts

Tax transfers 1............................................................... $76.7 $67.8 $23.5 ........ .... .... .... .... .... .... .... 

Interest and profit on investments 2................................. 3.5 3.1 2.9 ........ ... ..... ... ..... ... ..... ... .

Expenditures

Table 2.--Status of the Railroad Retirement Act accounts and trust funds, by fiscal year, 2000-2009 (in millions), cash 

Fiscal Year

Expenditures

Benefit payments 6......................................................... $72.9 $68.8 $16.8 ........ .... .... .... .... .... .... .... 

Net transfers to administration....................................... 2.3 2.0 0.7 ........ ... ..... ... ..... ... ..... ... .

Loan repayments to RR Account 12................................. ........ ........ ........ ... ..... ... ..... ... ..... ... ..... ... .

Transfers to the National RR Investment Trust 3............... ........ ........ 70.4 ........ ... ..... ... ..... ... ..... ... .Transfer to Railroad Retirement Account........................ ........ ........ 0.1 ........ ... ..... ... ..... ... ..... ... .

Balance at end of period...................................................... $61.7 $61.7 ........ .... .... .... .... .... .... .... .... .... 

DUAL BENEFITS PAYMENTS ACCOUNT 15

Dual benefit transfers 16...................................................... $173.3 $160.0 $146.0 $131.1 $118.3 $107.1 $97.0 $8

Benefit payments............................................................... 171.4 156.0 142.2 129.4 117.3 106.3 96.0 8

Balance at end of period 8................................................... $1.9 $4.0 $3.9 $1.8 $1.0 $0.8 $1.0 $

See footnotes at end of table.
Footnotes - Table 2

1 Net of U.S. Treasury adjustments for payroll tax refunds to certain carriers and their employees for prior periods. Includes federal inco

section 72(r) of the Internal Revenue Code as amended.

2 Net of interest on U.S. Treasury adjustments for payroll tax refunds (see note 1).3 Under the Railroad Retirement and Survivors' Improvement Act of 2001, as amended, the portion of the Railroad Retirement Account 

administrative expenses is to be transferred to the National Railroad Retirement Investment Trust (Trust). The Trust may transfer fun

Retirement Account for payment of benefits. The balance of the Social Security Equivalent Benefit (SSEB) Account not needed to pa

administrative expenses is to be transferred to the Trust or to the Railroad Retirement Account. The SSEB Account transferred funds 

2003 and to the Railroad Retirement Account thereafter.

4 Includes interest.5 Under the Railroad Retirement and Survivors' Improvement Act of 2001, the supplemental work-hour tax was repealed for years after 

Railroad Retirement Supplemental Account was eliminated. The balance remaining in the Railroad Retirement Supplemental Accoun

Railroad Retirement Account.

6 Effective January 1, 2002, supplemental benefits are paid from the Railroad Retirement Account.7 Adjustments in benefit payments charged to the Social Security Equivalent Benefit Account as compared to actual financial interchan8 The Railroad Retirement Account balance reflects (a) the current net difference between Board payments of social security benefits an

reimbursements for such payments, (b) liabilities for uncashed check credits received from U.S. Treasury, and (c) credits for undistribrecoveries. The Dual Benefits Payments Account balance does not carry over to the following year.

1 Net of U.S. Treasury adjustments for payroll tax refunds to certain carriers and their employees for prior periods. Includes federal inco

section 72(r) of the Internal Revenue Code as amended.

2 Net of interest on U.S. Treasury adjustments for payroll tax refunds (see note 1).3 Under the Railroad Retirement and Survivors' Improvement Act of 2001, as amended, the portion of the Railroad Retirement Account 

administrative expenses is to be transferred to the National Railroad Retirement Investment Trust (Trust). The Trust may transfer fun

Retirement Account for payment of benefits. The balance of the Social Security Equivalent Benefit (SSEB) Account not needed to pa

administrative expenses is to be transferred to the Trust or to the Railroad Retirement Account. The SSEB Account transferred funds 

2003 and to the Railroad Retirement Account thereafter.

4 Includes interest.5 Under the Railroad Retirement and Survivors' Improvement Act of 2001, the supplemental work-hour tax was repealed for years after 

Railroad Retirement Supplemental Account was eliminated. The balance remaining in the Railroad Retirement Supplemental Accoun

Railroad Retirement Account.

6 Effective January 1, 2002, supplemental benefits are paid from the Railroad Retirement Account.7 Adjustments in benefit payments charged to the Social Security Equivalent Benefit Account as compared to actual financial interchan8 The Railroad Retirement Account balance reflects (a) the current net difference between Board payments of social security benefits an

reimbursements for such payments, (b) liabilities for uncashed check credits received from U.S. Treasury, and (c) credits for undistribrecoveries. The Dual Benefits Payments Account balance does not carry over to the following year.

9 Established October 1, 1984, to keep track of the financing and payment of social security level portions of railroad retirement benefits

10 Transfers to or from OASDHI Trust Funds under section 7(c)(2) of the 1974 Railroad Retirement Act.11 Advances, including interest, from U.S. Treasury to offset lag in receipt of financial interchange funds under section 7(c)(4) of the 197

 as amended.

 12 Includes interest. 13 Established February 1, 2002, for investment of railroad retirement assets. 14 Source: National Railroad Retirement Investment Trust.

 15 Established October 1, 1981, to keep track of the financing and payment of vested dual benefits.

 16 Transfers from U.S. Treasury under section 15(d) of the Railroad Retirement Act of 1974 and Federal income tax transfers under sectio

 Code as amended. 
Table 3.--Status of the Railroad Unemployment Insurance Account, by fiscal year, 2005-2009 (in thousands), c

Fiscal year

 Item 2005 2006 2007 2008 RECEIPTS Taxes..................................................................... $76,179 $65,725 $65,995 $67,074 

 Interest.................................................................. 5,387 3,963 6,838 

5,796

 Transfer from Administration fund under sec. 11(d) of the RUI Act................................. 6,544 6,664 8,923 8,711 

 Undistributed recoveries of benefit payments1........... (327) (982) 1,405 (34) 

 Total..................................................................... $88,192 $76,794 $80,286 $82,589 

EXPENDITURES Benefit payments2................................................... $72,861 $72,812 $74,004 $80,068 

 Funding for Office of Inspector General..................... 1,686 1,558 1,572 1,550 

 Total..................................................................... $74,547 $74,370 $75,577 $81,618 

Cash balance end of period....................................... $97,183 $99,606 $104,316 $105,287 

1 Net of distributed payments.2 Fiscal year 2009 amount does not include $10,249,000 in temporary extended unemployment benefits paid under the American Recovery an

Reinvestment Act of 2009. Funding for these additional benefits was provided by a congressional appropriation of $20,000,000.
Table 4.--Status of the RUIA Administration Fund, by fiscal year, 2000-2009 (in thousands), cash bas

Transfer to

Railroad

Unemployment

Insurance

Taxes and Administrative Account under 

Fiscal year interest expenditures1 Sec. 11d2 

2000...................................... $19,941 $14,847 $6,546 

2001...................................... 20,434 14,004 6,048 

2002...................................... 20,032 13,266 6,734 

2003...................................... 21,313 15,407 5,645 

2004...................................... 20,787 15,846 6,608 

2005...................................... 21,126 15,761 6,544 

2006...................................... 21,980 10,610 6,664 

2007...................................... 23,082 14,415 8,923 

2008...................................... 23,945 14,713 8,711 

2009...................................... 23,151 14,305 9,808 

1 Expenditures for each year included encumbrances as of end of year. FY 2006 and later reflect reallocation of prior period ad

expenses between the Railroad Retirement Act and Railroad Unemployment Insurance Act programs.

2 Transfers to the Railroad Unemployment Insurance Account are based on the amount the accrual balance on the prior Septe

exceeded $6,000,000.
Retired employees Spouses

and Widowed

Supple- divorced Aged Disabled mothers R

 Total1 Age Disability mental2 spouses widow(er)s3 widow(er)s (fathers)3 Children w

NUMBER AT END OF YEAR2000 ............................ 819,327 228,439 80,158 138,158 161,283 175,464 5,679 1,245 13,561 

2001 ............................ 790,711 219,646 80,574 132,799 154,710 167,840 5,460 1,165 13,233 2002 ............................ 775,638 216,044 81,653 132,066 151,006 160,490 5,236 1,114 12,804 2003 ............................ 756,176 210,363 82,572 129,201 146,740 153,673 5,105 1,035 12,472 2004 ............................ 736,787 204,650 83,302 125,992 142,881 146,943 4,936 1,050 12,176 2005 ............................ 721,659 199,767 84,000 123,550 141,330 140,595 4,835 999 11,795 2006 ............................ 706,158 195,380 84,321 121,407 138,492 134,811 4,733 927 11,448 2007 ............................ 696,472 193,282 84,319 121,188 137,371 129,350 4,596 877 11,078 2008 ............................ 686,636 191,146 84,049 120,824 136,332 124,089 4,450 832 10,692 2009 ............................ 680,534 190,302 83,804 120,778 136,467 119,459 4,323 814 10,417 AVERAGE AMOUNT

Table 5.--Number and average amount of retirement and survivor annuities in current-payment status at end of yea

by type of annuitant and fiscal year, 2000-2009

Fiscal year

2000 ............................ ......... $1,351 $1,465 $42 $530 $826 $711 $1,029 $678 

2001 ............................ ......... 1,414 1,548 42 550 870 746 1,076 706 

2002 ............................ ......... 1,496 1,624 42 579 948 799 1,228 728 2003 ............................ ......... 1,554 1,683 42 598 985 831 1,279 744 2004 ............................ ......... 1,619 1,751 42 620 1,026 865 1,337 766 2005 ............................ ......... 1,693 1,825 42 638 1,069 902 1,388 789 2006 ............................ ......... 1,789 1,920 42 671 1,122 946 1,423 823 2007 ............................ ......... 1,890 2,005 42 709 1,173 989 1,471 853 2008 ............................ ......... 1,982 2,070 42 742 1,222 1,025 1,529 879 2009 ............................ ......... 2,126 2,197 42 795 1,294 1,084 1,597 935 

1 Includes annuities to parents and, beginning in fiscal year 2008, payments to partitioned spouses and partitioned divorced spouses where the 

deceased or not otherwise entitled to an annuity. On September 30, 2009, there were 36 parents' annuities in current-payment status averaginpayments averaging $284.

2 Excludes supplemental benefits paid to partitioned spouses and partitioned divorced spouses where the employee is deceased. Averages are 

partitions.

3 Numbers include annuities temporarily being paid at spouse annuity rates, pending final adjudication of survivor annuities.

NOTE.--Data exclude survivor (option) annuities, last payable in December 2005.
Retired employees Spouses

and Widowed

S l di d A d Di bl d th R 

Table 6.--Number and average amount of retirement and survivor annuities awarded during year, by type of annuitant and fiscal ye

Supple- divorced Aged Disabled mothers R

 Total1 Age Disability mental spouses widow(er)s widow(er)s (fathers) Children w

NUMBER AWARDED2000......................... 35,818 7,186 4,709 4,749 8,316 8,699 204 159 714 

Fiscal year

2001......................... 33,289 6,285 4,630 4,339 7,648 8,372 217 157 611 

2002......................... 44,485 11,127 5,206 8,337 9,764 8,104 199 161 590 

2003......................... 37,841 8,261 4,955 6,124 8,749 7,800 244 162 645 

2004......................... 36,083 7,801 4,764 5,590 8,579 7,320 218 186 660 

20052........................ 37,405 7,958 4,399 5,671 10,380 7,020 239 176 581 

2006 ........................ 35,137 7,919 4,128 5,717 8,830 6,820 204 107 504 

2007......................... 2007......................... 38,743 9,643 3,619 7,273 ,643 3,619 7,273 10,065 6,482 205 113 498 

205 113 498 

2008.......................... 38,591 9,753 3,402 7,090 10,127 6,511 166 143 515 

2009.......................... 39,317 10,310 3,213 7,015 10,919 6,283 181 142 463 

Cumulative 1937-2009 4,973,765 1,451,991 510,738 475,479 1,144,051 1,010,941 17,965 84,778 236,183 

AVERAGE AMOUNT2000......................... ........ $1,745 $1,871 $41 $584 $998 $901 $1,049 $858 2001......................... ........ 1,842 1,971 41 613 1,044 927 996 932 2002......................... ........ 2,243 2,051 42 697 1,286 1,148 1,319 961 2003......................... ........ 2003......................... ........ 2,201 2,092 41 733 1 092 41 733 1,346 1,262 1,384 953 

384 953 

2004......................... ........ 2,247 2,168 41 744 1,378 1,257 1,550 998 20052........................ ........ 2,285 2,210 41 655 1,416 1,288 1,397 1,023 

2006......................... ........ 2,389 2,308 41 794 1,493 1,334 1,492 1,056 2007......................... ........ 2,562 2,397 41 890 1,557 1,373 1,585 1,099 2008......................... ........ 2,650 2,441 41 911 1,629 1,385 1,721 1,153 2009......................... ........ 2,685 2,558 41 931 1,708 1,443 1,709 1,233 

1 Excludes payments to partitioned spouses and partitioned divorced spouses where the employee is deceased or not otherwise entitled to an annuit

annuities to parents. Fiscal year 2009 total includes 3 annuities to parents averaging $1,011. Cumulative total includes 3,532 annuities to parents.

2 An unusually large number of spouse awards were made with small or no tier 1 amounts, resulting in larger than normal numbers of spouse awards 

than normal award amounts.

NOTE C l ti fi fl t dj t t t d i l d t b t t f h i l d ff t f h i t d 1 Excludes payments to partitioned spouses and partitioned divorced spouses where the employee is deceased or not otherwise entitled to an annuit

annuities to parents. Fiscal year 2009 total includes 3 annuities to parents averaging $1,011. Cumulative total includes 3,532 annuities to parents.

2 An unusually large number of spouse awards were made with small or no tier 1 amounts, resulting in larger than normal numbers of spouse awards 

than normal award amounts.

NOTE.--Cumulative figures reflect adjustments not made in yearly data, but average amounts for each year include effects of changes in rates made 
 Monthly Monthly 

 Number amount Number amount 

Alabama.......................................................................... $16,185 9,400 12,000 $13,018 

Alaska............................................................................. 200 275 200 219 Arizona............................................................................ 12,000 15,173 9,500 12,097 

Arkansas......................................................................... 12,200 16,781 10,100 14,134 

California......................................................................... 44,200 35,700 27,700 34,809 

Colorado.......................................................................... 9,400 12,680 7,500 10,379 

Connecticut....................................................................... 3,200 4,474 2,400 3,507 

Delaware.......................................................................... 3,152 2,300 1,800 2,487 

Washington DC.................................................................. 600 564 400 428 

Florida............................................................................. 36,500 47,120 29,400 38,730 

Georgia............................................................................ 27,185 20,100 16,200 22,383 

Hawaii.............................................................................. 200 223 200 182 

Idaho................................................................................ 7,723 5,800 4,600 6,259 

Illinois............................................................................... 53,833 42,800 33,700 42,713 

Indiana............................................................................. 26,383 20,100 15,700 20,917 Iowa................................................................................. 11,200 14,312 8,800 11,278 

Kansas............................................................................. 23,441 17,500 14,200 19,192 

Kentucky.......................................................................... 24,340 18,500 14,800 19,649 Louisiana.......................................................................... 12,336 9,300 7,300 9,777 

Maine............................................................................... 3,500 4,261 2,700 3,245 

Maryland.......................................................................... 11,000 14,141 8,300 10,912 

Massachusetts................................................................... 5,100 6,240 3,800 4,723 

Michigan.......................................................................... 18,000 22,959 14,200 18,317 

Minnesota......................................................................... 23,916 19,000 14,900 18,849 

Mississippi........................................................................ 7,900 10,184 6,300 8,254 

Missouri........................................................................... 23,500 30,378 18,700 24,474 

Montana........................................................................... 9,713 7,200 5,800 7,821 

Nebraska.......................................................................... 20,556 14,700 12,200 17,223 

Nevada............................................................................. 5,329 4,100 3,300 4,337 

New Hampshire.................................................................. 1,100 1,273 800 953 

New Jersey....................................................................... 10,800 14,255 8,000 10,885 

New Mexico....................................................................... 7,102 5,600 4,300 5,590 

New York.......................................................................... 36,101 26,300 20,000 28,785 

North Carolina..................................................................... 16,469 12,800 9,900 13,098 North Dakota...................................................................... 5,150 3,900 3,000 4,004 

See footnotes at end of table.

Table 7.--Retirement and survivor benefits in current-payment status on September 30, 2009, by class and state (amounts in thou

State3

Total1 Retirement benefits2
 Monthly Monthly 

 Number amount Number amount 

Ohio................................................................................. 34,400 $43,423 26,200 $33,232 

Oklahoma......................................................................... 6,300 8,265 5,000 6,642 

Oregon............................................................................. 10,300 13,366 8,100 10,672 

Pennsylvania..................................................................... 43,100 55,825 31,500 41,432 

Rhode Island...................................................................... 700 789 500 593 

South Carolina.................................................................... 8,200 10,976 6,500 8,878 

South Dakota..................................................................... 1,700 2,248 1,400 1,801 

Tennessee........................................................................ 15,200 20,022 11,900 16,035 

Texas............................................................................... 41,300 55,252 32,700 44,388 

Utah................................................................................. 6,600 8,825 5,200 6,986 

Vermont........................................................................... 1,000 1,127 700 817 Virginia............................................................................. 21,300 28,091 16,500 22,225 

Washington...................................................................... 14,500 18,941 11,500 15,188 

West Virginia...................................................................... 11,200 14,557 8,400 10,983 

Wisconsin........................................................................ 12,800 15,738 10,000 12,372 

Wyoming 3 800 5 438 3 200 4 552 

Table 7.--Retirement and survivor benefits in current-payment status on September 30, 2009, by class and state (amounts in thousands

State3

Total1 Retirement benefits2

Wyoming......................................................................... 3,800 5,438 3,200 4,552 

Outside United States:Canada............................................................................ 2,800 1,973 1,800 1,086 

Mexico............................................................................. 300 270 100 115 

Other................................................................................ 800 770 500 466 

 Total5.............................................................................. 680,500 $884,329 531,400 $702,096 

1 Includes 300 payments to partitioned spouses and partitioned divorced spouses where the employee is deceased or not otherwise entitled to an annuity. 2 Includes 120,800 supplemental annuities to employees receiving regular annuities. In a relatively small number of cases, employees were also receiving spo3 State of residence of beneficiary on September 30, 2009.4 Less than 50.5 Includes beneficiaries whose state of residence was unknown.

NOTE.--Retirement benefits include regular and supplemental employee annuities, spouse annuities and divorced spouse annuities. Survivor benefits include 

disabled widow(er)s, widowed mothers and fathers, remarried and divorced widow(er)s, children, parents, and widow(er)s' annuities temporarily being paid at spfinal adjudication of survivor annuities. Benefit amounts exclude social security payments to dual beneficiaries.
Table 8.-- Principal administrative data for the unemployment and sickness benefit programs, 

benefit years 2004-2005 through 2008-2009, cash basis

Item 2004-2005 2005-2006 2006-2007 2007-2008 

Qualified employees................................. 242,200 244,600 250,200 255,200 

Maximum daily benefit rate...................... $56 $56 $57 $59 

UNEMPLOYMENT BENEFITS

Net amount of benefits paid (thousands) $30,179 $30,586 $29,627 $32,212 

Payments:1

 Number................................................... 62,000 54,000 56,600 64,600  Average amount per two week claim period......................................... $489 $490 $499 $519 Beneficiaries............................................... 9,300 8,900 9,500 10,100 Applications received................................ 11,700 11,400 12,200 13,200 Claims received.......................................... 73,700 65,000 68,800 78,000 

Normal benefit accounts exhausted........ 2,200 1,900 1,800 2,000 Non-compensable waiting period only2.. (3) (3) (3) (3) 

SICKNESS BENEFITS SICKNESS BENEFITS

Net amount of benefits paid (thousands) $43,405 $43,801 $43,533 $46,115 Payments:1 Number................................................... 140,200 135,500 128,300 122,400  Average amount per two week claim period......................................... $496 $496 $503 $520 Beneficiaries............................................... 20,200 19,700 19,000 18,400 Applications received................................ 25,100 26,400 23,300 22,500 Claims received.......................................... 162,700 157,800 149,700 143,000 Normal benefit accounts exhausted........ 3,900 3,700 3,500 3,300 Non-compensable waiting period only2.. 100 100 100 100 

1 Not adjusted for recoveries or settlements of underpayments.2 Benefits are payable for each day of unemployment or sickness in excess of 7 during the first 14-day registration period in a ben3 Less than 50.

NOTE.--Data covered program activities during the year, regardless of when unemployment or sickness occurred. Starting in Jun2008-2009 includes $1,058,000 in temporary extended unemployment benefits authorized by the American Recovery and Reinves
Table 9.--All employees, new entrants, employees qualified for RUIA benefits, and related data, by employer, 20

All employees New entrants Creditable Comp

With

With 12 months sufficient Qualified Qualified

of service service for for RUIA for RUIA

Class or name of employer Total in 2008 RRA annuity benefits Total benefits Tier I T

CLASS OF EMPLOYER Class I railroads.......................................................... 206,487 167,920 143,849 198,146 12,630 7,613 $12,547,642 $11,

Class II railroads......................................................... 8,221 6,180 5,375 7,524 766 428 418,351 

Class III railroads and switching & terminal companies........................... 43,304 33,829 29,916 40,206 4,030 2,324 2,577,032 2,Car-loan companies................................................... 1,929 1,389 1,401 1,829 68 39 97,854 

Miscellaneous employers1.................................

... 5,119 4,075 3,314 4,630 437 258 327,983 

 Total.......................................................................... 265,060 213,393 183,855 252,335 17,931 10,662 $15,968,862 $14,

SELECTED EMPLOYERS BNSF Railway Company............................................ 46,149 39,132 31,854 44,602 2,297 1,447 $3,007,749 $2,Canadian National, U.S. Operations Bessemer and Lake Erie Railroad Co................... 118 84 92 110 8 3 5,857 

 Chicago Central and Pacific Railroad Co............. 273 224 221 266 6 2 18,395  Duluth, Missabe and Iron Range Railway Co...... 315 257 242 304 27 17 21,368  Duluth, Winnipeg and Pacific Railway Co............ 149 111 114 146 11 10 10,476 

 Grand Trunk Western Railroad Incorporated...... 1,243 979 1,133 1,212 29 22 86,685 

 Illinois Central Railroad Company........................ 3,462 2,834 2,620 3,344 187 126 235,744 

 Pittsburgh and Conneaut Dock Co....................... 69 53 60 63 ..... ..... 3,053 

 Wisconsin Central LTD.......................................... 1,614 1,252 1,374 1,577 85 67 103,293 

CSX Transportation Incorporated............................. 35,495 27,560 24,748 33,664 2,503 1,447 2,068,897 1,Kansas City Southern Railway Company................. 3,081 2,492 1,964 3,004 247 207 192,730 

 Gateway Eastern Railway Company..................... 8 8 8 8 ..... ..... 443 

 Texas Mexican Railway Company........................ 195 159 127 189 4 4 13,338 

National Railroad Passenger Corp. (Amtrak)........... 20,856 16,296 15,917 19,745 1,722 953 1,208,394 1,Norfolk Southern Corporation.................................. 32,880 27,277 22,181 31,643 2,222 1,305 1,911,822 1,Soo Line Railroad Company...................................... 3,020 2,328 2,191 2,871 257 163 169,717 

Union Pacific Railroad Company.............................. 57,560 46,874 39,003 55,398 3,025 1,840 3,489,680 3,

1 Includes labor organizations, lessor companies, employer associations and miscellaneous carrier affiliates.

NOTE.--Tier I compensation excludes miscellaneous compensation taxable at the tier I tax rate.
United States

Railroad Retirement Board

844 North Rush Street

Chicago, Illinois 60611-2092

www.rrb.gov