United States

Railroad Retirement Board

844 North Rush Street

Chicago, Illinois 60611-2092

www.rrb.gov

2012 RRB cover-4-30.indd 1 
U.S. Railroad Retirement Board

Mission Statement

The Railroad Retirement Board’s mission is to administer retirement/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

2012 Annual Report

For Fiscal Year Ended September 30, 2011

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 over $11.0 billion in the fiscal year ending 

September 30, 2011. Retirement and survivor benefits were paid by the RRB

to about 578,000 beneficiaries during the fiscal year, of whom 543,000 were on the

RRB’s annuity rolls at the end of the year. Approximately 28,000 railroad employees

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

Unemployment Insurance Act.

Retirement and survivor benefit payments of $10.9 billion during the 2011 fiscal

year were $166.3 million more than payments in the prior year. Employee and spouse

annuitants were paid approximately $8.8 billion, accounting for 80 percent of the total

payments. Employees received almost $5.1 billion in age annuities, $2.3 billion in 

disability annuities and $60.8 million in supplemental annuities, while spouses and

divorced spouses received nearly $1.4 billion. Survivors were paid $2.2 billion in 

annuities and more than $3.6 million in lump-sum benefits. The total number of 

beneficiaries who received retirement and survivor benefits declined by about 4,000

from fiscal year 2010.

Railroad retirement and unemployment insurance benefits totaling over 

$11.0 billion were paid by the Railroad Retirement Board (RRB) to approximately

603,000 beneficiaries in fiscal year 2011. Financial reports issued in 2012 on the 

solvency of the railroad retirement and railroad unemployment insurance systems 

were both favorable. Total railroad retirement system assets 

equaled $23.6 billion as of September 30, 2011. 

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 2011 totaled about

$129.0 million. Net benefits totaled almost $100.7 million after adjustment for recoveries of benefit payments, including injury settlements, some of which were made in prior

years. Total gross benefit payments decreased by approximately $62.0 million while net

benefit payments decreased by about $58.9 million from the preceding year. Gross

unemployment benefits decreased by over 54 percent as compared to the previous year,

reflecting recovery from the prior year’s recessionary levels. However, unemployment

benefits were still above pre-recessionary levels. Gross unemployment benefits totaling

$52.1 million ($48.3 million net), including $9.1 million ($8.7 million net) in temporary

extended benefits under the American Recovery and Reinvestment Act of 2009 and the

Worker, Homeownership, and Business Assistance Act of 2009, as amended by the Tax

Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, were

paid to 10,800 claimants, while gross sickness benefits of $76.9 million ($52.3 million

net) were paid to 17,700 claimants.

Financial Reports

The RRB’s 25th triennial actuarial valuation, submitted to the Congress in June

2012, 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 RRB’s most pessimistic employment assumption, and

then not until 2035. The long-term stability of the system, however, is 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 RRB’s 2012 railroad unemployment insurance financial report was also generally favorable. Even as projected maximum benefit rates increase 44 percent (from $66 to

$95) from 2011 to 2022, experience-based contribution rates maintain solvency. The

report also predicted average employer contribution rates well below the maximum

throughout the projection period. A 1.5 percent surcharge was imposed in calendar year

2012 in order to maintain a minimum account balance. Under all three employment

assumptions, the report projects no surcharge in 2013 or 2014, with a periodic surcharge

of at least 1.5 percent likely in subsequent years. 

The National Railroad Retirement Investment Trust’s annual management report

for fiscal year 2011 stated that, as of September 30, 2011, the net asset value of the

Trust-managed assets was $22.1 billion. This represented a decline from $23.8 billion in

the previous year, almost all of which is attributable to a transfer of $1.7 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 $23.6 billion.

2 2012 Annual Report, U.S. Railroad Retirement Board
THE REPORT IN BRIEF 3

The 2012 railroad retirement and railroad unemployment insurance financial reports

and the National Railroad Retirement Investment Trust’s 2011 annual management

report are available at www.rrb.gov.

Service Delivery

Customer Satisfaction

During fiscal year 2011, the RRB completed a year-long survey of visitors to the

agency website. The survey provided specific suggestions for improvements, particularly

with regard to the design of the site and navigation from the home page. Many of these,

including a login for online services from the home page, were implemented in May 2011.

Customer Service Plan

In fiscal year 2011, customers received benefit services within the timeframes

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

Service Enhancements

The RRB completed enhancements to its Employer Reporting System which allows

employers to complete several new forms in an online, web-based format. The agency also

completed a cost-of-living adjustment, with beneficiaries seeing a 3.6 percent benefit

increase due to inflation, for the first time in 2 years. In addition, the RRB expanded its

range of Internet services to include online filing of claims for sickness benefits. 

Economic Recovery Activities

The Temporary Payroll Tax Cut Continuation Act of 2011 and the Middle Class Tax

Relief and Job Creation Act of 2012 extended two provisions relating to railroad employees. Both laws provided for continued access to temporary extended unemployment benefits and a reduction in payroll taxes paid by employees. The 2011 law extended these provisions for the first 2 months of calendar year 2012, while the subsequent law covered the

balance of the year.

New Board Member

Walter A. Barrows was sworn in as the Labor Member of the Board on October 7,

2011. At the time of his appointment, he was the Secretary-Treasurer of the Brotherhood

of Railroad Signalmen, and had also served as a Trustee of the National Railroad

Retirement Investment Trust. Mr. Barrows replaced V. M. Speakman, Jr., who retired.
Office of Inspector General

During fiscal year 2011, 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 12 audit reports and 2 special reports that identified operational weaknesses and recommended improvements to agency management.

Investigative activities resulted in 62 convictions, 67 indictments and/or 

informations, 21 civil judgments and more than $106 million in recoveries, restitutions, 

fines, civil damages and penalties. This reflects fraud amounts related to programs

administered exclusively by the RRB and fraud amounts from other Federal programs,

such as Medicare or social security, which were included in the disposition resulting

from the investigation. 

4 2012 Annual Report, U.S. Railroad Retirement Board
THE REPORT IN BRIEF 5

Selected Data on Benefit Operations

Fiscal Year Fiscal Year

Retirement-Survivor 2011 2010

Employee age annuities

Number awarded 10,500 10,700

Number being paid at end of period 190,100 190,200

Average being paid at end of period $2,244 $2,186

Employee disability annuities

Number of total disability annuities awarded 1,200 1,100

Number of occupational disability

annuities awarded 1,900 2,000

Number of total disability annuities being paid 

at end of period 20,600 20,400

Number of occupational disability annuities

being paid at end of period 62,500 63,100

Average total disability annuity

being paid at end of period $1,525 $1,508

Average occupational disability annuity

being paid at end of period $2,482 $2,452

Supplemental employee annuities1

Number awarded 7,100 7,300

Number being paid at end of period 121,400 121,200

Average being paid at end of period $42 $42

Spouse and divorced spouse annuities

Number awarded, total 11,300 11,300

Number being paid to divorced

spouses at end of period 4,000 3,900

Number being paid at end of period, total 138,300 137,100

Average being paid to divorced spouses

at end of period $518 $504

Average being paid at end 

of period, total $839 $817

Survivor annuities

Number awarded to aged widow(er)s 6,100 6,200

Number awarded, total 7,600 7,700

Number being paid to aged widow(er)s

at end of period 110,400 114,900

Number being paid at end of period, total 138,800 143,900

Average being paid at end of period to

Aged widow(er)s $1,366 $1,329

Disabled widow(er)s $1,133 $1,108

Widowed mothers (fathers) $1,663 $1,643

Remarried widow(er)s $907 $896

Divorced widow(er)s $892 $880

Children $941 $937

Partition payments2

Number being paid at end of period 800 700

Average being paid at end of period $292 $287

Lump-sum survivor benefits awarded

Number of lump-sum death benefits 3,600 3,700

Average lump-sum death benefit $916 $915

Number of residual payments 3/ 3/

Average residual payment $2,519 $2,133
6 2012 Annual Report, U.S. Railroad Retirement Board

Selected Data on Benefit Operations (Continued)

Fiscal Year Fiscal Year

Employees and Earnings4 2011 2010

Average employment 228,000 220,000

Creditable earnings, Railroad Retirement

Act (billions):

Tier I $16.27 $15.21

Tier II $15.18 $14.20

Creditable earnings, Railroad

Unemployment Insurance Act (billions) $3.66 $3.53

Benefit Year Benefit Year

Unemployment-Sickness 2010-2011 2009-2010

Qualified employees 239,100 252,300

Unemployment benefits

Net amount paid (millions) 5

$51.4 6($48.3) 7$138.2

Beneficiaries 11,600 6

(10,800) 24,800

Number of payments 89,300 241,200

Normal benefit accounts exhausted 2,800 7,500

Average payment per 2-week registration period $566 $553

Sickness benefits

Net amount paid (millions) $51.2 6

($52.3) $52.4

Beneficiaries 17,400 6

(17,700) 17,800

Number of payments 117,100 120,000

Normal benefit accounts exhausted 3,100 3,200

Average payment per 2-week registration period $585 $565

1 Excludes partition payments to spouses and divorced spouses where the employee is deceased. Averages are 

after court-ordered partitions. Fiscal year 2011 average includes 50 supplemental annuities, averaging $65, 

awarded under the 1937 Act. 

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

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

employees’ annuities.

3 Fewer than 50.

4 Except for fiscal year 2010 employment, all figures in this section are preliminary.

5 Includes $9.4 million in temporary extended unemployment benefits authorized by the American Recovery and 

Reinvestment Act of 2009 and the Worker, Homeownership, and Business Assistance Act of 2009, as amended by 

the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

6 Data in parentheses are for fiscal year (October 1, 2010 - September 30, 2011). Unemployment benefits include 

$8.7 million in temporary extended unemployment benefits authorized by the American Recovery and 

Reinvestment Act of 2009 and the Worker, Homeownership, and Business Assistance Act of 2009, as amended by 

the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

7 Includes $26.8 million in temporary extended unemployment benefits authorized by the American Recovery and 

Reinvestment Act of 2009 and the Worker, Homeownership, and Business Assistance Act of 2009.
A REVIEW OF OPERATIONS

RAILROAD RETIREMENT AND 

SURVIVOR PROGRAM

As of September 30, 2011, 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

$23.6 billion, a decrease of $1.5 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 2011, 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 $11.0 billion in benefit obligations (excluding $1.4 billion in social security benefits which were reimbursed by the

Social Security Administration) during fiscal year 2011.

At the end of fiscal year 2011, total railroad retirement system assets equaled 

$23.6 billion. During fiscal year 2011, benefits totaling approximately $11.1 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 $96.4 million. 

7
8 2012 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, 42.1 percent of total financing sources (which excludes a decrease of

$1,664.3 million, mostly due to a change in NRRIT net assets) and $43.1 million more

than in fiscal year 2010.

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

social security taxes. The 2010 rate of 7.65 percent was 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 2010 was $106,800, and all

earnings were subject to the 1.45 percent Medicare tax.

Legislation enacted in December 2010 temporarily lowered the social security payroll tax rate on employees, and the corresponding tier I payroll tax rate on railroad

employees, by 2 percentage points for calendar year 2011. This temporary rate reduction was subsequently extended for calendar year 2012 under legislation enacted in

February 2012. The tier I tax rate on employees in 2011 was divided into 4.20% for

railroad retirement and 1.45% for Medicare hospital insurance. The tier I tax rate on

employers remained divided into 6.20% for railroad retirement and 1.45% for Medicare

hospital insurance. The 2011 maximum earnings base for railroad retirement was

$106,800 and the Medicare tax was applied to all earnings.

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 2011 and 2010, was 3.9 percent on employees and 12.1 percent on employers

in both 2011 and 2010.

Tier I and tier II taxes for fiscal year 2011 amounted to $2.3 billion and $2.4 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.

(text continued on page 10)
A REVIEW OF OPERATIONS 9

Financing Sources - Fiscal Year 2011 (In Millions) 

GROSS TOTAL: $11,140.01

Costs - Fiscal Year 2011 (In Millions)

TOTAL: $11,214.2

RETIREMENT AND SURVIVOR PROGRAM

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

1Excludes -$1,664.3 million as shown under Other Financing Sources on page 12.

Payroll Taxes 42.1%

$4,689.9

Financial Interchange 34.9%

$3,890.2

National Railroad 

Retirement 

Investment Trust

Transfers-In 15.7%

$1,744.0

Interest on 

Investments 0.3%

$35.8

Federal Income 

Taxes 4.1%

$453.4

General 

Appropriations 2.9%

$326.7

Benefit Payments 97.8%

$10,962.7

Interest 

Expense 1.2%

$132.2

Salaries and 

Expenses 1.1%

$118.6

Other < 0.1%

$0.7
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 2011 amounted to $3.9 billion.

Interest on Investments and Other Revenue

Interest revenue decreased from $36.5 million in fiscal year 2010 to $35.8 million in

fiscal year 2011. 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 2011 amounted to $452.0 million during the year.

Original transfers for fiscal year 2010 totaled $470.0 million. There were no reconciliation adjustments in either fiscal years 2010 or 2011. 

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 2002 through 2011, 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

10 2012 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.

5

October 2011 adjustment to initial reconciliation made in March 2009. 

Federal Income Tax Transfers by Recipient Account and 

Benefit Component, Taxable Years 2002-2011 (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

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

2010 159 315 3

2011 160 300 3

Reconciliation adjustments4

2002 (2008) -4 -20 -1

2003 (2008) -12 -70 -3

2004 (2008) -18 -63 -2

2005 (2009, 20115

) 8 -56 -1
Railroad Retirement and Survivor Program 

Consolidated Financing Sources, 

Costs and Net Position (Millions)1

For the Fiscal Year Ended September 30 2011 2010

Financing Sources:

Payroll Taxes $4,689.9 $4,646.8

Financial Interchange 3,890.2 3,964.1

Interest on Investments and Other Revenue2 35.8 36.5

Federal Income Taxes 453.4 467.0

General Appropriations3 326.7 64.1

Other (1,664.3) 457.1

Transfers to the National 

Railroad Retirement Investment Trust 0.0 0.0

Transfers from the National 

Railroad Retirement Investment Trust 1,744.0 1,989.0

Total Financing Sources 9,475.7 11,624.6

Costs:

Benefit Payments 10,962.7 10,796.9

Interest Expense 132.2 141.1

Salaries and Expenses4 118.6 120.1

Other 0.7 (2.2)

Total Costs 11,214.2 11,055.9

Financing Sources over Costs (1,738.5) 568.7

Net Position - Beginning of Period 24,564.2 23,995.5

Net Position - End of Period $22,825.7 $24,564.2

1 Prepared on an accrual basis of accounting. 

2 Includes accrued interest revenue in fiscal year 2010 from loan to the Railroad Unemployment 

Insurance Account. The loan was paid off in fiscal year 2011.

3 Includes payroll tax holiday amount in fiscal year 2011. 

4 Includes unemployment and sickness insurance salaries and expenses of approximately 

$15.1 million and $15.8 million for fiscal years 2011 and 2010, respectively.

12 2012 Annual Report, U.S. Railroad Retirement Board
A REVIEW OF OPERATIONS 13

Market value of assets managed 

by NRRIT on September 30, 2011 $22.1 billion

Rate of return of investment portfolio 

managed by NRRIT for full year 

ended September 30, 2011 -0.10%

Source: NRRIT 

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

Railroad Retirement Board’s website at www.rrb.gov.

National Railroad Retirement Investment Trust (NRRIT)

Fiscal Year 2011 Summary
14 2012 Annual Report, U.S. Railroad Retirement Board

by the Congress for vested dual benefits were $57.0 million for fiscal year 2011 and 

$64.0 million for fiscal year 2010. These amounts include Federal income tax transfers

for 2011 and 2010. The amount appropriated for fiscal year 2011 was 10.9 percent less

than fiscal year 2010, 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 2011/2012

and also $150,000 for fiscal years 2010/2011. 

Other Financing Sources

Other financing sources consisted of $10.6 million to be provided by the Office of

Personnel Management to pay future retirement benefits to RRB employees and 

$13.3 million from the railroad unemployment trust funds in transfers-in for current

budget fiscal year salaries and expenses. These financing sources were offset by a

decrease in NRRIT net assets of $1,641.0 million, transfers-out of $7.1 million for

salaries and expenses of the Board’s Office of Inspector General, a loss on contingency

liability of $37.9 million, and a $1.2 million decrease in unexpended appropriations.

Costs

The RRB 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 $118.6

million and $120.1 million shown on page 12 for salaries and expenses in fiscal years

2011 and 2010, respectively, about $15.1 million for fiscal year 2011 and $15.8 million

for fiscal year 2010 were for the unemployment and sickness insurance program. About

$1.4 million in other costs for fiscal year 2011 and $1.1 million for fiscal year 2010 were

for the unemployment and sickness insurance program. 

Excluding $16.5 million from total costs of $11.2 billion for fiscal year 2011 and 

$16.9 million from total costs of $11.1 billion for fiscal year 2010, total costs for the railroad retirement and survivor program for fiscal year 2011 increased $158.8 million or 

1.4 percent.

Benefit Payments

In fiscal year 2011, railroad retirement benefit payments increased $165.8 million or

almost 1.5 percent to about $11.0 billion on an accrual basis, including $55.2 million in

vested dual benefits and $60.8 million in supplemental annuities.

Interest Expense

Interest expense of $132.2 million represents interest on the financial interchange

advances made by the U.S. Treasury during the fiscal year.
A REVIEW OF OPERATIONS 15

Salaries and Expenses

Excluding unemployment and sickness insurance salaries and expenses of 

$15.1 million for fiscal year 2011 and $15.8 million for fiscal year 2010, salaries and

expenses for the railroad retirement and survivor program were about $103.5 million for 

fiscal year 2011 and about $104.3 million for fiscal year 2010, a $0.8 million or 

0.7 percent decrease. Adjusted by the $15.1 million in salaries and expenses and 

$1.4 million in other costs for the unemployment and sickness insurance program, fiscal

year 2011 administrative expenses for the railroad retirement and survivor program

were about 0.91 percent of total costs.

Other Costs

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

insurance) for RRB employees of $9.3 million for the railroad retirement and survivor

program and $1.3 million for the unemployment and sickness insurance program. In

addition, carrier refunds of $0.3 million were incurred. These costs were offset by

approximately $9.7 million in reimbursements from the Centers for Medicare &

Medicaid Services for Part B Medicare costs, as well as a reimbursement of approximately $0.4 million from the RRB’s Office of Inspector General for RRB-incurred expenses,

and various other revenues of approximately $30,000.

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 2011, the net asset value of Trust-managed assets decreased from

$23.8 billion on October 1, 2010, to $22.1 billion on September 30, 2011. This includes

$1.7 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 -0.10 percent.

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

Treasury accounts) grew from $20.7 billion in 2002 to $23.6 billion as of the end of fiscal

year 2011, after net transfers for benefit payments of approximately $11.6 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 2011, which is available

on the RRB’s website at www.rrb.gov.

BENEFIT OPERATIONS

Retirement and survivor benefits paid, including vested dual benefits and supplemental employee annuities, totaled $10.9 billion in fiscal year 2011, $166 million more

than in fiscal year 2010. Benefits were paid to over 577,800 beneficiaries in fiscal year

2011. Some 542,800 beneficiaries were being paid at the end of the year. The table

shown below presents retirement and survivor benefit payments for fiscal years 2011

and 2010, 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. 

Monthly retirement and

survivor benefits being paid

numbered nearly 672,500 at

the end of the 2011 fiscal

year, about 4,200 less than at

the end of the prior year.

Monthly beneficiaries on the

rolls declined by more than

4,600 over the year, from

547,400 to 542,800. 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 2011 numbered 273,200, about 500 less than at the end of the previous fiscal year. The number of

age annuities being paid dropped slightly from 190,200 to 190,100 over the year, while

16 2012 Annual Report, U.S. Railroad Retirement Board

Type of benefit

Amount (in millions)

Percent

change

Fiscal year 

2011

Fiscal year 

2010

Retirement benefits

Employee annuities

Age $5,063.7 $4,928.9 +2.7

Disability 2,274.9 2,260.9 +0.6

Supplemental1

60.8 60.3 +0.8

Spouse and divorced

spouse annuities 1,379.2 1,338.4 +3.0

Total 8,778.5 8,588.6 +2.2

Survivor benefits

Annuities 2,161.6 2,183.5 -1.0

Lump-sum benefits 3.6 3.6 +1.1

Total 2,165.3 2,187.1 -1.0

Partition payments22.8 4.5 -38.5

Grand total $10,946.5 $10,780.2 +1.5

1 Excludes partitioned payments to spouses and divorced spouses where the 

employee is deceased. 

2 Limited to partitioned payments to spouses and 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

disability annuities decreased some 400 to 83,100. Supplemental annuities being paid

to employees rose approximately 300, numbering 121,400 at the end of the year. The

number of divorced spouse annuities being paid rose about 100 to 4,000. Spouse and

divorced spouse annuities together increased by more than 1,100, totaling 138,300 at

year-end. Nearly 138,800 monthly survivor benefits were being paid at the end of fiscal year 2011, a decrease of 5,100 from the previous year. More than 800 partition

payments to spouses and divorced spouses where the employee is deceased or not otherwise entitled to an annuity were being paid at the end of fiscal year 2011, an

increase of over 100 from the prior year.

Retirement

Regular employee annuities

Awards of regular employee annuities numbered 13,600 in fiscal year 2011, 

some 200 less than in fiscal year 2010. 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

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.

Average

Employee annuities 

awarded in 

fiscal year 2011 Number Percent

Monthly

amount

Years of 

service

Age at 

retirement

Age

Beginning at full 

retirement age or over 1,000 7 $2,214 22.0 67.6

Unreduced, beginning 

at age 60 to under full 

retirement age 6,800 50 3,445 36.4 60.7

Reduced, beginning 

at age 62 to under full 

retirement age 2,800 20 1,491 16.4 62.8

Disability 3,100 23 2,524 24.0 55.6

Total 13,600 100 $2,748 28.5 60.5

Note.--Detail may not add to total due to rounding.
18 2012 Annual Report, U.S. Railroad Retirement Board

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 3,100 disability awards,

1,200 averaging $1,673 per month were

for total disability and 1,900 averaging

$3,046 were for occupational disability.

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.

Employee Spouse

(includes

divorced

spouses)

Survivor

280

138

167

273

138 139

2006

2011

Employee Spouse Aged widow(er)

$1,829

$671

$1,122

$2,244

$839

$1,366

1 2

2006

2011

Employee Spouse Survivor

$6,178

$1,116

$2,147

$7,399

$1,379

$2,165

2

2006

2011

1

Number of monthly beneficiaries, 

September 30, 2006, and 2011 (thousands)

Amount of benefits paid,

fiscal years 2006 and 2011 (millions)

1

Includes $61.4 million in fiscal year 2006 and $60.8 million in 

fiscal year 2011 for supplemental annuities. 2

Includes divorced spouses.

1

Without supplemental annuity. 2Includes divorced spouses.

Average monthly amount,

September 30, 2006, and 2011
A REVIEW OF OPERATIONS 19

An estimated four-fifths 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 2011, 

nearly 9,500, or 70 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 $3,234 per month, compared to $1,640 for the 4,200 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,

51 percent of normal age retirements were immediate. While 94 percent of all 60/30

retirements were immediate, only 15 percent of the reduced age awards to employees

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

for 71 percent of the year’s disability awards.

The 273,200 retired employees on the rolls as of September 30, 2011, were being

paid regular monthly annuities averaging $2,244. The table on this page presents data

by type of annuity for these benefits.

Of the 83,100 disability annuities being paid, 20,600 were for total disability and

62,500 for occupational disability. The two types of disability annuities averaged

$1,525 and $2,482,

respectively. In fiscal

year 2011, over 

$380 million was paid

in total disability annuities and $1,895 million

in occupational disability annuities.

About 190,500

employees on the rolls

at the end of fiscal year

2011 were immediate

retirees and their regular annuities averaged $2,613 per month. Annuities of the 82,800 deferred retirees

averaged $1,395. Although their average railroad retirement annuity was much lower,

a greater proportion of the deferred annuitants also received social security benefits--

28 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

Employee annuities in 

current-payment status 

on September 30, 2011 Number

Percent

Average

monthly

amount

Percent

immediate

retirements

Age

Beginning at full retirement 

age or over 21,300 8 $1,668 45

Unreduced, beginning at age 60

to under full retirement age 97,500 36 2,933 92

Reduced, beginning at age 60 

to under full retirement age 71,400 26 1,476 34

Disability 83,100 30 2,244 81

Total 273,200 100 $2,244 70

Note.--Detail may not add to total due to rounding.
20 2012 Annual Report, U.S. Railroad Retirement Board

who were dual beneficiaries averaged $1,579, while combined benefits to immediate

retirees averaged $2,312. 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 2011 averaged $1,732 per month.

Tier I amounts of nearly 7,500 employees were completely offset by social security benefits. Tier I amounts being paid averaged $1,588.

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

amounts being paid at the end of fiscal year 2011 averaged $704. 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 25,700 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.

Nearly 7,100 supplemental annuities were awarded in fiscal year 2011, about 

200 less than in fiscal year 2010. Approximately 5,400 of the awards (75 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

averaged 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,

Type of retirement

Dual benefit

status Total Immediate Deferred

Receiving social security benefit

Number 31,000 8,000 22,900

Average monthly amount:

Railroad retirement (regular) $674 $1,410 $416

Social security 1,095 902 1,163

Combined benefit 1,769 2,312 1,579

Not receiving social security benefit

Number 242,200 182,400 59,800

Average monthly amount $2,445 $2,666 $1,770

Note.--Detail may not add to total due to rounding.
2,100 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 some 121,400, or 44 percent, of the

retired employees on the rolls at the end of the 2011 fiscal year. These annuities averaged $42 after court-ordered partitions; fewer than 50 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

11,300 in 

fiscal year

2011, slightly

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

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

A REVIEW OF OPERATIONS 21

Monthly 

spouse benefits

Awarded in

fiscal year 2011

In current-payment 

status on 

September 30, 2011

Number

Average

amount Number

Average

amount

Beginning at full retirement age or over 1,300 $534 16,700 $462

With minor or disabled child in care 400 1,114 1,900 1,137

Unreduced, beginning at age 60 

to under full retirement age 6,000 1,336 64,400 1,205

Reduced rate 3,100 446 51,300 515

Total 10,700 979 134,300 848

Divorced spouse annuities 600 567 4,000 518

Grand total 11,300 $958 138,300 $839

Note.--Detail may not add to total due to rounding.
22 2012 Annual Report, U.S. Railroad Retirement Board

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 2011, fewer than 100

averaging $694 per month were to spouses of 30-year employees and some 3,000 

averaging $442 were to spouses of employees with less than 30 years of service.

At the end of fiscal year 2011, almost 134,300 spouse annuities averaging $848 per

month were being paid. Nearly 4,000 divorced spouse annuities averaging $518 per

month were also being paid. These included some 50 averaging $613, 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 $3,238. This included $2,390

in regular and supplemental employee annuities and $848 in spouse annuities.

Approximately 52,600, 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 $1,267 per month, including $327 in railroad

retirement benefits and $940 in social security benefits. Railroad retirement annuities to

the 83,300 spouses not receiving social security benefits averaged $1,166, while railroad

retirement annuities to the 2,300 divorced spouses not receiving social security benefits

averaged $699.

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 134,300 spouses on the rolls at the end of fiscal year 2011, 91,800 were being

paid tier I amounts averaging $743 per month. The tier I amounts of 42,400 spouses were

completely offset by other benefits also due. Spouse tier II amounts averaged $370.

Vested dual benefits averaging $145 were being paid to 200 spouses. The 4,000 divorced

spouses on the rolls at the end of fiscal year 2011 were being paid tier I amounts averaging $537 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 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 2011.
A REVIEW OF OPERATIONS 23

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 2011 fiscal year, the RRB paid over 900 dual retirement tax refunds averaging

$68. Most of the payments were to employees retiring during the year. Fewer than 100

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 7,600 during fiscal year 2011, 100 less than the previous year. About 138,800 survivor annuities were

being paid at the end of the fiscal year, including 200 temporarily paid at spouse or

divorced spouse annuity rates pending recomputation to widow(er)s’ rates. Almost 110,400,

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 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

Monthly 

survivor benefits

Awarded in

fiscal year 2011

In current-payment status 

on September 30, 2011

Number

Average

amount Number

Average

amount

Aged widow(er)s’ 6,100 $1,789 110,400 $1,366

Disabled widow(er)s’ 200 1,531 4,100 1,133

Widowed mothers’ (fathers’) 100 1,779 700 1,663

Remarried widow(er)s’ 200 1,077 4,000 907

Divorced widow(er)s’ 700 991 9,600 892

Children’s:

Under age 18 300 1,249 1,800 1,264

Student * 1,412 100 1,404

Disabled 100 1,054 8,000 865

Parents’ * $1,006 * $945

Total 7,600 . . . 138,800 . . .

* Fewer than 50.

Note.--Detail may not add to total due to rounding.
24 2012 Annual Report, U.S. Railroad Retirement Board

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 some 200 annuities temporarily paid at spouse or divorced spouse rates,

aged widow(er)s’ annuities being paid at the end of the 2011 fiscal year included 52,900

which were reduced for age. Aged widow(er)s’ tier I amounts being paid averaged $1,134

per month. In almost 7,400 cases, the tier I amount was wholly offset by reductions for

other benefits. Nearly 35,900 aged widow(er)s were also receiving social security benefits, and these averaged $869. Tier II amounts averaged $310. More than 900 vested

dual benefits averaging $70 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 2011 averaged $943 (in about 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 $825. Tier II amounts averaged $234, while the 100

vested dual benefits being paid averaged $88.

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 2011 averaged $1,205 for widowed mothers and fathers and $869 for children. Fewer than 50

mothers (fathers) and some 2,300 children received social security benefits averaging

$967 and $571, respectively. Tier II amounts paid mothers (fathers) and children averaged, respectively, $488 and $100. 
A REVIEW OF OPERATIONS 25

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. 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 retirements. About 3,600 

lump-sum death benefits averaging $916 were awarded during fiscal year 2011.

Approximately 500 benefits were to widow(er)s, while 3,100 were to other individuals

who paid the funeral expenses. 

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 2011 fiscal year; they averaged $2,519. 

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 2011, there were some 800 spouses and divorced spouses

receiving payments averaging $292 where the employee was deceased or not otherwise

entitled to an annuity. While all but one received a partitioned tier II benefit, only 

8 percent received a partitioned vested dual benefit and 34 percent received a 

partitioned supplemental benefit.

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.
26 2012 Annual Report, U.S. Railroad Retirement Board

Eligible railroad retirement annuitants and social security beneficiaries whose benefits are payable by the RRB 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 RRB automatically enrolled almost

27,300 beneficiaries for Medicare during fiscal year 2011. As of the end of the fiscal

year, more than 471,000 persons were enrolled in the Part A plan, and some 453,000

(96 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 $868 million in the 2011 fiscal year.

The regular monthly premium for medical insurance during fiscal year 2011 was

$110.50 for coverage through December 2010 and $115.40 thereafter. Beneficiaries

with modified adjusted gross incomes above certain thresholds pay higher Part B premiums. The RRB generally withholds Medicare premiums for annuitants from their

benefit payments, and at the end of the fiscal year almost 429,900 annuitants were having their premiums withheld. Of the remaining Part B enrollees, approximately 2,500

were paying premiums to the RRB, either directly or through an intermediary, and

20,700 had their premiums paid by State agencies. The RRB 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 2011 exceeded costs by $61.9 million and the net position increased

by $61.9 million from $147.5 million at the end of fiscal year 2010 to $209.4 million at

the end of fiscal year 2011. For fiscal year 2011 as compared to fiscal year 2010, total

financing sources for the railroad unemployment and sickness insurance program

decreased by $97.8 million (37.7 percent) to $161.6 million.

Unemployment and Sickness Insurance Program

Consolidated Financing Sources, 

Costs and Net Position (Millions)1

For the Fiscal Year Ended September 30 2011 2010

Financing Sources:

Employer Payroll Taxes $172.8 $98.4

Interest Income 1.7 1.5

General Appropriations 0 175.82

Other (12.9) (16.3) 

Total Financing Sources 161.6 259.4

Costs:

Benefit Payments:

Unemployment 42.0 104.5

Sickness 54.4 52.1

Other3 3.3 1.7

Total Costs 99.7 158.3

Financing Sources over Costs 61.9 101.1

Net Position - Beginning of Period 147.5 46.4

Net Position - End of Period $209.4 $147.5

1 Prepared on an accrual basis of accounting. 

2 For payment of temporary extended unemployment benefits and administrative costs authorized 

under the Worker, Homeownership, and Business Assistance Act of 2009. 

3 Includes accrued interest expense for loan in fiscal year 2010 from the Railroad Retirement Account and

program costs for Railroad Unemployment Insurance - Extended Benefit Payments (Worker,

Homeownership, and Business Assistance Act of 2009). The loan was paid off in fiscal year 2011.

(text continued on p. 29)
28 2012 Annual Report, U.S. Railroad Retirement Board

Financing Sources - Fiscal Year 2011 (In Millions)

GROSS TOTAL $161.6

UNEMPLOYMENT AND SICKNESS 

INSURANCE PROGRAM

1Less Transfers-Out and carriers’ refunds of $12.9 million.

Benefit Payments 96.7%

$96.4

Other Expenses 3.3%

$3.3

Employer 

Payroll Taxes1 98.9%

$159.9

Interest Income 1.1%

$1.7

Costs - Fiscal Year 2011 (In Millions)

TOTAL $99.7
A REVIEW OF OPERATIONS 29

Financing Sources

The primary ongoing 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 2011,

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 2011, the basic tax rates on railroad employers, including covered commuter 

railroads, ranged from a minimum of 3.15 percent (which included a surcharge of 

2.5 percent) to a maximum of 12.0 percent. Most employers were assessed the minimum rate in 2011. New employers in 2011 paid an initial rate of 2.50 percent.

Employer Payroll Taxes

Payroll taxes by employers totaled $172.8 million during fiscal year 2011. This was

an increase of 75.6 percent or $74.4 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

3.9 percent in fiscal year 2011, of which the RRB earned $1.7 million as its pro rata

share.

Costs

Total costs for the railroad unemployment and sickness insurance program

decreased by $58.6 million (37.0 percent) to $99.7 million. 

Benefit Payments

During fiscal year 2011, unemployment insurance benefit payments decreased by

$62.5 million (59.8 percent) to $42.0 million. Sickness insurance benefit payments

increased $2.3 million (4.4 percent) to $54.4 million.
30 2012 Annual Report, U.S. Railroad Retirement Board

BENEFIT OPERATIONS

Net unemployment and sickness benefits totaling $102.6 million were paid in the

2010-2011 benefit year, $87.9 million less than in the prior year. Beneficiaries numbered 28,100, in comparison to the previous year’s total of some 41,200. About 900

employees received both unemployment and sickness benefits during the 2010-2011

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

53 percent, while sickness benefit claimants decreased approximately 2 percent. Total

net unemployment benefit payments decreased by about 63 percent, while net sickness

benefits decreased by more than 2 percent. The substantial decreases in unemployment benefits and beneficiaries can be attributed to an ending of a national economic

recession. The number of employees qualified for benefits under the Railroad

Unemployment Insurance Act fell more than 5 percent to 239,100.

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 2010-2011,

there were 8,300 and 13,900 unemployment and sickness benefit waiting period claims,

respectively.

Unemployment

Improvement in the national economy was evidenced by the large decreases in

unemployment benefits and beneficiaries in the railroad industry. Some 11,600 railroad workers were paid $51.4 million in unemployment benefits during the 2010-2011

benefit year, including $9.4 million in temporary extended benefits under the American

Recovery and Reinvestment Act of 2009 and the Worker, Homeownership, and

Business Assistance Act of 2009, as amended by the Tax Relief, Unemployment

Reauthorization, and Job Creation Act of 2010. The number of benefit claimants

decreased by 13,200 from the prior year total of 24,800, while the benefit amount fell

$86.8 million from the year-earlier total of $138.2 million. The claimant count

decreased for the first time in five years. The average number of compensable days per

unemployment benefit claimant was 73 in benefit year 2010-2011 as compared to 90 in

the previous benefit year. 

The mid-month unemployment count in the 2010-2011 benefit year began with a

July count of 3,800 claimants. The count sporadically dropped and rose in the following months until it peaked at 4,900 in January 2011 due to extended benefit claims.

After January 2011, the count dropped during the following months until reaching a

benefit year low of 2,300 in June 2011. For the 2010-2011 benefit year as a whole, the

weekly number of claimants averaged 3,500 in comparison to an average of 9,000 in

the previous benefit year. The overall unemployment benefit claimant rate, measured

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

in relation to numbers of employees qualified to receive benefits under the Railroad

Unemployment Insurance Act during a particular time period, decreased to 5 per 100

qualified from the previous year’s level of 10 per 100 qualified, reflecting the end of the

national economic recession. The median age for all unemployment benefit claimants

was 42 years, as compared to 38 in the previous benefit year.

Sickness

The number of sickness benefit claimants during the 2010-2011 benefit year was

17,400, over 400 lower than in the previous year. The benefit year claimant count was

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

Major unemployment and sickness benefit operations,

benefit years 2010-2011 and 2009-2010

Item

Benefit year 2010-2011 Benefit year 2009-2010

Total

Unemployment1 Sickness TotalUnemployment1

Sickness

Applications 35,700 14,500 21,200 45,900 24,500 21,500

Claims 238,400 101,100 137,300 406,300 265,900 140,400

Claimants 2

28,100 11,600 17,400 241,200 24,800 17,800

Net amount of benefits $102,584,900 $51,423,800 $51,161,100 $190,533,200 $138,175,100 $52,358,100

Number of payments

Normal 170,500 64,800 105,700 293,500 184,800 108,600

Extended 35,900 24,500 11,400 67,700 56,300 11,400

Total 206,400 89,300 117,100 361,200 241,200 120,000

Average amount per 

2-week registration period

Normal $581 $569 $589 $560 $554 $568

Extended 554 557 549 544 547 529

Total 577 566 585 557 553 565

1 Starting in June 2009, includes temporary extended unemployment benefits authorized by the American Recovery and 

Reinvestment Act of 2009. Beginning in November 2009, temporary extended unemployment benefits are also being paid under 

the Worker, Homeownership, and Business Assistance Act of 2009, as amended by the Tax Relief, Unemployment Insurance 

Reauthorization, and Job Creation Act of 2010. The benefit year 2009-2010 amount totaled $26.8 million and the benefit year 

2010-2011 amount totaled $9.4 million. 

2 Benefits for both unemployment and sickness were paid to approximately 1,400 employees in benefit year 2009-2010 and 900 

employees in benefit year 2010-2011. 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 2012 Annual Report, U.S. Railroad Retirement Board

Unemployment and Sickness Benefit Claimants by Age, 

Benefit Year 2010-2011

Claimants under the Railroad Unemployment Insurance Act, 

Benefit Years 2006-2007 through 2010-2011
A REVIEW OF OPERATIONS 33

benefits of $77.6 million were paid, $0.6 million more than in the prior benefit year.

Net sickness benefits totaled $51.2 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 $1.2 million in comparison with the previous year.

The utilization rate for sickness benefits was 7.3% as compared to 7.0% in the previous benefit year. The average duration of sickness was 68 days, the same as the previous benefit year.

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

wounds (affecting 26 percent of beneficiaries), arthritis and disk disorders (23 percent),

circulatory and heart disease (8 percent), and mental disorders, including drug and

alcohol addictions (11 percent). The median age of all sickness benefit claimants was

52 years; the same as in the previous benefit year.

RAILROAD EMPLOYMENT

Average monthly railroad employment in fiscal year 2011 rose about 4 percent to

228,000 from the 220,000 average of the previous year. After experiencing an all-time

low of 215,000 in January 2010, railroad employment began to rebound in 2010 and

continued that recovery in 2011. Fiscal year 2011 average railroad employment began

at 225,000 and stayed the same or increased in all but two months during the year. By

September 2011 railroad employment had risen to 233,000.

Employment in the railroad industry was affected by an increase in rail traffic,

which can be attributed to increases in industrial production. Freight-ton-miles in 

fiscal year 2011 increased in all quarters as compared to the previous year. Overall,

fiscal year 2011 railroad freight-ton-miles were 5 percent higher than the previous year

with the largest year to year increase coming in the January-March 2011 quarter.
34 2012 Annual Report, U.S. Railroad Retirement Board

Average Railroad Employment

Fiscal Years 2007 through 2011

Note.--Numbers for 2011 are preliminary.
ADMINISTRATIVE DEVELOPMENTS

35

Performance Management

Customer Satisfaction Survey

In fiscal year 2011, the RRB completed a year-long survey of visitors to the agency

website (www.rrb.gov). The survey followed the American Customer Satisfaction Index

model designed by the University of Michigan and coordinated with the company

Foresee Results. During the survey period, the agency received ongoing customer feedback and quarterly summary reports, as well as two special reports on specific areas of

concern identified by visitors to the website. The reports provided specific suggestions

for improvements, particularly with regard to navigation from the home page and within the site. As a result of the survey and reports, the RRB updated its website with an

optimized layout to make better use of available space and improve navigation through

use of cascading menus. In addition, a login area for online services was added to the

home page. These changes went online in May 2011, and work continues to expand

these enhancements and make improvements to other areas of the website.

Customer Service Plan

The RRB’s Customer Service Plan promotes the principles and objectives of customer-driven quality service agency-wide. The RRB’s plan was revised in fiscal year

2011 in response to Executive Order 13571, Streamlining Service Delivery and

Improving Customer Service. The plan now provides an increased emphasis on agency

accountability and includes a new section which describes how the agency seeks input

from customers and determines their satisfaction. The plan is reviewed and updated

periodically based on agency experience, customer feedback and comparison with 

similar best-in-business models.

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

meeting timeliness standards. The RRB publicizes the Customer Service Plan and performance results on the agency website and posts them in all of its field offices. 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

The following describes some major issues addressed in 2011 and 2012 

as the RRB continued efforts to improve agency operations 

and service to its customers.
36 2012 Annual Report, U.S. Railroad Retirement Board

claims. This index, based on a weighted average, allows for a more concise and meaningful presentation of its customer service efforts. During fiscal year 2011, the overall benefit timeliness index was 99.2 percent. This means that the RRB provided benefit services

within the timeframes promised in the Customer Service Plan 99.2 percent 

of the time.

Reducing Improper Payments

The RRB reviewed benefit payments made under the Railroad Retirement Act for fiscal year 2010 as required by the Improper Payments Information Act of 2002 and the

Improper Payments Elimination and Reduction Act of 2010. The RRB’s Performance and

Accountability Report for fiscal year 2011 includes 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. The analysis shows that the RRB does not have

significant improper payments, as defined by Office of Management and Budget guidelines. In addition, the RRB’s Office of Inspector General recently completed an audit in

this area and determined that the agency is in compliance with statutory requirements.

The RRB continues to review its benefit payment programs to ensure that the level of

improper payments remains below significant thresholds, and to look for operational

improvements to minimize improper payments in the future.

Economic Recovery Activities

Two laws enacted to foster growth in the economy contained similar provisions relating to railroad employees. Both laws provided for continued access to extended unemployment benefits for rail workers, as well as a reduction in payroll taxes paid by employees. The Temporary Payroll Tax Cut Continuation Act of 2011 extended these provisions

for the first two months of calendar year 2012, while the Middle Class Tax Relief and Job

Creation Act of 2012 continued them for the balance of the year. The extended unemployment benefits were first authorized by legislation enacted in 2009.

The laws provide for up to 13 weeks of additional temporary extended unemployment

benefits to certain railroad workers who received normal unemployment benefits for days

between July 1, 2010, and June 30, 2011, and exhausted eligibility for these benefits.

The latest date that an extended benefit period may begin is December 31, 2012. In addition, $175 million was provided for payment of extended benefits, with benefits stopping

at the end of a claimant’s extended unemployment benefit period or when the total funding has been spent, whichever comes first.

The new laws also continued a reduction of 2 percentage points in the employee portion of the social security payroll tax, and the tier I tax on railroad employees, 

throughout calendar year 2012. Enacted in 2010, this reduction was originally scheduled

to expire at the end of 2011. Previously, the overall tax rate was 7.65 percent, which

included 6.2 percent for tier I and 1.45 percent for Medicare. The reduced rate is 5.65

percent, with 4.2 percent for tier I – a reduction of 2 percentage points – while the

Medicare rate remains 1.45 percent. The reduced tax rate also applies to sickness benefit
ADMINISTRATIVE DEVELOPMENTS 37

payments processed by the RRB. This increases the net amount received by railroad

employees suffering from extended illness, except for claimants injured on the job.

Payroll tax rates for employers remained the same.

Service Enhancements

Employer Reporting System

In fiscal year 2011, the RRB completed conversion of its original Employer

Reporting System – which supported Forms BA-4 (Report of Creditable Compensation

Adjustments), BA-6 (Certificate of Service Months and Compensation) and GL-129a

(Record of Employer Determination on Employee Protest of Service and Compensation) –

from SAS to ASP.Net programming software. The new Employer Reporting System

(ERSNet), which processes prepayment and post-payment verification Forms ID-4K

and ID-4E, was developed in the ASP.Net software, so this conversion combined the

two separate systems into one. 

The agency also completed Phase 3 of the ERSNet project to implement an Internetbased version of Forms BA-3 (Annual Report of Service and Compensation) and BA-11

(Report of Gross Earnings). This particular project significantly enhanced the RRB’s

ability to reduce paper and enable its customers to conduct business with the agency

through the Internet.

Cost-of-Living Adjustment

For the first time in two years, a cost-of-living adjustment based on inflation was

applied to most railroad retirement beneficiaries. The increase was 3.6 percent, and

was included in tier I and tier II payments for 540,940 annuitants. In addition,

114,281 beneficiaries whose social security benefits are paid by the RRB received an

increase. The total amount of the cost-of-living adjustment was $23.6 million in railroad retirement annuities and $4.0 million in social security benefits. For most participants, Medicare Part B premiums had stayed the same the past 2 years due to a “hold

harmless” provision that freezes the premium in years without a cost-of-living adjustment to retirement benefits. As a result, monthly Medicare Part B premiums increased

by $3.50, to $99.90, for most participants. For those who first enrolled in Medicare Part

B in 2010 or 2011, the monthly premium declined by $10.60 or $15.50, respectively.

Online Filing of Sickness Claims

The RRB expanded its range of Internet services to include online filing of biweekly

claims for sickness benefits in October 2010. To further speed processing of those

claims, the agency implemented an automated review of “clean” claims – those that do

not require manual adjudication – in calendar year 2011. This system proved to be

extremely successful, with 30,000 sickness claims filed online during the year and 80

percent of them processed as “clean.” 
38 2012 Annual Report, U.S. Railroad Retirement Board

Officials

Walter A. Barrows was sworn in as the Board’s Labor Member on October 7, 2011. 

At the time of his appointment by President Obama, Mr. Barrows was the SecretaryTreasurer of the Brotherhood of Railroad Signalmen. Since 2004, he had also been a

Trustee of the National Railroad Retirement Investment Trust. Mr. Barrows replaced

V. M. Speakman, Jr., who retired.

Michael S. Schwartz continues to serve as Chairman of the Railroad Retirement

Board, along with Jerome F. Kever as Management Member. Mr. Schwartz was first

appointed to the Board in 2003, while Mr. Kever was appointed in 1992.

The RRB also saw some changes in its senior executive ranks. The agency’s Senior

Executive Officer and Director of Administration, Henry M. Valiulis, retired in April

2012, following the retirement of Steven A. Bartholow as General Counsel in December

2011. Both retired with 38 years of service at the RRB. Dorothy A. Isherwood, the

RRB’s Director of Programs since June 2003, was named by the Board as the new

Senior Executive Officer. In that capacity, she will chair the agency’s Executive

Committee, coordinating development and implementation of agency policy. 

Keith B. Earley was named by the Board as the new Director of Administration. 

Mr. Earley had previously served as the RRB’s Director of Human Resources since

October 2001. The Board also named Karl T. Blank as the new General Counsel. Since

February 2009, he had served as Assistant General Counsel and Director of Hearings

and Appeals. Upon Mr. Blank’s promotion, Rachel L. Simmons assumed his previous

position.

In addition, the Board approved a change in the agency’s organizational structure

related to its nationwide network of field services. Rather than being part of the Office

of Programs, the Field Service component now reports directly to the three-member

Board. This change took effect in May 2012. As a result, Martha M. Barringer, who 

has been Director of Field Service since July 2000, became a member of the agency’s

Executive Committee.

Headquarters Building

On June 29, 2011, the General Services Administration (GSA) hosted a ceremony at

which the RRB’s headquarters facility was formally named as the William O. Lipinski

Federal Building. Mr. Lipinski was a long-time Congressman from the Chicago area

with extensive involvement in railroad and transportation issues. This was in accordance with a resolution passed by the Congress and signed by the President in 2009. In

addition to Mr. Lipinski, his wife and two children attended the ceremony, including

his son Daniel, who currently represents his old district in Congress. Speakers included

former Speaker of the House Dennis Hastert and former Congressman James Oberstar

of Minnesota, both of whom served with Mr. Lipinski in the House, and former

Northwestern University President Henry Bienen. Also making remarks at the event

were Michael J. Madigan, Speaker of the Illinois House of Representatives; 
ADMINISTRATIVE DEVELOPMENTS 39

Jeffrey Moreland, a member of the Amtrak Board of Directors; GSA Regional Public

Building Commissioner J. David Hood; and RRB Chairman Michael S. Schwartz.

Workforce Management

Staffing/Training

Like many agencies, the RRB has an aging workforce, with about 70 percent of its

employees having 20 or more years of service. In addition, about half of the agency’s

employees will be eligible for retirement in the next 5 years. As a result, the RRB has

focused on continued implementation of its Human Capital Management Plan, and

related activities in the area of hiring reform and succession planning. While attrition

remains an ongoing concern, it has also presented an opportunity for the RRB to

increase hiring of entry-level positions, particularly those engaged in direct customer

service. In 2011, the agency conducted two training classes for claims examiners

involved in post-adjudication processing under the Railroad Retirement Act, with one

in the area of retirement benefits and the other in survivor benefits. In addition, a

training class of Medicare examiners was concluded, while a new training class of

examiners for unemployment and sickness benefits will be completed in 2012. Lastly,

the agency completed training programs for new claims representatives assigned to the

various RRB field offices around the country. All of this training prepares RRB

employees to meet the goals outlined in the agency’s Customer Service Plan, and additional training classes are planned in 2012.

Employee Survey

The Office of Personnel Management conducts the Federal Employee Viewpoint

Survey to identify the extent to which employees identify the characteristics of successful organizations within their own agencies. The results for RRB employees surveyed

in 2011 showed very positive results (greater than 65 percent favorable) on the majority of questions about personal work experiences. In particular, 94 percent of RRB

respondents think the work they do is important, and 86 percent know how their work

relates to agency goals and priorities. Over 80 percent like the kind of work they do,

with more than 86 percent feeling that they are held accountable for achieving results,

and almost 79 percent feel supported by their supervisors in terms of balancing work

and life issues. At the same time, the survey results showed room for improvement in

elements of performance culture, such as in the area of dealing with poor performers.

As a result, the RRB has developed expanded training for managers and supervisors on

this particular issue, and has also incorporated it into a curriculum for new supervisors.

Employee Recognition

The RRB administers an Awards for Excellence program to recognize outstanding

agency employees, and also participates in the Chicago Federal Executive Board’s

Federal Employee of the Year awards program that recognizes outstanding Federal
40 2012 Annual Report, U.S. Railroad Retirement Board

employees from throughout the metropolitan area. The RRB had two employees selected as finalists for the 2011 Federal Employee of the Year awards. Rachel Shoulders, a

secretary in the Accounting, Treasury and Financial Systems Division of the agency’s

Bureau of Fiscal Operations, was a finalist in the Outstanding Administrative/Clerical

Employee category. Keith Earley, the agency’s then Director of Human Resources, was

a finalist in the category of Outstanding Community Service Employee.

Information Technology

RRBVision

The RRB uses a system called RRBVision that allows users to view video presentations with accompanying training materials, such as PowerPoint presentations or 

online screens. Presentations can be viewed in real-time or saved for later viewing. In

2011, the agency developed 43 presentations for viewing by employees on the RRB

intranet. Topics included technical training for claims examiners/representatives, nontechnical training sessions and presentations from the RRB’s Office of Equal

Opportunity. The benefits of RRBVision include consistency in training, a greater

number of training programs available to offsite staff, availability of training ondemand, and savings in travel costs. The system also offers programs for rail employers, rail workers, beneficiaries and claimants through the RRB website.

Information Security

The RRB is committed to protecting its annuitants’ information from unauthorized

use or disclosure, and continues to work on improving security capabilities in this

regard. In 2011, the agency started to encrypt mainframe backup tapes that are sent to

an offsite storage location, which helps ensure that personal information and files are

less likely to be compromised. The RRB also implemented an Office of Management

and Budget initiative on trusted Internet connections. As a result, a contracted service

provider delivers encrypted traffic, supports adjustments based on identified threats,

and performs forensic analysis as required by the agency. Staff also developed a policy

directive on information security that prescribes various internal policies and assigns

responsibility for protecting information from unauthorized access, use, disclosure, disruption and modification, reflecting various Federal directives, regulations and best

practices.

Cost Savings

As part of a continuing effort to maximize efficiency while reducing staffing costs,

the agency increased use of automation in its processing routines and consolidated certain tasks among two operations shifts in its data center, allowing it to eliminate a

third shift consisting of two staff members. RRB staff, working with counterparts at

other agencies, also evaluated the utility of software used by the agency. This resulted

in four software products being eliminated or replaced with an annual savings of more

than $37,000.
ADMINISTRATIVE DEVELOPMENTS 41

Office of Equal Opportunity

Diversity Program

Throughout the year, the agency’s Office of Equal Opportunity sponsored many programs designed to foster an inclusive work environment and enhance the understanding of disability issues. These included several cultural enrichment events sponsored

by the RRB’s Workplace Diversity Committee to commemorate African American

History Month, Women’s History Month, Asian Pacific American Heritage Month,

Hispanic Heritage Month, and Native American Heritage Month. The agency’s

Employees with Disabilities Advisory Council also presented informational sessions on

various topics that affect individuals with disabilities.

Equal Opportunity Policies

The agency’s equal employment opportunity (EEO) complaint program meets all of

the elements necessary to achieve a discrimination-free work environment. All employees received training on their rights and remedies under the No FEAR Act, Title VII

and other antidiscrimination laws. The agency has policies and procedures to address

all forms of EEO complaints, including harassment, as well as procedures to respond to

requests for reasonable accommodation. Much of this information is contained in an

EEO Handbook, and the agency also maintains several pages on its intranet and public

website with information on EEO programs and procedures. The RRB’s Office of Equal

Opportunity also updated the agency’s Strategic Plan for Achieving and Maintaining a

Model Equal Employment Opportunity Program to cover the years 2012 through 2015.

The plan captures the vital elements of the EEO program and reflects the activities

necessary to achieve positive results for the agency. Lastly, Executive Order 13548,

issued in July 2010, provides that the Federal government, as the nation's largest

employer, must become a model for the employment of individuals with disabilities. In

response, the Office of Equal Opportunity, in collaboration with the Bureau of Human

Resources, developed a 5-year plan for promoting employment of individuals with disabilities.

Recruitment

As part of the RRB’s commitment to a diverse workforce, the Office of Equal

Opportunity worked 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 RRB 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 
42 2012 Annual Report, U.S. Railroad Retirement Board

benefits and answer any questions related to the benefit programs. The RRB 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, RRB 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 55th year, in 2011 a total of 1,482 railroad labor union officials attended 35

informational conferences held in cities throughout the United States. In addition,

railroad labor unions frequently request that RRB representatives speak before their

meetings, seminars and conventions. In 2011, the Labor Member’s Office was represented at 16 union gatherings attended by 3,539 railroad labor officials. Field personnel

addressed 69 local union meetings with 2,528 members in attendance.

At seminars for railroad executives and managers, RRB representatives review programs, financing, and administration, with special emphasis on those areas which

require cooperation between railroads and RRB offices. During 2011, the Management

Member’s Office conducted three seminars for 135 railroad officials, as well as preretirement counseling seminars attended by railroad employees and their spouses, and

benefit update presentations.

Office of Inspector General

The Office of Inspector General for the RRB focuses its audit and investigative

efforts on protecting the integrity of the agency’s trust funds by providing comprehensive program and operational oversight. Reports issued by the Office of Inspector

General, and other documents referenced in this section, can be accessed at

www.rrb.gov/oig.

Office of Audit

During fiscal year 2011, auditors published 12 reports and issued findings and recommendations to agency management, including their opinion and related reports on

the RRB’s financial statements for fiscal years 2009 and 2010. Pursuant to the Reports

Consolidation Act of 2000 and the requirements of Office of Management and Budget

Circular A-136, the Inspector General issued a document that identified the most serious management challenges facing the RRB and progress in addressing them. The

Inspector General identified the following as the most serious challenges facing the

agency: providing oversight of invested program assets, disability program integrity,

Railroad Medicare program integrity, information technology security, internal control

over non-integrated subsystems, and preventing and detecting improper payments.

Additionally, auditors completed their annual evaluation of the agency's information security program, including progress in implementing the Federal Information

Security Management Act of 2002 requirements. They also reviewed the RRB’s Audit
ADMINISTRATIVE DEVELOPMENTS 43

and Compliance Division, audited controls over Railroad Medicare contract costs, and

audited Railroad Retirement Act benefit overpayments and internal control.

Office of Investigations

The Office of Investigations focuses on identifying, investigating, and presenting

RRB fraud cases for prosecution or monetary recovery action. It also seeks to prevent

and deter program fraud by reporting systemic weaknesses in agency operations and

processes identified through investigative work. In order to maximize the impact of its

resources, the office pursues cooperative investigative activities with other inspectors

general and law enforcement agencies, such as the Federal Bureau of Investigation, the

U.S. Secret Service, and the Postal Inspection Service.

As of September 30, 2011, the Office of Investigations’ caseload totaled 547 matters,

representing more than $40 million1 in potential fraud. During fiscal year 2011, the

unit secured 15 arrests, 67 indictments and/or informations, 62 convictions, 21 civil

judgments, 111 referrals to the Department of Justice, and more than $106 million2

in financial accomplishments.

Special Reports

During fiscal year 2011, the Office of Inspector General conducted a limited-scope

railroad Medicare fraud detection project and subsequently published a special report

titled Railroad Medicare Fraud Detection Contracts: Lessons Learned. Additionally, it

conducted a special review to identify the RRB’s current weaknesses and published a

report titled Office of Inspector General’s Proposal to Improve Business Efficiency at the

Railroad Retirement Board which detailed ways in which they could be addressed.

1

This reflects potential fraud amounts related to programs administered exclusively by the RRB and potential fraud amounts from other Federal programs such as Medicare or social security which have been identified by Office of Investigations’ joint investigative work.

2 The total amount of financial accomplishments reflects fraud amounts related to programs administered

exclusively by the RRB and fraud amounts from other Federal programs such as Medicare or social 

security which were included in the disposition resulting from the investigation.
LEGAL RULINGS

45

Court Cases

Five petitions for review were filed during fiscal year 2011, with one case 

decided by a court of appeals. Four petitions were still pending at 

the end of the year.

Legal Opinions

The RRB’s Office of General Counsel issued several formal Legal Opinions in fiscal

year 2011, with summaries for three presented here as they are of special interest.

Legal Opinion L-2011-01 addressed the issue of whether retroactive accruals should

be paid to annuitants in current-day dollars. An annuitant argued that she was not

asking for interest on her accrual, but wanted payment in current-day dollars for the

annuity rates she was supposed to have been paid as far back as 1998. She wanted to

receive those 1998 and other distant-year rates at the 2010 annuity rate. 

The opinion explained that it has been the long-standing practice of the RRB not to

use current-day dollars to pay accrual amounts. The RRB, as a Federal agency, only

has the authority to pay amounts in accordance with computation provisions contained

within its statutes and has not been granted the authority to pay interest. Further,

case law has directed that Federal statutes cannot be read to permit interest to run on

a recovery against the United States unless Congress has affirmatively mandated such

a result. The opinion determined that such a power has not been granted to the RRB

by the Congress; therefore, the RRB may not pay accruals in current-day dollars.

Legal Opinion L-2011-05 addressed the status of the National Railroad Retirement

Investment Trust (NRRIT) as a “fiduciary” and whether or not it was subject to

Statement of Federal Financial Accounting Standards 31, Accounting for Fiduciary

Activities (SFFAS #31). A “fiduciary” is defined in an appendix to SFFAS #31 to mean a

Federal entity that holds assets in trust for non-Federal parties in which the nonFederal parties have an ownership interest that the Federal government must uphold.

One ruling on a case involving the RRB was issued by a court of appeals 

during fiscal year 2011, and seven noteworthy legal opinions 

were issued by the RRB’s Office of General Counsel.
46 2012 Annual Report, U.S. Railroad Retirement Board

The NRRIT was established by Public Law 107-90, which amended the Railroad

Retirement Act in 2001. Section 15 of the Act now authorizes the Trust to invest the

assets of the Railroad Retirement Account in a diversified portfolio of investments for

the benefit of the employees and annuitants covered by the Act. The NRRIT is financed

by employment taxes paid by railroad employers and employees and, like social security, individual participants do not have an ownership interest in the assets of the

NRRIT. The Supreme Court has pointed out that railroad benefits, like social security

benefits, are not contractual and may be altered or even eliminated at any time. Thus,

there is no fiduciary status since individual non-governmental entities do not have an

ownership interest in the assets.

Legal Opinion L-2011-08 addressed the hiring authority of the RRB to hire attorneys. The Merit System Audit and Compliance section of the Office of Personnel

Management (OPM) alleged that the RRB was improperly using delegated authority to

competitively appoint attorneys. OPM alleged that Executive Order 9830 (1947) moved

all attorney positions to Schedule A of the excepted service and prevents attorneys from

being hired into the competitive service.

The RRB’s General Counsel pointed out several historical communications, agreements and documents that outline a continuous, recognized agreement that the agency

retained the right to hire attorneys according to the provisions of the Railroad

Retirement Act. In summary, Section 7(b)(9) of the Railroad Retirement Act grants the

RRB authority to fill all positions through the competitive civil service except for one

position in each Board Member’s office. The historical record shows that the RRB was

granted the authority to hire its own attorneys under the Act in 1955. Further, a congressional committee specifically addressed this issue in 1955 and stated that the RRB

could continue to hire attorneys into the competitive civil service. Finally, in the mid1980s and again in the mid-1990s, the RRB worked with OPM to hire attorneys into

the competitive civil service and at neither time did OPM question or object to the

process.

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

RRB’s 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 2011, 478 appeals were filed with the Bureau of Hearings and

Appeals under the Railroad Retirement Act, and the Bureau rendered decisions in 

489 appeals. The initial or reconsideration decision was sustained in 191 cases. 

In 298 appeals the decision was favorable to the claimant in whole or in part.
LEGAL RULINGS 47

Eighty-four appeals were filed with the Board in fiscal year 2011, which, added to

the 26 appeals carried over from the previous year, brought the total to be considered to

110. Of 94 decisions, 79 sustained previous rulings of the hearings officer, three were

allowed, one was remanded to the Office of Programs, four were remanded to the

Bureau of Hearings and Appeals, three were affirmed in part, one denied in 

part/granted in part, two were dismissed and one was remanded to the Bureau of Fiscal

Operations. At the end of the year, 16 appeals were pending before the Board. 

Railroad Unemployment Insurance Act

During fiscal year 2011, 54 appeals were filed with the Bureau of Hearings and

Appeals under the Railroad Unemployment Insurance Act, and the Bureau rendered

decisions in 35 appeals. The initial or reconsideration decision was sustained in 22

cases. In 13 appeals the decision was favorable to the claimant in whole or in part.

Four appeals were filed with the Board in fiscal year 2011. The Board rendered

decisions in three cases of appeals from the decision of the referee, affirming the 

decision of the referee in two, and one was remanded to the Office of Programs. At the

end of the year no appeals were pending before the Board.
STATISTICAL

TABLES
Total1 Retirement2 Survivor2 Unemploymen

BENEFICIARIES (in thousands)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 

2010....................................................... 617 428 161 22 

2011....................................................... 603 429 156 11 

BENEFIT PAYMENTS (in millions)2002....................................................... $8,742.1 $6,535.9 $2,107.5 $49.2 

2003....................................................... 8,957.3 6,726.0 2,136.9 44.3 

2004 9 091 3 6 876 9 2 131 3 37 7 

Table 1.--Beneficiaries and benefits paid under the Railroad Retirement Act and the Railroad Unemployment Insurance Act, by fiscal yea

Fiscal year

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 

2010....................................................... 10,939.8 8,588.6 2,187.1 109.6 

2011....................................................... 11,047.2 8,778.5 2,165.3 48.3 

1 Beginning in fiscal year 2008, beneficiaries and benefit payments include partition payments to spouses and divorced spouses where the employee i

 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, and the Worker, Homeownership

 Act of 2009, as amended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

NOTE.-- Number of beneficiaries represents all individuals paid benefits in year. In total number for each year, beneficiaries are counted only once, ev

received more than one type of benefit. In fiscal year 2011, 7,600 individuals received both retirement and survivor benefits, 900 employees received bsickness benefits, and 2,800 employees received benefits under both the Railroad Retirement Act and the Railroad Unemployment Insurance Act. Theestimated, and totals for earlier years are similarly adjusted.
Item 2002 2003 2004 2005 2006 2007 2008 20

RAILROAD RETIREMENT ACCOUNT

Receipts

Tax transfers 1.................................................................. $2,743.1 $2,651.4 $2,611.0 $2,606.6 $2,674.8 $2,637.8 $2,636.5 $2,50

Interest and profit on investments2....................................... 1,875.8 291.8 15.1 15.8 19.6 19.3 12.9 12

Transfers from the National RR Investment Trust 3.................. ........ 300.0 1,564.0 809.0 947.0 1,391.0 1,298.0 1,553

Transfers from the SSEB Account 3....................................... ........ ........ 223.0 149.0 38.0 181.0 147.0 ....Loan repayments from RUI Account 4.................................. ........ 8.2 ........ ........ ........ ........ ........ ....

Transfer from RR Supplemental Account 5........................... 0.1 ........ ........ ........ ........ ........ ........ ....

Expenditures

Benefit payments 6............................................................ $3,240.7 $3,504.1 $3,602.4 $3,679.0 $3,808.8 $4,073.0 $4,121.8 $4,326

Financial Interchange adjustment 7....................................... 140.9 72.1 36.6 (137.4) (85.9) (45.7) (100.0) (104

Net transfers to administration............................................. 64.9 64.0 65.3 73.7 69.9 64.0 58.4 63

Transfers to the National RR Investment Trust 3..................... 1,431.6 17,750.0 586.0 ........ ........ ........ ........ ....

Loans to RUI Account......................................................... 7.8 ........ ........ ........ ........ ........ ........ ....

Balance at end of period8.........................................................$18,640.4 $502.2 $625.6 $591.1 $479.4 $616.9 $632.0 $418

SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT9

Receipts

Tax transfers 1.................................................................. $2,134.7 $2,128.0 $2,240.8 $2,370.8 $2,462.5 $2,538.0 $2,649.3 $2,528

Interest and profit on investments2....................................... 71.6 59.1 20.0 23.3 28.0 29.0 19.9 19

Transfers under financial interchange10.............................. 3,646.8 3,747.3 3,843.5 3,917.3 3,846.3 4,019.8 4,049.9 4,137

Advances against financial interchange11.............................. 3,153.9 3,236.1 3,245.7 3,256.0 3,241.3 3,232.3 3,385.6 3,66

Expenditures

Benefit payments............................................................... $5,243.8 $5,229.5 $5,288.7 $5,395.8 $5,536.1 $5,637.9 $5,835.8 $6,107

Financial Interchange adjustment 7....................................... (140.9) (72.1) (36.6) 137.4 85.9 45.7 100.0 104

Net transfers to administration............................................. 26.1 22.8 22.9 24.1 24.3 25.6 38.5 32

Transfers under financial interchange10.............................. 424.7 426.3 418.6 444.9 471.5 483.3 525.7 524

Repayment of advances against financial interchange4......... 3,385.3 3,342.4 3,409.9 3,399.6 3,419.7 3,418.7 3,410.8 3,564

Transfers to the National RR Investment Trust/RR Account3... ........ 1,438.0 223.0 149.0 38.0 181.0 147.0 ....

Balance at end of period............................................................$1,890.9 $674.6 $698.2 $714.8 $717.4 $744.2 $791.2 $803

See footnotes at end of table.

Table 2.--Status of the Railroad Retirement Act accounts and trust funds, by fiscal year, 2002-2011 (In millions), c

Fiscal Year
Item 2002 2003 2004 2005 2006 2007 2008 20

NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST12

Cash and investment balance at end of period13...........................$1,420.7 $23,016.5 $25,019.7 $27,636.6 $29,327.9 $32,631.4 $25,271.5 $23,330

RAILROAD RETIREMENT SUPPLEMENTAL ACCOUNT5

Receipts

Tax transfers 1.................................................................. $23.5 ........ ........ ........ ........ ........ ........ ....

Interest and profit on investments2....................................... 2.9 ........ ........ ........ ........ ........ ........ ....

Expenditures

Benefit payments 6............................................................ $16.8 ........ ........ ........ ........ ........ ........ ....

Net transfers to administration............................................. 0.7 ........ ........ ........ ........ ........ ........ ....

Transfers to the National RR Investment Trust 3..................... 70.4 ........ ........ ........ ........ ........ ........ ....

Transfer to Railroad Retirement Account.............................. 0.1 ........ ........ ........ ........ ........ ........ ....

Balance at end of period............................................................ ........ ........ ........ ........ ........ ........ ........ ....

DUAL BENEFITS PAYMENTS ACCOUNT14

Dual benefit transfers 15............................................................ $146.0 $131.1 $118.3 $107.1 $97.0 $88.0 $79.0 $72

Benefit payments..................................................................... 142.2 129.4 117.3 106.3 96.0 86.5 77.7 69

Balance at end of period8......................................................... $3.9 $1.8 $1.0 $0.8 $1.0 $1.5 $1.3 $2

See footnotes at end of table.

Table 2.--Status of the Railroad Retirement Act accounts and trust funds, by fiscal year, 2002-2011 (In millions), cash ba

Fiscal Year
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 in

under section 72(r) of the Internal Revenue Code as amended. Beginning in January 2011, Social Security Equivalent Benefit Account 

revenue transfers under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

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 Accoun

current administrative expenses is to be transferred to the National Railroad Retirement Investment Trust (Trust). The Trust may transfRailroad Retirement Account for payment of benefits. The balance of the Social Security Equivalent Benefit (SSEB) Account not needebenefits and administrative expenses is to be transferred to the Trust or to the Railroad Retirement Account. The SSEB Account transfTrust in fiscal year 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 afte

separate Railroad Retirement Supplemental Account was eliminated. The balance remaining in the Railroad Retirement Supplemental 

transferred to the 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 int Adjustments in benefit payments charged to the Social Security Equivalent Benefit Account as compared to actual financial interchan

rchan

interest.

8 The Railroad Retirement Account balance reflects (a) the current net difference between Board payments of social security benefits 

reimbursements for such payments, (b) liabilities for uncashed check credits received from U.S. Treasury, and (c) credits for undistribut

and recoveries. 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 benefi

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 19

Retirement Act as amended.

12 Established February 1, 2002, for investment of railroad retirement assets.13 Source: National Railroad Retirement Investment Trust.14 Established October 1, 1981, to keep track of the financing and payment of vested dual benefits.15 Transfers from U.S. Treasury under section 15(d) of the Railroad Retirement Act of 1974 and Federal income tax transfers under se

Internal Revenue Code as amended.
Table 3.--Status of the Railroad Unemployment Insurance Account, by fiscal year, 2007-2011 (In thousands), cash 

Fiscal year

 Item 2007 2008 2009 2010 

RECEIPTS Taxes............................................................

... $65,995 $67,074 $69,600 $75,298 

 Interest............................................................ 3,963 6,838 4,688 1,354 

 Transfer from Administration fund under sec. 11(d) of the RUI Act........................

... 8,923 8,711 9,808 8,305 

 Undistributed recoveries of benefit payments1

...

... 1,405 (34) (169) 354 

 Loans from the RR Account..............................

... .... .... .... 46,500 

 Total............................................................

... $80,286 $82,589 $83,927 $131,812 

EXPENDITURES Benefit payments2............................................. $74,004 $80,068 $149,555 $139,392 

 Repayment of RRA Loans.................................

... .... .... .... .... 

Funding for Office of Inspector General............... Funding for Office of Inspector General............... 1,572 1,550 1,536 1,274 

 Total............................................................

... $75,577 $81,618 $151,091 $140,666 

Cash balance end of period.................................

... $104,316 $105,287 $38,123 $29,269 

LOANS DUE RAILROAD RETIREMENT ACCOUNT Loans............................................................

... .... .... .... $46,500 

 Interest accrued................................................ .... .... .... 878 

 Repayment from RUI Account...........................

... .... .... .... .... 

Due RR Account end of period...........................

... .... .... .... $47,378 

1 Net of distributed payments. 2 Excludes temporary extended unemployment benefits authorized by the American Recovery and Reinvestment Act of 2009, the Wo

Homeownership, and Business Assistance Act of 2009, and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creaof 2010. FY 2009: $10,249,000, FY 2010: $20,171,000, and FY 2011: $8,736,000.
Table 4.--Status of the RUIA Administration Fund, by fiscal year, 2002-2011 (In thousands), cash 

Transfer to

Railroad

Unemployment

Insurance

Taxes and Administrative Account under 

Fiscal year interest expenditures1 Sec. 11d2 

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 2010...................................... 22,990 15,729 8,305 2011...................................... 23,722 12,442 7,918 

1 Expenditures for each year included encumbrances as of end of year. Fiscal years 2006-2009 and 2011 reflect rea

prior period administrative expenses between the Railroad Retirement Act and Railroad Unemployment Insurance A

2 Transfers to the Railroad Unemployment Insurance Account are based on the amount the accrual balance on the p

September 30 exceeded $6,000,000.
Retired employees Spouses

and Widowed

Supple- divorced Aged Disabled mothers 

 Total1 Age Disability mental2 spouses widow(er)s3 widow(er)s (fathers)3 Children 

NUMBER AT END OF YEAR2002 ............................ 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 2010 ............................ 676,653 190,236 83,517 121,166 137,112 114,929 4,251 776 10,168 2011 ............................ 672,484 190,100 83,109 121,422 138,253 110,372 4,136 745 9,881 AVERAGE AMOUNT

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 2010 ............................ ......... 2,186 2,221 42 817 1,329 1,108 1,643 937 2011 ............................ ......... 2,244 2,244 42 839 1,366 1,133 1,663 941 

1 Includes annuities to parents and, beginning in fiscal year 2008, partition payments to spouses and divorced spouses where the employee is de

 otherwise entitled to an annuity. On September 30, 2011, there were 29 parents' annuities in current-payment status averaging $945 and 836 pa

 averaging $292. 

2 Excludes partition payments to spouses and divorced spouses where the employee is deceased. Averages are after court-ordered 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. 

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, 2002-2011

Fiscal year
Retired employees Spouses

and Widowed

Supple- divorced Aged Disabled mothers 

 Total1 Age Disability mental2 spouses widow(er)s widow(er)s (fathers) Childr

Table 6.--Number and average amount of retirement and survivor annuities awarded during year, by type of annuitant and fis

Fiscal year g y p ( ) ( ) ( ) 

NUMBER AWARDED2002......................... 44,485 11,127 5,206 8,337 9,764 8,104 199 161 59

2003......................... 37,841 8,261 4,955 6,124 8,749 7,800 244 162 64

2004......................... 36,083 7,801 4,764 5,590 8,579 7,320 218 186 66

y

, , , , , ,

20053........................ 37,405 7,958 4,399 5,671 10,380 7,020 239 176 58

2006 ........................ 35,137 7,919 4,128 5,717 8,830 6,820 204 107 50

2007......................... 38,743 9,643 3,619 7,273 10,065 6,482 205 113 49

2008.......................... 38,591 9,753 3,402 7,090 10,127 6,511 166 143 51

2009.......................... 39,317 10,310 3,213 7,015 10,919 6,283 181 142 46

2010.......................... 40,191 10,712 3,161 7,319 11,256 6,163 189 99 42

2011.......................... 39 647 , 10 542 , 3 086 , 7 087 , 11 301 , 6 053 , 173 110 41Cumulative 1937-2011 5,053,127 1,473,144 516,949 489,784 1,166,349 1,023,167 18,327 84,986 237,03AVERAGE AMOUNT AVERAGE AMOUNT2002......................... ........ $2,243 $2,051 $42 $697 $1,286 $1,148 $1,319 $962003......................... ........ 2,201 2,092 41 733 1,346 1,262 1,384 952004......................... ........ 2,247 2,168 41 744 1,378 1,257 1,550 9920053........................ ........ 2,285 2,210 41 655 1,416 1,288 1,397 1,02

2006......................... ........ 2,389 2,308 41 794 1,493 1,334 1,492 1,05

2007......................... ........ 2 562 , 2 397 , 41 890 1 557 , 1 373 , 1 585 , 1 09

, 

2008......................... ........ 2,650 2,441 41 911 1,629 1,385 1,721 1,152009......................... ........ 2,685 2,558 41 931 1,708 1,443 1,709 1,232010......................... ........ 2,786 2,509 41 950 1,740 1,536 1,778 1,202011......................... ........ 2,814 2,524 41 958 1,789 1,531 1,779 1,19

1 Excludes partition payments to spouses and divorced spouses where the employee is deceased or not otherwise entitled to an annuity. Inclu

annuities to parents. Fiscal year 2011 total includes 2 annuities to parents averaging $1,006. Cumulative total includes 3,538 annuities to pa

2 Excludes partition payments to spouses and divorced spouses where the employee is deceased. Averages are after court-ordered partitions.3 An unusually large number of spouse awards were made with small or no tier 1 amounts, resulting in larger than normal numbers of spouse a

than normal award amounts.

NOTE.--C l ti fi fl t dj t t t d i l d t b t Cumulative figures reflect adjustments not made in yearly data, but average amount f h i l d ff t f h ts for each year include effects of changes i t 

in rates 

end of the year. 
Total1 Retirement benefits2 

 Monthly Monthly 

State3 Number amount Number amount 

Alabama......................................................................... 11,900 $16,733 9,500 $13,580 

Alaska............................................................................ 284 200 200 222 

Arizona........................................................................... 15,607 11,800 9,500 12,622 

Arkansas........................................................................ 17,431 12,300 10,300 14,737 

California........................................................................ 45,228 34,900 27,500 36,155 

Colorado......................................................................... 13,518 9,600 7,800 11,225 

Connecticut...................................................................... 4,595 3,100 2,300 3,642 

Delaware........................................................................ 3,424 2,400 1,900 2,796 

Washington DC................................................................. 561 500 400 445 

Florida............................................................................ 48,741 36,200 29,500 40,503 

Georgia........................................................................... 28,961 20,600 16,900 24,192 

Hawaii............................................................................. 250 200 200 191 

Idaho............................................................................... 7,935 5,700 4,700 6,531 

Illinois............................................................................. 55,673 42,300 33,700 44,738 

Indiana............................................................................ 27,525 20,100 16,000 22,132 

Iowa................................................................................ 15,065 11,200 8,900 12,024 

Kansas........................................................................... 24,543 17,600 14,400 20,279 

Kentucky......................................................................... 25,246 18,600 15,000 20,456 

Louisiana......................................................................... 12,691 9,300 7,300 10,147 

Maine.............................................................................. 4,262 3,400 2,600 3,261 

Maryland......................................................................... 14,302 10,700 8,200 11,241 

Massachusetts.................................................................. 6,271 4,800 3,700 4,899 

Michigan......................................................................... 23,619 17,700 14,200 19,014 

Minnesota........................................................................ 24,363 18,500 14,600 19,437 

Mississippi....................................................................... 10,372 7,800 6,200 8,343 

Missouri.......................................................................... 31,969 23,700 19,200 26,209 

Montana......................................................................... 10,052 7,200 5,800 8,224 

Nebraska......................................................................... 23,053 15,600 13,200 19,739 

Nevada........................................................................... 5,493 4,100 3,300 4,483 

New Hampshire................................................................. 1,374 1,000 800 1,059 

New Jersey...................................................................... 14,636 10,400 7,900 11,477 

New Mexico..................................................................... 7,185 5,400 4,200 5,722 

New York........................................................................ 37,017 25,500 19,800 30,008 

North Carolina................................................................... 16,723 12,600 9,900 13,392 

North Dakota..................................................................... 5,332 3,900 3,000 4,173 

See footnotes at end of table.

Table 7.--Retirement and survivor benefits in current-payment status on September 30, 2011, by class and state (Amounts in 
Total1 Retirement benefits2 

 Monthly Monthly 

State3 Number amount Number amount 

Ohio................................................................................ $43,330 25,400 33,000 $33,438 

Oklahoma....................................................................... 8,506 6,200 4,900 6,844 

Oregon........................................................................... 13,614 10,100 8,000 10,928 

Pennsylvania.................................................................... 55,938 41,400 30,800 42,293 

Rhode Island.................................................................... 700 888 500 699 

South Carolina.................................................................. 8,300 11,419 6,600 9,339 

South Dakota.................................................................... 2,469 1,800 1,500 2,036 

Tennessee....................................................................... 20,995 15,300 12,200 17,058 

Texas.............................................................................. 58,391 41,800 33,600 47,709 

Utah................................................................................ 9,126 6,500 5,200 7,302 

Vermont.......................................................................... 900 1,141 700 848 Virginia........................................................................... 28,402 20,800 16,300 22,668 

Washington..................................................................... 19,151 14,100 11,300 15,461 West Virginia..................................................................... 14,403 10,700 8,100 10,969 

Table 7.--Retirement and survivor benefits in current-payment status on September 30, 2011, by class and state (Amounts in thousands

Wisconsin....................................................................... 16,030 12,400 9,800 12,777 

Wyoming........................................................................ 5,907 4,000 3,300 5,012 Outside United States:Canada........................................................................... 1,803 2,600 1,700 969 Mexico............................................................................ 300 241 100 95 

Other............................................................................... 700 719 400 456  Total5............................................................................. $912,539 532,900 672,500 $734,207 

1 Includes 800 partition payments to spouses and divorced spouses where the employee is deceased or not otherwise entitled to an annuity. 2 Includes 121,400 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, 2011.4 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 sfinal 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 2006-2007 through 2010-2011, cash basis

Item 2006-2007 2007-2008 2008-2009 2009-2010 2

Qualified employees................................. 250,200 255,200 255,500 252,300 

Maximum daily benefit rate...................... $57 $59 $61 $64 

UNEMPLOYMENT BENEFITS

Net amount of benefits paid (thousands) $29,627 $32,212 $77,804 $138,175 

Payments:1

 Number................................................... 56,600 64,600 139,100 241,200  Average amount per two week claim period......................................... $499 $519 $520 $553 

Beneficiaries............................................... 9,500 10,100 21,400 24,800 Applications received................................ 12,200 13,200 32,600 24,500 Claims received.......................................... 68,800 78,000 166,900 265,900 

Normal benefit accounts exhausted........ 1,800 2,000 3,100 7,500 

Non-compensable waiting period onl

y2.. (3) (3) (3) (3) 

SICKNESS BENEFITS

Net amount of benefits paid (thousands) $43,533 $46,115 $45,158 $52,358 Payments:1 Number................................................... 128,300 122,400 117,200 120,000  Average amount per two week claim period......................................... $503 $520 $538 $565 

Beneficiaries............................................... 19,000 18,400 17,600 17,800 Applications received................................ 23,300 22,500 21,500 21,500 Claims received.......................................... 149,700 143,000 137,400 140,400 

Normal benefit accounts exhausted........ 3,500 3,300 3,100 3,200 

Non-compensable waiting period onl

y2.. 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 benefit ye3 Less than 50.NOTE.--Data covered program activities during the year, regardless of when unemployment or sickness occurred. Starting in June 200

temporary extended unemployment benefits authorized by the American Recovery and Reinvestment Act of 2009. Beginning in Novem

temporary extended unemployment benefits are also being paid under the Worker, Homeownership, and Business Assistance Act of 20

Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, enacted December 17, 2010, extended the special une

benefit provisions for an additional year. Net benefits for these temporary payments were $1,058,000 in benefit year 2008-2009, $26,852009-2010 and $9,388,000 in 2010-2011.
Table 9.--All employees, new entrants, employees qualified for RUIA benefits, and related data, by employer, 2010

All employees New entrants Creditable Compen

With

With 12 months sufficient Qualified Qualified

of service service for for RUIA for RUIA

Class or name of employer Total in 2010 RRA annuity benefits Total benefits Tier I Tie

CLASS OF EMPLOYER Class I railroads.......................................................... 193,853 152,983 149,396 185,032 9,358 4,182 $11,990,923 $11,33Class II railroads......................................................... 5,544 4,289 4,017 5,098 319 143 292,329 28

Class III railroads and switching & terminal companies........................... 41,063 33,476 29,757 38,789 2,184 1,100 2,535,651 2,35Car-loan companies................................................... 1,346 965 1,099 1,179 98 27 73,503 6

Miscellaneous employers1.................................

... 5,643 3,786 3,169 5,010 1,107 779 337,907 29

 Total.......................................................................... 247,449 195,499 187,438 235,108 13,066 6,231 $15,230,313 $14,33SELECTED EMPLOYERS BNSF Railway Co........................................................ 42,750 34,235 33,777 40,726 1,375 379 $2,829,914 $2,63Canadian National, U.S. Operations Bessemer and Lake Erie Railroad Co................... 85 63 67 80 2 2 4,495 

 Chicago Central and Pacific Railroad Co............ 255 217 216 253 5 4 18,043  Duluth, Missabe and Iron Range Railway Co...... 373 256 229 338 61 31 23,108 2

 Duluth, Winnipeg and Pacific Railway Co........... 105 93 82 102 1 ..... 7,952  Elgin, Joliet and Eastern Railway Co................... 224 141 157 195 34 8 12,841 

 Grand Trunk Western Railroad Co....................... 1,015 770 889 973 39 20 69,529 6

 Illinois Central Railroad Co................................... 3,906 3,134 3,029 3,752 220 130 271,369 24

 Pittsburgh and Conneaut Dock Co...................... 33 21 32 27 ..... ..... 1,115 

 Wisconsin Central LTD.......................................... 1,332 1,064 1,132 1,295 44 21 86,735 8

Canadian Pacific, Soo Line Corporation Dakota, Minnesota & Eastern Railroad Corp....... 1,128 798 719 1,056 128 76 57,492 5

 Delaware and Hudson Railway Co. Inc................ 520 377 406 504 7 3 28,366 2 Soo Line Railroad Co............................................ 2,918 2,208 2,180 2,753 272 154 169,732 16

CSX Transportation Inc............................................. 31,792 24,086 24,111 30,310 1,622 855 1,925,388 1,83Kansas City Southern Railway Co............................ 2,874 2,265 2,019 2,699 201 84 171,159 16

 Gateway Eastern Railway Co................................ 13 9 8 10 4 1 549 

 Texas Mexican Railway Co.................................... 185 139 135 176 12 6 11,923 

National Railroad Passenger Corp. (Amtrak).......... 21,773 17,764 15,811 21,059 1,213 768 1,328,630 1,24Norfolk Southern Corp.............................................. 31,477 24,699 23,109 29,623 2,658 1,189 1,813,444 1,74Union Pacific Railroad Co......................................... 51,095 40,644 41,288 49,101 1,460 451 3,159,138 2,98

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

2012 RRB cover-4-30.indd 1