News Release

Senate Legislation Could Mean More Secure Retirement for Railroad Workers

FORT WORTH, Texas, November 27, 2001:

Hundreds of thousands of active and retired railroad employees and their surviving spouses could look forward to a better, more financially secure retirement if the U.S. Senate passes legislation this week to reform the Railroad Retirement System.

“Railroad employees and their spouses shouldn’t have to fear retirement. With passage of this legislation, they won’t have to,” said Dennis Boston, international vice president for the Brotherhood of Railroad Signalmen and head of the labor coalition supporting the legislation.

Matthew K. Rose, president and chief executive officer of The Burlington Northern and Santa Fe Railway Company, added, “It also has the potential to put the Railroad Retirement System on a sound footing for at least the next 75 years. All of this would be accomplished without costing taxpayers a dime.”

The legislation is especially meaningful for widows and widowers of railroad employees who could see their benefits increase by an average of $300 a month if the legislation becomes law.

“I’ll feel a lot better about my wife’s future if this legislation is passed,” said Jim Atchley, a retired conductor from Cleburne, Texas. “I don’t want her to have to worry about whether she can afford food or medicine.”

Currently, money raised by Railroad Retirement must be invested in government bonds. The reform legislation would permit some of the System’s assets to be invested in the same manner as done by private multi-employer pension plans. On average, those plans earn more than twice as much on invested assets as Railroad Retirement. This is what makes the improved benefits possible. And since the money to be invested has already been paid into the fund by railroads and their employees, there would be no net cost to taxpayers. Additionally, the railroad companies would be responsible to make up any shortfalls if they should occur in the future.

In addition to improving benefits for surviving spouses of railroad employees, the legislation would also permit railroad employees with at least 30 years’ service to retire with full benefits at age 60 instead of the current 62, and it would vest new railroad employees in the Railroad Retirement System after just five years of service, instead of the current ten years.

The Railroad Retirement System covers almost one million current and retired railroad employees and their spouses. It was established by the federal government during the 1930s, even before the Social Security System was created to cover workers in other industries. Like Social Security, it is funded by payroll taxes levied on both employees and employers and provides employees with a basic set of benefits. But unlike Social Security, it also provides a second set of benefits that are more like those provided by private pension plans in other industries. To fund these additional benefits, both railroads and their employees pay substantially higher payroll taxes than do employees and employers covered by Social Security.

The legislation is supported by a broad coalition that includes railroad labor, organizations representing railroad retirees; and the railroad companies.

It passed the House by an overwhelming 384-33 majority. Senate Majority Leader Thomas Daschle has promised to bring the legislation up for consideration this week.

BNSF Headquarters
BNSF Railway Company
2650 Lou Menk Dr. 2nd Floor
P.O. Box 961057
Fort Worth, TX 76161-0057
Phone: (817) 352-1000