For Use With Survivor Annuity Applications
Form RB-17 (7-04)
Part VII - How Your Annuity Is Computed
The Parts Of A Railroad Retirement Annuity
Your annuity can be made up of one or two parts, depending on the type of
annuity you are receiving. The first part, Tier I, is
included in all annuities.
The second part, Tier II, is not included in your
annuity computation if you are a remarried widow(er), surviving divorced spouse,
divorced mother/father or a parent, if other survivor annuitants are entitled or
potentially entitled to a widow(er), surviving divorced spouse or child benefit.
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Periodically, you will receive a cost-of-living increase. Your gross Tier I
increase will be the same percentage as the social security benefit
cost-of-living increase. Your Tier II will generally increase by 32.5 percent of
the Tier I percentage increase. An increase may not be payable each year.
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The Tier I amount is based on the deceased employee's combined railroad
retirement and social security credits. The Tier I you will receive is equal to
a percentage of the amount that the employee would have received if he or she
had retired under the social security system only. The percentage depends on the
type of benefit you are receiving and the number of annuitants who are qualified
to receive a benefit. If there are fewer than three qualified family members,
the percentages are as follows:
If there are three or more qualified family members, an amount called the
"family maximum" applies to the Tier I amount. The "family maximum" amount is
divided proportionately among the family members to determine the individual
annuity Tier I amounts.
The Tier I portion of the annuity is reduced for:
- the entire amount of any social security benefit which you are entitled to
receive on your own account or on the account of another person;
- a portion of any railroad retirement annuity based on your own railroad
- two-thirds of the amount of any public service pension based on your
earnings if you are receiving a widow(er) type benefit and you do not meet one
of the exceptions given in the section "Public
If you are not entitled to a Tier II, you cannot receive an annuity if the
amount of any social security benefit you receive is greater than the amount of
the maximum Tier I which could be paid on the employee's account.
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December 2001 legislation established an "initial minimum amount" which
yields, in effect, a widow(er)'s tier II benefit equal to the tier II benefit
the employee would have received at the time of the award of the widow(er)'s
annuity, minus any applicable age reduction. It does this by adding a "guaranty
amount," initially set at 50% of the employee's tier II, to the 100% tier I and
50% tier II benefits provided under prior law. The "initial minimum amount" is
computed as if it applied on the widow(er)'s annuity beginning date and is not
increased for cost-of-living adjustments.
This "guaranty amount" is reduced each year by the dollar amount of the
cost-of-living increases payable in both the tier I and tier II benefits
provided under prior law. Consequently, the widow(e)'s net benefit payment will
not increase until the annuity, as computed under prior law, exceeds the annuity
computed under the intial miniumum amount formula.
The widow(er)s' guaranty provision applies to all widow(er)s entitled to a
tier II effective February 1, 2002. If the annuity beginning date is before
February 1, 2002 the increase due to the "intial minimum amount" maybe zero,
because of previous cost-of-living adjustments.
If a widow(er) is also a railroad employee annuitant and both the widow(er)
and the deceased employee started railroad emplyment after 1974, only the
railroad retirement employee annuity or the survivor annuity, whichever is
larger, is, in effect, payable to the widow(er) unless the smaller annuity is
Each child received 15% of the deceased employee's tier II amount, and each
surviving parent received 35%. The minimum total tier II amount payable to a
family is 35% of the employee's tier II amount, and the maximum, 130%.
A tier II benefit is not payable for a surviving divorced spouse or a
remarried widow(er). A tier II benefit is not payable to surviving parents if
other family members may receive benefits or if the parent has remarried.
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Social Security Benefits
If you are qualified to receive an old age, survivor, or disability insurance
benefit from the Social Security Administration (SSA) at the time that you file
your railroad retirement application, and you indicate on the application that
you want to use your application to protect your filing date for a social
security benefit, SSA will get in touch with you and advise you on how to file a
social security application.
If you become qualified to receive any social security benefits after you
file your application for an annuity with the Railroad Retirement Board (RRB),
you must contact the SSA office directly to file an application for social
security benefits. In either case, SSA will decide if you are entitled to
receive benefits and will compute the amount of the benefits which can be paid.
However, the actual payment will be made by the RRB and will be combined with
your regular monthly railroad retirement payment.
The section "Tier I," explained how your annuity must be
adjusted for any social security benefit which you are entitled to receive. In
most cases, the total amount which will be paid to you each month by both the
RRB and SSA will not change if you file for social security benefits.
Filing for a social security benefit will usually increase the total benefits
payable to you only if all of the following situations apply:
- Your social security benefit is larger than the Tier I part of your
railroad retirement annuity; and
- You do not expect to earn more than the annual earnings exempt amount.
It is important to notify the RRB as soon as you file a social security
application for monthly benefits. If you do not notify the RRB, a railroad
retirement annuity overpayment may result.
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Public Service Pension
As explained in the section "Tier I," a widow(er) type
annuity must be adjusted for any public service pension payment, based on your
earnings, that you receive.
A public service pension is the retirement pay you receive because you worked
for the Federal Government of the United States, a state government or any
political subdivision of a state, such as a city, county, town, township,
village, school or sanitation district. The definition of "state" includes the
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam and American Samoa. Work for the government of a foreign country
is not included.
The public service pension may either be monthly checks or a lump-sum
payment. It may be administered by the government agency or a private insurance
company. The following are not considered to be public service pension payments:
- Social security benefits.
- Railroad retirement annuities.
- Veteran affairs benefits.
- Worker's compensation.
- Black lung benefits.
In addition, your annuity will not be adjusted for a public service pension
- you were eligible for or entitled to a public service pension before July
1, 1983; a special exemption may apply to you. Contact an RRB
field office if this situation applies
- you worked for state or local government:
- Your application for benefits was filed after March 2004 and your date
last worked is later than June 30, 2004 and FICA taxes were deducted from
your public service wages for 60 months. Coverage must include the last
month of employment.
- Your application for benefits was filed before March 2004 or your date
last worked is before July 1, 2004, FICA taxes must have been deducted on
the last day of your public service employment.
- you are a federal employee and you elected coverage under the Federal
Employee Retirement System (FERS). If FERS coverage was elected in 1998, you
must have worked for a minimum of five years under FERS.
If you are receiving a public service pension when you file an application,
you must report, to the RRB, any changes in the amount of the public service
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Widow(er)'s Rate Is Never Less Than Previous Rate
If you are currently receiving a retirement Spouse annuity, the total of your
Widow(er)'s annuity will be compared to the amount you are now receiving. If the
calculation of your Widow(er)'s annuity results in an amount that is less than
what you are currently receiving as a spouse, your Widow(er)'s annuity will be
increased to equal that amount. Your Widow(er)'s annuity amount will never be
less than the annuity you were receiving in the month before the employee's
This guarantee does not apply to a Surviving Divorced Spouse annuity.
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