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"" Table of Contents
The Report in Brief
"" Benefits and Beneficiaries
"" Financial Reports
"" Service Delivery
"" Economic Recovery Activities
"" Office of Inspector General
"" Selected Data on Benefit Operations
"" A Review of Operations
"" Administrative Developments
"" Legal Rulings
"" Statistical Tables
"" Contact Public Affairs
2014 Annual Report for Fiscal Year Ended
September 30, 2013
The Report in Brief View this document in PDF

 
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Railroad retirement and unemployment insurance benefits totaling over $11.7 billion were paid by the Railroad Retirement Board (RRB) to about 592,000 beneficiaries in fiscal year 2013.  Financial reports issued in 2014 on the solvency of the railroad retirement and railroad unemployment insurance systems were both favorable.  Total railroad retirement system assets equaled $26.7 billion as of September 30, 2013.
 

Benefits and Beneficiaries

Benefits paid under the Railroad Retirement and Railroad Unemployment Insurance Acts totaled over $11.7 billion in the fiscal year ending September 30, 2013. Retirement and survivor benefits were paid by the RRB to about 568,000 beneficiaries during the fiscal year, of whom 534,000 were on the RRB's annuity rolls at the end of the year. More than 26,000 railroad employees were paid unemployment and/or sickness insurance benefits. Some 2,000 beneficiaries received payments under both the Railroad Retirement Act and the Railroad Unemployment Insurance Act.

Retirement and survivor benefit payments of $11.6 billion during fiscal year 2013 were $305.4 million more than payments in the prior year. Employee and spouse annuitants were paid approximately $9.5 billion, accounting for 81 percent of the total payments. Employees received over $5.5 billion in age annuities, $2.4 billion in disability annuities and $60.6 million in supplemental annuities, while spouses and divorced spouses received more than $1.5 billion. Survivors were paid $2.2 billion in annuities and nearly $3.2 million in lump-sum benefits. The total number of beneficiaries who received retirement and survivor benefits declined by about 5,000 from fiscal year 2012.
 

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 below, the Federal Income Tax Transfers section/table in "A Review of Operations," which are also presented as cash, the information under "Financial Reports" in "The Report in Brief, " and in both the Railroad Retirement and Survivor Program and the Railroad Unemployment and Sickness Insurance Program financial operations sections of "A Review of Operations" 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 2013 totaled about $116.0 million. Net benefits totaled about $90.7 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 $3.2 million while net benefit payments increased by almost $12.2 million from the preceding year. In accordance with the Balanced Budget and Deficit Control Act of 1985, as amended by the Budget Control Act of 2011, amounts reflect a reduction of 9.2 percent under sequestration for days of unemployment and sickness after February 28, 2013.

Gross unemployment benefits increased by nearly 12 percent compared to the previous year. Unemployment benefits were still above pre-recessionary levels due to the continuation of temporary extended benefits. Gross unemployment benefits totaling $51.5 million ($47.8 million net), including $7.6 million ($7.0 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, the Temporary Payroll Tax Cut Continuation Act of 2011, and the Middle Class Tax Relief and Job Creation Act of 2012 and the American Taxpayer Relief Act of 2012 were paid to 11,100 claimants, while gross sickness benefits of $64.6 million ($42.9 million net) were paid to 16,200 claimants.

Financial Reports

The RRB's 2014 railroad retirement financial report to Congress, which addressed the period 2014-2038, 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 25-year projection period.  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 2014 railroad unemployment insurance financial report was also generally favorable. Even as projected maximum benefit rates increase 41 percent (from $68 to $96) from 2013 to 2024, experience-based contribution rates maintain solvency. The report also predicted average employer contribution rates well below the maximum throughout the projection period. Under all three employment assumptions, a 1.5 percent surcharge is probable in 2015 and 2016 in order to maintain a minimum account balance, with the same surcharge amount likely in 2017. 

The National Railroad Retirement Investment Trust's annual management report for fiscal year 2013 stated that, as of September 30, 2013, the net asset value of the Trust-managed assets was $25.0 billion. This represented an increase from $23.7 billion in the previous year, primarily due to a net investment return of 12.8 percent. The ending balance also reflects a transfer of $1.6 billion to the U.S. Treasury for the payment of railroad retirement (tier II) benefits. Total railroad retirement system assets, including those maintained at the Treasury, equaled $26.7 billion.

The 2014 railroad retirement and railroad unemployment insurance financial reports and the National Railroad Retirement Investment Trust's 2013 annual management report are available at www.rrb.gov.

Service Delivery

Customer Service Plan

In fiscal year 2013, customers received benefit services within the timeframes promised in the RRB's Customer Service Plan 99.3 percent of the time.

Service Enhancements

The RRB completed additional enhancements to its Employer Reporting System, which allows employers to complete several new forms in an electronic format, significantly reducing the number of paper documents generated and mailed. The agency also completed a cost-of-living adjustment, with tier I benefits increasing by 1.5 percent due to inflation. In the area of information technology, the RRB procured a new mainframe computer and implemented a new Financial Management Integrated System..

Economic Recovery Activities

The American Taxpayer Relief Act of 2012 provided for continued access to temporary extended unemployment benefits for railroad workers.

New Board Member

Steven J. Anthony was sworn in as the Management Member of the Board on May 8, 2014.  Prior to his appointment, he had 36 years of service in the rail industry and served as Senior General Counsel of the Norfolk Southern Corporation from 2007 to 2012.  Mr. Anthony replaced Jerome F. Kever, who retired as the longest serving Board Member in the agency's history.

Office of Inspector General

During fiscal year 2013, 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 11 audit reports that identified operational weaknesses and recommended improvements to agency management.

Investigative activities resulted in 26 arrests, 47 indictments and/or informations, 82 convictions, 37 civil judgments, 64 referrals to the Department of Justice, and more than $564 million in financial accomplishments. 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 were identified during Office of Inspector General joint investigative work.

Selected Data on Benefit Operations

Retirement-Survivor Fiscal Year
2013
Fiscal Year
2012

Employee age annuities

  Number awarded 10,200 10,100
  Number being paid at end of period 189,600 189,900
  Average being paid at end of period $2,451 $2,363

Employee disability annuities
  Number of total disability annuities awarded 900 1,100
  Number of occupational disability annuities awarded 1,400 1,700
  Number of total disability annuities being paid at end of period 20,700 20,800
  Number of occupational disability annuities being paid at end of period 60,500 61,700
  Average total disability annuity being paid at end of period $1,635 $1,596
  Average occupational disability annuity being paid at end of period $2,638 $2,580

Supplemental employee annuities1
  Number awarded 6,500 6,800
  Number being paid at end of period 121,500 121,600
  Average being paid at end of period $42 $42


Spouse and divorced spouse annuities

 

  Number awarded, total 11,400 11,500
  Number being paid to divorced spouses at end of period 4,400 4,200
  Number being paid at end of period, total 140,900 139,700
  Average being paid to divorced spouses at end of period $567 $542
  Average being paid at end of period, total $915 $882

Survivor annuities
  Number awarded to aged widow(er)s 6,000 5,800
  Number awarded, total 7,600 7,500
  Number being paid to aged widow(er)s at end of period 102,200 106,300
  Number being paid at end of period, total 129,700 134,300

Average being paid at end of period to
  Aged widow(er)s $1,476 $1,426
  Disabled widow(er)s $1,217 $1,181
  Widowed mothers (fathers) $1,757 $1,700
  Remarried widow(er)s $986 $956
  Divorced widow(er)s $974 $938
  Children $1,006 $980

Partition payments
2
  Number being paid at end of period 1,100 1,000
  Average being paid at end of period $300 $294

Lump-sum survivor benefits awarded
 
  Number of lump-sum death benefits 3,300 3,500
  Average lump-sum death benefit $922 $928
  Number of residual payments 3 3
   Average residual payment $3,087 $919

Employees and Earnings4 Fiscal
Year
2013
Fiscal
Year
2012

Average employment

236,000

234,000

Creditable earnings, Railroad Retirement Act (billions)

  Tier I
  Tier II



$17.66
$16.39



$17.28
$16.01
Creditable earnings, Railroad Unemployment Insurance Act (billions)
$3.99

$3.84

Unemployment-Sickness5 Benefit Year
2012-2013
Benefit Year
2011-2012

Qualified employees

243,800

235,100
     
Unemployment benefits    
  Net amount paid (millions) 6$47.2 7($47.8) 8$40.7
  Beneficiaries 10,700  7(11,100) 9,200
  Number of payments 83,500 71,800
  Normal benefit accounts exhausted 2,500 2,200
  Average payment per 2-week registration period $557

$573

     
Sickness benefits    
  Net amount paid (millions) $43.4  7($42.9) $49.1
  Beneficiaries 15,800  7(16,200) 16,700
  Number of payments 102,500 112,200
  Normal benefit accounts exhausted 2,600 3,000
   Average payment per 2-week registration period $571

$585


1 Excludes partition payments to spouses and divorced spouses where the employee is deceased. Averages are after court-ordered partitions. Fiscal year 2013 average includes fewer than 50 supplemental annuities, averaging $70, 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 2012 employment, all figures in this section are preliminary.
5 In accordance with the Balanced Budget and Deficit Control Act of 1985, as amended by the Budget Control Act of 2011, amounts reflect a reduction of 9.2% under sequestration for days of unemployment and sickness after February 28, 2013.
6 Includes $6.9 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, the Temporary Payroll Tax Cut Continuation Act of 2011, the Middle Class Tax Relief and Job Creation Act of 2012, and the American Taxpayer Relief Act of 2012.
7 Data in parentheses are for fiscal year (October 1, 2012 - September 30, 2013). Unemployment benefits
include $7.0 million in temporary extended unemployment benefits.
8 Includes $7.0 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, the Temporary Payroll Tax Cut Continuation Act of 2011, and the Middle Class Tax Relief and Job Creation Act of 2012.

 

 

 


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