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2011 Annual Report for Fiscal Year Ended
September 30, 2010
A Review of Operations View this document in PDF

 
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At the end of fiscal year 2010, total railroad retirement system assets equaled $25.1 billion. During fiscal year 2010, benefits totaling approximately $11.0 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 $156.6 million.

Railroad Retirement and Survivor Program

As of September 30, 2010, 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 $25.1 billion, an increase of $0.5 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 2010, railroad retirement and survivor benefit payments were financed through four U.S. Treasury accounts.

The SSEB Account, established in fiscal year 1985, pays the portion of railroad retirement benefits equivalent to a social security benefit from various income sources related to these benefits. The RR Account funds retirement, survivor and disability benefits, in excess of social security equivalent benefits, from payroll taxes on employers and employees and other income sources. Supplemental benefit payments are also paid from the RR Account. The Dual Benefits Payments (DBP) Account and Federal Payments (FP) Account, funded by congressional appropriations from general revenues, finance the phase-out costs of certain vested dual benefits and interest on unnegotiated checks, respectively. The four accounts together incurred $10.8 billion in benefit obligations (excluding $1.3 billion in social security benefits which were reimbursed by the Social Security Administration) during fiscal year 2010.

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 more than $4.6 billion, 41.6 percent of total financing sources (which excludes an increase of $457.1 million, mostly due to a change in NRRIT net assets) and $62.3 million less than in fiscal year 2009.

Railroad employees and employers pay tier I taxes which, by law, are the same as social security taxes. The 2010 and 2009 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 years 2010 and 2009 was $106,800, and all earnings were subject to the 1.45 percent Medicare tax. Both employees and employers also pay a tier II tax to finance railroad retirement benefit payments over and above social security levels.  This tax, on earnings up to $79,200 in 2010 and 2009, was 3.9 percent on employees in both 2010 and 2009. It was 12.1 percent on employers in both 2010 and 2009.

Tier I and tier II taxes for fiscal year 2010 amounted to $2.4 billion and $2.3 billion, respectively.

Financial Interchange Transfers

The second major source of income to the railroad retirement and survivor program consists of transfers from the social security trust funds under a financial interchange between the two systems. The financial interchange is intended to place the Social Security Old-Age, Survivors and Disability Insurance and Hospital Insurance Trust Funds in the same position in which they would have been had railroad employment been covered by the Social Security and Federal Insurance Contributions Acts. This involves computing the amount of social security taxes that would have been collected on railroad employment, and computing the amount of additional benefits which
social security would have paid to railroad retirement beneficiaries during the same fiscal year.

In the computation of the latter amount, credit is given for any social security benefits actually paid to railroad retirement beneficiaries. When benefit reimbursements exceed payroll taxes, the difference, with an allowance for interest and administrative expenses, is transferred from the Social Security Trust Funds to the SSEB Account. If taxes exceed benefit reimbursements (this has not happened since 1951), a transfer would be made in favor of the Social Security Trust Funds. The net financial interchange transfer to the SSEB Account during fiscal year 2010 amounted to $4.0 billion.

Retirement and Survivor Program
Financing Sources - Fiscal Year 2010 (In Millions)

GROSS TOTAL: $11,167.51Financing Sources FY 2010

1 Excludes $457.1 million as shown under  Other Financing Sources.
 

 

Costs - Fiscal Year 2010 (In Millions)
TOTAL: $11,055.9
Pie Chart of Costs Annual Report
Note.--Percentages may not add to 100 due to rounding.


Interest on Investments and Other Revenue

Interest revenue increased from $34.7 million in fiscal year 2009 to $36.5 million in fiscal year 2010. 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 2010 amounted to $470.0 million during the year. Original transfers for fiscal year 2009 totaled $463.0 million. There were no reconciliation adjustments in fiscal year 2010.  Net transfers in fiscal year 2009 were $321.0 million, including -$142.0 million in reconciliation adjustments.

The information in the preceding paragraph is on a fiscal year basis, while the table shown below shows income tax transfers to the Accounts for taxable (calendar) years 2001 through 2010, including reconciliation adjustments through 2005. 
 

Federal Income Tax Transfers by Recipient Account
and Benefit Component,
Taxable Years 2001-2010 (Millions)

Taxable year Revenue from taxes on
RRA benefits
treated as
SSA benefits
RRA benefits treated as
private or public pensions

SSEB
tier I
benefits

Tier II and
non-SSEB
tier I benefits
1

Vested
dual 
benefits

SSEB Account2

RR Account

DBP Account3
Original transfers during the year
2001 $94 $229 $10
2002 97 252 9
2003 97 283 9
2004 109 294 8
2005 117 301 7
2006 125 312 7
2007 135 334 6
2008 144 325 5
2009 144 304 3
2010 159 315 3
Reconciliation adjustments4
2001 (2006) +6 +25 +1
2002 (2008) -4 -20 -1
2003 (2008) -12 -70 -3
2004 (2008) -18 -63 -2
2005 (2009) -8 -49 -2
   
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.

Railroad Retirement and Survivor Program 

Consolidated Financing Sources, Costs and Net Position (Millions)1
For the Fiscal Year Ended September 30 2010 2009
Financing Sources:
Payroll Taxes
Financial Interchange
Interest on Investments and Other Revenue2
Federal Income Taxes
General Appropriations
Other
Transfers to the National Railroad Retirement Investment Trust
Transfers from the National Railroad Retirement Investment Trust

Total Financing Sources

Costs:
Benefit Payments
Interest Expense
Salaries and Expenses3
Other

Total Costs

Financing Sources over Costs
Net Position - Beginning of Period

Net Position - End of Period

$4,646.8
3,964.1
36.5
467.0
64.1
457.1
---
1,989.0

11,624.6


10,796.9
141.1
120.1
(2.2)
 
11,055.9

568.7
23,995.5

$24,564.2

$4,709.1
4,003.7
34.7
321.0
208.5
(1,964.2)
---
1,553.0

8,865.8


10,673.8
160.2
114.6
(1.0)
 
10,947.6

(2,081.8)
26,077.3


$23,995.5
   
1 Prepared on an accrual basis of accounting.
2 Includes accrued interest revenue from loan to the Railroad Unemployment Insurance Account.
3 Includes unemployment and sickness insurance salaries and expenses of approximately $15.8 million and $15.9 million for fiscal years 2010 and 2009, respectively.

National Railroad Retirement Investment Trust (NRRIT)

Fiscal Year 2010 Summary
Market value of assets managed by NRRIT on September 30, 2010 $23.8 billion
Rate of return of investment portfolio managed by NRRIT for full year ended
September 30, 2010


11.15%

Source:  NRRIT

All NRRIT annual management reports and quarterly updates are available here.

General Appropriations

General revenue appropriations were provided by the Railroad Retirement Act of 1974 to fund the phase-out costs of certain dual railroad retirement/social security benefits considered vested prior to 1975, and by the Railroad Retirement Solvency Act of 1983 to fund interest on unnegotiated checks. The total amounts appropriated by the Congress for vested dual benefits were $64.0 million for fiscal year 2010 and $72.0 million for fiscal year 2009. These amounts include Federal income tax transfers for 2010 and 2009. The amount appropriated for fiscal year 2010 was 11.1 percent less than fiscal year 2009, 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 2010/2011 and also $150,000 for fiscal years 2009/2010. In addition, Congress appropriated $135.0 million in fiscal year 2009 for a one-time $250 payment to most railroad retirement annuitants under the American Recovery and Reinvestment Act of 2009, and $1.4 million for associated administrative costs under the law.

Other Financing Sources

Other financing sources consisted of $8.4 million to be provided by the Office of Personnel Management to pay future retirement benefits to Railroad Retirement Board employees, $16.0 million from the railroad unemployment trust funds in transfers-in for current budget fiscal year salaries and expenses, and an increase in NRRIT net assets of $441.5 million. These financing sources were offset by transfers-out of $7.0 million for salaries and expenses of the Board's Office of Inspector General, a loss on contingency liability of $0.9 million, and a $0.9 million decrease in unexpended appropriations.

Costs

The Railroad Retirement Board pays all salaries and expenses under a single administrative fund (Limitation on Administration) for both the railroad retirement and survivor program and the unemployment and sickness insurance program. Consequently, of the $120.1million and $114.6 million shown here for salaries and expenses in fiscal years 2010 and 2009, respectively, about $15.8 million for fiscal year 2010 and $15.9 million for fiscal year 2009 were for the unemployment and sickness insurance program. About $1.1 million in other costs for fiscal year 2010 and $1.2 million for fiscal year 2009 were for the unemployment and sickness insurance program.

Excluding $16.9 million from total costs of $11.1 billion for fiscal year 2010 and $17.1 million from total costs of $10.9 billion for fiscal year 2009, total costs for the railroad retirement and survivor program for fiscal year 2010 increased $108.5 million or 1.0 percent.

Benefit Payments

In fiscal year 2010, railroad retirement benefit payments increased $123.1 million or almost 1.2 percent to about $10.8 billion on an accrual basis, including $62.1 million in vested dual benefits and $60.4 million in supplemental annuities.

Interest Expense

Interest expense of $141.1 million represents interest on the financial interchange advances made by the U.S. Treasury during the fiscal year.

Salaries and Expenses

Excluding unemployment and sickness insurance salaries and expenses of $15.8 million for fiscal year 2010 and $15.9 million for fiscal year 2009, salaries and expenses for the railroad retirement and survivor program were about $104.3 million for fiscal year 2010 and about $98.7 million for fiscal year 2009, a $5.6 million or 5.7 percent increase. Adjusted by the $15.8 million in salaries and expenses and $1.1 million in other costs for the unemployment and sickness insurance program, fiscal year 2010 administrative expenses for the railroad retirement and survivor program were about 0.93 percent of total costs.

Other Costs

Other costs consisted primarily of post-retirement benefits (pensions, health and life insurance) for Railroad Retirement Board employees of $7.3 million for the railroad retirement and survivor program and $1.1 million for the unemployment and sickness insurance program. In addition, carrier refunds of $0.1 million were incurred. These costs were offset by approximately $10.1 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 $0.2 million.

National Railroad Retirement Investment Trust Operations

Funds not needed immediately for benefit payments or administrative expenses are invested through the National Railroad Retirement Investment Trust. The Trust was established pursuant to section 105 of the Railroad Retirement and Survivors’ Improvement Act of 2001 for the sole purpose of investing railroad retirement assets. The Act authorizes the Trust to invest the assets of the Railroad Retirement Account in a diversified investment portfolio in the same manner as those of private sector retirement plans. Prior to the Act, investment of Railroad Retirement Account assets was limited to U.S. Government securities. Although the Trust was created by Congress to hold and invest Federal assets, it is not an agency or instrumentality of the Federal government. It is a tax-exempt entity governed by a seven-member Board, three selected by rail management, three selected by rail labor and one independent trustee selected by the six rail trustees.

During fiscal year 2010, the net asset value of Trust-managed assets increased from $23.3 billion on October 1, 2009, to $23.8 billion on September 30, 2010. This includes $2.0 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 11.15 percent.

Total railroad retirement system assets (Trust-managed assets and reserves held in Treasury accounts) grew from $20.7 billion in 2002 to $25.1 billion as of the end of fiscal year 2010, after net transfers for benefit payments of approximately $9.9 billion over the same time frame.

Trust operations are described in detail in the National Railroad Retirement Investment Trust Annual Management Report for fiscal year 2010, which is available here.

Benefit Operations

Retirement and survivor benefits paid, including vested dual benefits and supplemental employee annuities, totaled $10.8 billion in fiscal year 2010, $276 million more than in fiscal year 2009. Benefits were paid to over 581,700 beneficiaries in fiscal year 2010. Some 547,400 beneficiaries were being paid at the end of the year. The table shown below presents retirement and survivor benefit payments for fiscal years 2010 and 2009, by type of benefit, and the percent changes in payments between the 2 years.

Type of benefit Amount
(in millions)
Fiscal year
2010
Fiscal year
2009
Percent
change
Retirement benefits
Employee annuities
Age
Disability
Supplemental1

$4,928.9
2,260.9
60.3

$4,750.9
2,217.2
60.4

+3.7
+2.0
-0.1
Spouse and divorced spouse annuities 1,338.4 1,282.4 +4.4

     Total

8,588.6 8,311.0 +3.3
Survivor benefits
Annuities
Lump-sum benefits
2,183.5
3.6
2,188.5
3.5
-0.2
+1.5
     Total 2,187.1 2,192.0 -0.2

Partition payments2

4.5 0.9 +377.8
     Grand total $10,780.2 $10,504.0 +2.6
1Excludes partitioned payments to spouses and divorced spouses where
the employee is deceased.
2Limited 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.

                     
                     

Under the two-tier railroad retirement formulas, the tier I annuity portion approximates a social security benefit and increases by the cost-of-living percentage applied to social security benefits. The tier II portion, which is comparable to retirement benefits paid over and above social security benefits to workers in other industries, increases by 32.5 percent of the social security percentage. Effective December 2008, tier I portions increased by 5.8 percent while tier II portions increased by 1.9 percent. There were no tier I or tier II cost-of-living increases effective December 2009.

The December 2008 cost-of-living increase provided additional benefit payments of about $100 million in fiscal year 2010, compared to payments in fiscal year 2009.

Monthly retirement and survivor benefits being paid numbered nearly 676,700 at the end of the 2010 fiscal year, about 3,900 less than at the end of the prior year. Monthly beneficiaries on the rolls declined by more than 4,800 over the year, from 552,300 to 547,400. 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 2010 numbered 273,800, about 400 less than at the end of the previous fiscal year. The number of age annuities being paid dropped slightly from 190,300 to 190,200 over the year, while disability annuities decreased almost 300 to 83,500. Supplemental annuities being paid to employees rose approximately 400, numbering 121,200 at the end of the year.  The number of divorced spouse annuities being paid rose about 100 to 3,900. Spouse and divorced spouse annuities together increased by more than 600, totaling 137,100 at year-end. Some 143,900 monthly survivor benefits were being paid at the end of fiscal year 2010, a decrease of 5,000 from the previous year. More than 700 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 2010, an increase of approximately 500 from the prior year.


Retirement

Regular employee annuities

Awards of regular employee annuities numbered 13,900 in fiscal year 2010, 400 more than in fiscal year 2009. Data by type of annuity awarded during the year are given in the table below.

Employee annuities awarded in fiscal year 2010 Number Percent Average
Monthly amount Years of service   Age at retirement
Age
Beginning at full retirement
age or over
900 7 $2,217 22.6 67.4
Unreduced, beginning at age 60 to under full retirement age 6,900 50 3,391 36.1 60.7
Reduced, beginning at age 62 to under full retirement age 2,900 21 1,507 16.7 62.8
Disability 3,200 23 2,509 23.8 55.6

Total

13,900 100 $2,723 28.4 60.4
Note: Detail may not add to total due to rounding.

                 

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.

Disability awards are based either on total disability or on occupational disability. A total disability annuity is based on disability for all employment and is payable at any age to employees with at least 10 years of railroad service. Employees with 5-9 years of service, if at least 5 years were after 1995, may qualify for tier I only before retirement age on the basis of total disability if they also meet certain social security earnings requirements. An employee is considered totally disabled if medical evidence shows that a permanent physical or mental condition exists which prevents the performance of any regular work. A condition is considered to be permanent if it has lasted or may be expected to last for at least 12 months.

An
occupational disability annuity is based on disability for the employee’s regular railroad occupation and is payable to employees with a current connection with the rail industry at age 60 if the employee has 10 years of service, or at any age if the employee has at least 20 years of service. An employee is considered occupationally disabled if the physical or mental condition is such that the employee is permanently disabled for work in his or her regular railroad occupation, even though the employee may be able to perform other kinds of work.

Of the year’s 3,200 disability awards, 1,100 averaging $1,677 per month were for total disability and 2,000 averaging $2,978 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.

.

Number of monthly beneficiaries,
September 30, 2005, and 2010 (thousands)
Number of monthly beneficiaries

Amount of benefits paid,
fiscal years 2005 and 2010 (millions)

Amount of benefits paid

1 Includes $62.7 million in fiscal year 2005 and $60.3 million in fiscal year 2010 for supplemental annuities.
2 Includes divorced spouses.

Average monthly amount,
September 30, 2005, and 2010
Average Monthly amount of benefits

1 Without supplemental annuity.
2 Includes divorced spouses.

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 2010, nearly 9,700, 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 $3,191 per month, compared to $1,650 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, 54 percent of normal age retirements were immediate. While 93 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 273,800 retired employees on the rolls as of September 30, 2010, were being paid regular monthly annuities averaging $2,196. The table below presents data by type of annuity for these benefits.

Employee annuities in
current-payment status on
September 30, 2010
Number Percent Average monthly
amount
Percent
immediate
retirements
Age
Beginning at full retirement
age or over
22,000 8 $1,621 45
Unreduced, beginning at age 60
to under full retirement age
95,500 35 2,862 92
Reduced, beginning at age 60
to under full retirement age
72,800 27 1,470 35
Disability 83,500 31 2,221 81

          Total

273,800 100 $2,196 70
  Note: Detail may not add to total due to rounding.

              

Of the 83,500 disability annuities being paid, 20,400 were for total disability and 63,100 for occupational disability. The two types of disability annuities averaged $1,508 and $2,452, respectively. In fiscal year 2010, nearly $373 million was paid in total disability annuities and $1,888 million in occupational disability annuities.

About 190,600 employees on the rolls at the end of fiscal year 2010 were immediate retirees and their regular annuities averaged $2,560 per month. Annuities of the 83,200 deferred retirees averaged $1,364. Although their average railroad retirement annuity was much lower, a greater proportion of the deferred annuitants also received social security benefits--29 percent compared to 4 percent for the immediate retirees. Moreover, the average social security benefit paid to deferred retirees was higher than that paid to immediate retirees. Combined railroad retirement and social security benefits to deferred retirees who were dual beneficiaries averaged $1,554, while combined benefits to immediate retirees averaged $2,246. 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.

Dual benefit status Total Type of retirement
Immediate Deferred
Receiving social security benefit
Number 31,900 8,100 23,800
Average monthly amount:
Railroad retirement (regular)
Social security
Combined benefit

$645
1,085
1,730

$1,364
882
2,246

$400
1,154
1,554
Not receiving social security benefit
Number 241,800 182,400 59,400
Average monthly amount $2,401 $2,613 $1,751
Note: Detail may not add to total due to rounding.

                     
      

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 2010 averaged $1,710 per month. Tier I amounts of nearly 7,700 employees were completely offset by social security benefits. Tier I amounts being paid averaged $1,563.

The employee tier II component is based solely on railroad earnings. Tier II amounts being paid at the end of fiscal year 2010 averaged $679. 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 29,000 retirees were receiving vested dual benefits averaging $162 at the end of the fiscal year.

Supplemental employee annuities

A supplemental annuity is payable to employees with a current connection with the rail industry at age 60 if the employee has at least 30 years of service, or at age 65 if the employee has 25-29 years of service. The employee must also have had some rail service before October 1981.

Some 7,300 supplemental annuities were awarded in fiscal year 2010, about 300 more than in fiscal year 2009. Approximately 5,600 of the awards (76 percent) began concurrently with the employee’s regular annuity, while the remaining 1,700 were to employees already receiving a regular annuity. Supplemental annuity awards 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, 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 almost 121,200, or 44 percent, of the retired employees on the rolls at the end of the 2010 fiscal year. These annuities averaged $42 after court-ordered partitions; over 100 of them were paid under 1937 Act amendments, which stipulated a maximum rate of $70.

Spouse and divorced spouse annuities

Annuity awards to spouses and divorced spouses of retired employees numbered 11,300 in fiscal year 2010, 300 more than in the previous year. The table below 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.

Monthly spouse benefits Awarded in
fiscal year 2010
In current-payment
status on
September 30, 2010
Number Average
amount
Number Average
amount
Beginning at full retirement age or over 1,200 $534 17,000 $446
With minor or disabled child in care 400 1,066 1,800 1,118
Unreduced, beginning at age 60
to under full retirement age
5,900 1,327 62,300 1,177
Reduced rate 3,100 461 52,100 521
     Total 10,600 976 133,200 826
Divorced spouse annuities 700 528 3,900 504
     Grand total 11,300 $950 137,100 $817
Note: Detail may not add to total due to rounding.

               

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 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 2010, 100 averaging $691 per month were to spouses of 30-year employees and some 3,000 averaging $456 were to spouses of employees with less than 30 years of service.

At the end of fiscal year 2010, more than 133,200 spouse annuities averaging $826 per month were being paid. Nearly 3,900 divorced spouse annuities averaging $504 per month were also being paid. These included some 50 averaging $547, 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 $3,155. This included $2,329 in regular and supplemental employee annuities and $826 in spouse annuities.

Approximately 52,300, 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 $1,239 per month, including $317 in railroad retirement benefits and $922 in social security benefits. Railroad retirement annuities to the 82,600 spouses not receiving social security benefits averaged $1,138, while railroad retirement annuities to the 2,200 divorced spouses not receiving social security benefits averaged $686.

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 133,200 spouses on the rolls at the end of fiscal year 2010, 91,500 were being paid tier I amounts averaging $728 per month. The tier I amounts of 41,800 spouses were completely offset by other benefits also due. Spouse tier II amounts averaged $355. Vested dual benefits averaging $142 were being paid to 300 spouses. The 3,900 divorced spouses on the rolls at the end of fiscal year 2010 were being paid tier I amounts averaging $525 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 2010.

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 2010 fiscal year, the RRB paid about 1,300 dual retirement tax refunds averaging $81. Most of the payments were to employees retiring during the year. Less than 50 refunds were to survivors, mostly widows, of employees who died before receiving the refund. Employees entitled to dual retirement tax refunds for years after 1974 may claim them on their Federal income tax returns.

Survivor

Monthly benefits

Annuity awards to survivors of deceased railroad employees numbered 7,700 during fiscal year 2010, 100 less than the previous year. About 143,900 survivor annuities were being paid at the end of the fiscal year, including 300 temporarily paid at spouse or divorced spouse annuity rates pending recomputation to widow(er)s’ rates. Some 114,900, or 80 percent, of the survivor annuities were to aged widows and widowers.

The table below 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.

Monthly survivor benefits Awarded in
fiscal year 2010
In current-payment
status on
September 30, 2010
Number Average
amount
Number Average
amount
Aged widow(er)s' 6,200 $1,740 114,900 $1,329
Disabled widow(er)s' 200 1,536 4,300 1,108
Widowed mothers' (fathers') 100 1,778 800 1,643
Remarried widow(er)s' 200 1,064 4,200 896
Divorced widow(er)s' 700 963 9,600 880
Children's:
     Under age 18
     Student
     Disabled

300
*
100

1,212
1,443
1,144

1,800
100
8,200

1,264
1,414
859
Parents' * $798 * $935
     Total 7,700 . . . 143,900 . . .

 *Fewer than 50.

Note:
Detail may not add to total due to rounding.

                       

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 benefit only. A dependent parent receives only a tier I amount if another family member is also receiving benefits or if the parent has remarried.

Survivor tier II amounts are figured as a percentage of an employee tier II benefit. Prior to 2002, the percentages were 50 percent for a widow(er), 15 percent for a child, and 35 percent for a parent. The total tier II amount for a survivor family was subject to a minimum of 35 percent and a maximum of 80 percent of the employee tier II benefit, and all survivor tier II amounts were proportionately adjusted when either limit applied. December 2001 legislation established an “initial minimum amount” for widow(er)s which provides a tier II benefit equal to 100 percent of the tier II amount of the deceased employee. The maximum tier II amount payable to a family rose to 130 percent of the employee’s tier II amount. Widows and widowers are guaranteed a total tier I and tier II amount not less than what they were paid as a spouse, any necessary increase being added to tier II.

Aged widow(er)s, who are eligible for benefits at age 60, have their tier I and tier II amounts reduced if the annuity begins before full retirement age. The eligibility age for unreduced annuities is gradually rising from age 65 to age 67. The maximum age reductions range from 17.1 percent to 20.36 percent, depending on the widow(er)’s date of birth. Excluding about 300 annuities temporarily paid at spouse or divorced spouse rates, aged widow(er)s’ annuities being paid at the end of the 2010 fiscal year included 54,400 which were reduced for age. Aged widow(er)s’ tier I amounts being paid averaged $1,121 per month. In almost 7,700 cases, the tier I amount was wholly offset by reductions for other benefits. Nearly 37,900 aged widow(er)s were also receiving social security benefits, and these averaged $855. Tier II amounts averaged $284. More than 1,200 vested dual benefits averaging $69 were being paid to aged widow(er)s.

The tier I and tier II amounts of disabled widow(er)s’ annuities, which begin at ages 50-59, are reduced 28.5 percent for age. Tier I amounts being paid to disabled widow(er)s on the rolls at the end of fiscal year 2010 averaged $931 (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 $812. Tier II amounts averaged $218, while the 100 vested dual benefits being paid averaged $85.

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 2010 averaged $1,210 for widowed mothers and fathers and $865 for children. Fewer than 50 mothers (fathers) and some 2,300 children received social security benefits averaging $1,018 and $564, respectively. Tier II amounts paid mothers (fathers) and children averaged, respectively, $461 and $99.

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 requirements.  More than 3,700 lump-sum death benefits averaging $915 were awarded during fiscal year 2010.  Approximately 500 benefits were to widow(er)s, while 3,300 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 2010 fiscal year; they averaged $2,133.

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 2010, there were some 700 spouses and divorced spouses receiving payments averaging $287 where the employee was deceased or not otherwise entitled to an annuity. While all but one received a partitioned tier II benefit, only 9 percent received a partitioned vested dual benefit and 35 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.

Eligible railroad retirement annuitants and social security beneficiaries whose benefits are payable by the Railroad Retirement Board are automatically enrolled under both plans, but Part B may be declined by the annuitant or beneficiary. Eligible nonretired persons must apply in order to obtain Medicare coverage. The RRB automatically enrolled almost 22,800 beneficiaries for Medicare during fiscal year 2010. As of the end of the fiscal year, nearly 476,200 persons were enrolled in the Part A plan, and about 458,800 (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 $870 million in the 2010 fiscal year.

The regular monthly premium for medical insurance during fiscal year 2010 was $96.40 for coverage through December 2009 and $110.50 thereafter.. However, due to the "hold-harmless" provision related to no cost-of-living increase effective December 2009, most beneficiaries who had premiums withheld prior to January 2010 continued to pay a $96.40 premium in calendar year 2010.  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 over 435,200 annuitants were having their premiums withheld.  Of the remaining Part B enrollees, more than 2,200 were paying premiums to the RRB, either directly or through an intermediary, and 21,300 had their premiums paid by State agencies.  The RRB periodically transfers premiums to the SMI Trust Funds.

Railroad Unemployment and Sickness
Insurance Program

Financial Operations

Financing sources for the railroad unemployment and sickness insurance program during fiscal year 2010 exceeded costs by $101.1 million and the net position increased by $101.1 million from $46.4 million at the end of fiscal year 2009 to $147.5 million at the end of fiscal year 2010. For fiscal year 2010 as compared to fiscal year 2009, total financing sources for the railroad unemployment and sickness insurance program increased by $158.4 million (156.8 percent) to $259.4 million.

Railroad Unemployment and Sickness Insurance Program

Consolidated Financing Sources, Costs and Net Position (Millions)1
For the Fiscal Year Ended September 30 2010 2009
Financing Sources:
Employer Payroll Taxes
Interest Income
  General Appropriations
Other


Total Financing Sources

Costs:
Benefit Payments:
Unemployment
Sickness
Other4:
Total Costs

Financing Sources over Costs
Net Position - Beginning of Period

Net Position - End of Period

$98.4
1.5
2175.8
(16.3)

259.4



104.5
52.1
1.7
158.3

101.1
46.4


$147.5

 


$92.9
4.2
320.1
(16.2)

101.0



116.4
48.1
...
164.5

(63.5)
109.9


$46.4


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 For payment of temporary extended unemployment benefits authorized under the American Recovery and Reinvestment Act of 2009.
4
Includes accrued interest expense for loan from the Railroad Retirement Account and program costs for Railroad Unemployment Insurance - Extended Benefit Payments (Worker, Homeownership, and Business Assistance Act of 2009).                    
             

 

Unemployment and Sickness Insurance Program
Financing Sources - Fiscal Year 2010 (In Millions)

GROSS TOTAL: $259.4UI and SI Insurance Program Financing Sources

1 Less Transfers-Out and carriers' refunds of $16.3 million.
2 Worker, Homeownership, and Business Assistance Act of 2009 funding..

Costs - Fiscal Year 2010 (In Millions)

TOTAL: $158.3Costs - Fiscal Year 2010

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 2010, 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 two-thirds of the annual rate of increase in the maximum base for railroad retirement tier I taxes.

In 2010, the basic tax rates on railroad employers, including covered commuter railroads, ranged from a minimum of 2.15 percent (which included a surcharge of 1.5 percent) to a maximum of 12 percent. Most employers were assessed the minimum rate in 2010. New employers in 2010 paid an initial rate of 2.51 percent.

Employer Payroll Taxes

Payroll taxes by employers totaled $98.4 million during fiscal year 2010. This was an increase of 5.9 percent or $5.5 million more than the previous year.

Interest

Cash not needed immediately for unemployment and sickness insurance benefits or operating expenses is held in the Federal Unemployment Insurance Trust Fund and invested by the Secretary of the Treasury. The fund earned an average rate of return of 4.2 percent in fiscal year 2010, of which the Railroad Retirement Board earned $1.5 million as its pro rata share.

Costs

Total costs for the railroad unemployment and sickness insurance program decreased by $6.2 million (3.8 percent) to $158.3 million.

Benefit Payments

During fiscal year 2010, unemployment insurance benefit payments decreased by $11.9 million (10.2 percent) to $104.5 million. Sickness insurance benefit payments increased $4.0 million (8.3 percent) to $52.1 million.

Benefit Operations

Net unemployment and sickness benefits totaling $190.5 million were paid in the 2009-2010 benefit year, $67.6 million more than in the prior year. Beneficiaries numbered 41,200, in comparison to the previous year’s total of some 37,600. Over 1,400 employees received both unemployment and sickness benefits during the 2009-2010 benefit year. The number of unemployment benefit claimants increased by more than 16 percent, while sickness benefit claimants increased approximately 1 percent. Total unemployment benefit payments increased by about 78 percent, while net sickness benefits increased by almost 16 percent. The substantial increases in unemployment benefits and beneficiaries can be attributed to a national economic recession. The number of employees qualified for benefits under the Railroad Unemployment Insurance Act fell more than 1 percent to 252,300.

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 2009-2010, there were 16,000 and 14,300 unemployment and sickness benefit waiting period claims, respectively.

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.

Unemployment

The effect of the national economic decline on the railroad industry is apparent by the large increases in unemployment benefits and beneficiaries. Some 24,800 railroad workers were paid $138.2 million in unemployment benefits during the 2009-2010 benefit year, including $26.8 million in temporary extended benefits under the American Recovery and Reinvestment Act of 2009 (ARRA) and the Worker, Homeownership, and Business Assistance Act of 2009 (WHBAA). The number of benefit claimants increased by 3,500 from the prior year total of 21,400, while the benefit amount rose $60.4 million from the year-earlier total of $77.8 million. The claimant count increased for the third straight year. The average number of compensable days per unemployment benefit claimant was 90 in benefit year 2009-2010 as compared to 63 in the previous benefit year.  The large increase reflected not only the national recession, but the availability since June 2009 of temporary extended unemployment benefits under ARRA and WHBAA.

The mid-month unemployment count in the 2009-2010 benefit year began with a July count of 11,100 claimants. The count sporadically dropped and rose in the following months until it peaked at 12,200 in January 2010 due to claims under WHBAA. After January 2010, the count dropped during the following months until reaching a benefit year low of 4,000 in June 2010.  For the 2009-2010 benefit year as a whole, the weekly number of claimants averaged 9,000 in comparison to an average of 6,100 in the previous benefit year.  The overall unemployment benefit claimant rate, measured in relation to numbers of employees qualified to receive benefits under the Railroad Unemployment Insurance Act during a particular time period, increased to 10 per 100 qualified from the previous year's level of 8 per 100 qualified, continuing to reflect the impact of the national economic recession.  The median age for all unemployment benefit claimants was 38 years, the same as in the previous benefit year.

Sickness

The number of sickness benefit claimants during the 2009-2010 benefit year was 17,800, about 200 higher than in the previous year. The previous year claimant count was the lowest since sickness benefits began in benefit year 1947-1948. Gross sickness benefits of $77.0 million were paid, $5.3 million more than in the prior benefit year. Net sickness benefits totaled $52.4 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 increased by $7.2 million in comparison with the previous year.

Major unemployment and sickness benefit operations,
benefit years 2009-2010 and 2008-2009

Item Benefit year 2009-2010 Benefit year 2008-2009

Total
Unemploy-
ment1

Sickness

Total
Unemploy-
ment1

Sickness
Applications 45,900 24,500 21,500 54,100 32,600 21,500
Claims 406,300 265,900 140,400 304,300 166,900 137,400
Claimants 41,2002 24,800 17,800 37,6002 21,400 17,600
Net amount of benefits $190,533,200 $138,175,100 $52,358,100 $122,961,500 $77,803,800 $45,157,700
Number of payments
   Normal
   Extended


293,500
67,700


184,800
56,300


108,600
11,400


237,900
18,400


132,000
7,100


105,900
11,300
     Total 361,200 241,200 120,000 256,300 139,100 117,200
Average amount per 2-week registration period
   Normal
   Extended




$560
544




$554
547




$568
529




$531
482




$522
457




$542
497
     Total 557 553 565 528 520 538
1Starting 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.  The benefit year 2008-2009 amount totaled $1.1 million and the benefit year 2009-2010 amount totaled $26.8 million.
2Benefits for both unemployment and sickness were paid to approximately 1,300 employees in benefit year 2008-2009 and 1,400 employees in benefit year 2009-2010. Those claimants who had only a non-compensable waiting period are not included in the beneficiary counts since no benefits were paid.

The utilization rate for sickness benefits increased for the first time in six years. The previous year was at a historically low level.  The average duration of sickness increased for the second consecutive 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 (22 percent), circulatory and heart disease (8 percent), and mental disorders, including drug and alcohol addictions (11percent). The median age of all sickness benefit claimants was 52 years; the same as in the previous benefit year.

Benefit Year Utilization Per
100 Qualified
Employees
Average
Compensable
Days
2006-2007 7.6 67
2007-2008 7.2 66
2008-2009 6.9 67
2009-2010 7.0 68

 

Claimants under the Railroad Unemployment Insurance Act,
Benefit Years 2005-2006 through 2009-2010

Claimants under the RUIA


Unemployment and Sickness Benefit Claimants By Age,
Benefit Year 2009-2010
UI and SI Benefit claimants by age

Railroad Employment

Average monthly railroad employment in fiscal year 2010 fell about 4 percent to 219,000 from the 227,000 average of the previous year, as the nationwide recession continued to severely affect the railroad industry throughout calendar year 2009. After experiencing an all-time low of 214,000 in January 2010, railroad employment began to rebound, increasing in all but two months after January 2010.  By September 2010 railroad employment had risen to 224,000.

Employment in the railroad industry was affected by an increase in rail traffic, which can be attributed to declines in industrial production. Although freight-ton-miles in the October-December 2009 quarter were 8 percent lower than in the same quarter of 2008, freight-ton-miles in the April-June 2010 quarter were almost 15 percent higher than in the same quarter of the previous year.  Overall, fiscal year 2010 railroad freight-ton-miles were 4 percent higher than the previous year.
 

Average Railroad Employment
Fiscal Years 2006 through 2010

Average Railroad Employment

Note.--Numbers for 2010 are preliminary.
            

 

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