Railroad Retirement Board
Dual Benefit Payments
October 2008
The
payment of a railroad retirement annuity can be affected by entitlement to
social security benefits, as well as certain other government benefits. Such dual entitlement, if not reported to the
Railroad Retirement Board (RRB), can result in benefit overpayments which have
to be repaid, sometimes with interest and penalties. The following questions and answers describe
how dual benefit payments are adjusted by the RRB for annuitants eligible for
social security benefits and/or other benefit payments.
1. How are dual benefits paid to persons
entitled to both railroad retirement and social security benefits?
Since
1975, if a railroad retirement annuitant is also awarded a social security
benefit, the Social Security Administration determines the amount due, but a
combined monthly dual benefit payment should, in most cases, be issued by the
RRB after the railroad retirement annuity has been reduced for the social
security benefit.
2. Why is a railroad retirement annuity
reduced when a social security benefit is also payable?
The tier I portion
of a railroad retirement annuity is based on both the railroad retirement and
social security credits acquired by an employee and reflects what social
security would pay if railroad work were covered by social security. Tier I benefits are, therefore, reduced by
the amount of any actual social security benefit paid on the basis of non-railroad
employment, in order to prevent a duplication of benefits based on the same
earnings.
The tier I dual
benefit reduction also applies to the annuity of an employee qualified for
social security benefits on the earnings record of another person, such as a
spouse. And, the tier I portion of a
spouse or survivor annuity is reduced for any social security entitlement, even
if the social security benefit is based on the spouse’s or survivor’s own
earnings. These reductions follow
principles of social security law which, in effect, limit payment to the higher
of any two or more benefits payable to an individual at one time.
However, the tier
II portion of a railroad retirement annuity is based on railroad service and
earnings alone, is computed under a separate formula, and is not reduced for
entitlement to a social security benefit.
3. Are there any exceptions to the railroad
retirement annuity reduction for social security benefits?
No. However, if an employee qualified for dual
benefits before 1975 and meets certain vesting requirements, he or she can
receive an additional annuity amount which offsets, in part, the dual benefit
reduction. This additional amount,
reflecting the dual benefits payable prior to 1975, is called a vested dual
benefit payment. Legislation enacted in
1974 coordinated dual railroad retirement and social security benefit payments
to eliminate certain duplications, but this legislation also included a
grandfather provision to preserve the pre-1975 dual benefits of persons meeting
certain vesting requirements by including vested dual benefit payments in their
annuities.
Awards of these
vested dual benefit amounts are now limited only to vested railroad employees
with dual coverage on their own earnings.
Spouses and widow(er)s retiring since 1981 no longer qualify. Fewer than 100 vested dual benefits were
awarded in fiscal year 2007.
4. Are there any funding limitations on the
payment of vested dual benefits?
Vested dual benefit
payments are funded by annual appropriations from general U.S. Treasury
revenues. These appropriations account
for less than 1% of total financing sources for the railroad retirement
system. Payment of these vested dual
benefits is dependent on the time and amount of such appropriations. If the appropriation in a fiscal year is for
less than the estimated total vested dual benefit payments, individual payments
must be reduced by proration. Vested
dual benefits are not increased by cost-of-living adjustments.
5. Can Federal, State, or local government
pensions also result in dual benefit reductions in a railroad retirement
annuity?
Tier I benefits for
employees first eligible for a railroad retirement annuity and a Federal, State
or local government pension after 1985 may be reduced for receipt of a public
pension based, in part or in whole, on employment not covered by social
security or railroad retirement after 1956.
This also applies to certain other payments not covered by social
security, such as payments from a non-profit organization or from a foreign
government or a foreign employer.
However, it does
not include military service pensions, payments by the Department of Veterans
Affairs, or certain benefits payable by a foreign government as a result of a
totalization agreement between that government and the
This reduction is
made by adjusting certain weighting factors in the social security and tier I
benefit formulas. These factors increase
benefits for workers with low lifetime social security and/or railroad
retirement earnings. The weighting
factors were not, however, intended to increase benefits for those whose major
employment was not covered by social security or railroad retirement.
6. How does the public service pension apply
to spouse or widow(er)s’ benefits?
The tier I portion
of a spouse’s or widow(er)’s annuity may be reduced for receipt of any Federal,
State or local government pension separately payable to the spouse or widow(er)
based on her or his own earnings. The
reduction generally does not apply if the employment on which the public
service pension is based was covered under the Social Security Act throughout
the last 60 months of public employment.
(This 60-month requirement is being phased in over a 5-year period
ending
7. What dual benefit restrictions apply when
both a husband and wife are rail employees entitled to railroad retirement
annuities?
If both the
employee and spouse are qualified railroad employees and either one had some
railroad service before 1975, the spouse tier I amount is reduced by the amount
of the railroad employee tier I to which the spouse is entitled and that
reduction is restored in the spouse tier II amount. The spouse tier I amount cannot be reduced
below zero.
If both the
employee and spouse started railroad employment after 1974, the amount of any
spouse or divorced spouse annuity is reduced by the amount of the employee
annuity to which the spouse is also entitled.
In survivor cases,
if a widow or dependent widower is also a railroad employee annuitant, and
either the widow(er) or the deceased employee had 120 months of railroad
service before 1975, the tier I reduction may be partially restored in the
survivor tier II amount.
If either the
deceased employee or the widow(er) had some railroad service before 1975 but
less than 120 months of service, the widow(er)’s own employee annuity and the
tier II portion of the survivor annuity would be payable to the widow(er). The tier I portion of the survivor annuity
would be payable only to the extent that it exceeds the tier I portion of the
widow(er)’s own employee annuity.
If the widow(er)
qualifies for a railroad retirement employee annuity and neither the widow(er)
nor the deceased employee had any railroad service before 1975, the survivor
annuity payable to the widow(er) is reduced by the total amount of the
widow(er)’s own employee annuity.
8. Can workers’ compensation or public
disability benefits affect railroad retirement benefits?
If an employee is
receiving a disability annuity, tier I benefits for the employee and spouse
may, under certain circumstances, be reduced for receipt of workers’
compensation or public disability benefits.
9. How can an annuitant find out if receipt
of any dual benefits might affect his or her railroad retirement annuity?
If an annuitant
becomes entitled to any of the previously discussed dual benefit payments, or
if there is any question as to whether a dual benefit payment requires a
reduction in an annuity, an RRB field office should be contacted. In any situation, the best rule is, “When in
doubt-report.”
RRB field offices
are open to the public from
Public
Affairs 312-751-4777
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