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cluded their own negotiations, then Congress will have an abundance of current information that would be useful in considering the total package for reforming the Railroad Retirement system.

As a member of the Commission on Railroad Retirement, I am concerned about the whole retirement system; as a working man I am concerned about the effect of any changes on my members before the report is acted upon by Congress. In the first instance - as a Commission member - I accept the fact that the current system is liable to go broke by 1987 or 1988, unless certain changes recommended by the Commission are made. I estimate that if the full twenty percent is applied to all rail workers the plan might go broke a few years sooner. Since my fellow Commissioners have already agreed to change the system, that point does not appear important. However, on a current basis there is still approximately $5,500,000,000 (5 1/2 billion dollars) in the fund and even after the temporary twenty percent increase is accomplished there will be no material reduction in the fund during the next 10 months.

So far I have been talking as a Commission member and about the possible effects of a benefit increase. Now I would like to talk as a working man and the established facts of benefits and contributions.

Under current law every time Social Security taxes are raised our taxes automatically go up. As things stand now in January, 1973 our

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people will start paying 10. 25% of their pay into the retirement fund. For many of our people that will be a monthly contribution of $92.25! If we don't do anything else from here on in by January 1, 1974 the wage base will go up to $12,000 and our people will be paying $102.50 per month.

This is a rate nearly double that paid by workers covered under Social Security. They will pay 5. 5% beginning January, 1973 with a maximum of $49.50 while our people will be paying 10.25% and on January 1, 1974 with a $12,000 wage base their maximum will be $55.00 as compared with the $102.50 for railroad employes.

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My people people who work and pay these huge amounts question, that if we have to pay almost twice as much as Social Security why don't we get twice as much as Social Security? The Commission has even acknowledged that the railroad retirement system has been changed into a family income maintenance program. But do we get annuities that are twice as high as Social Security? No! As of September 1 the average benefit for an individual worker retiring under Social Security will be $161. Two times that would amount to $322, while the average benefit for a single worker under railroad retirement, including supplemental benefits, will be only $289. The same ratios hold true for married workers: $270 per month under Social Security contrasted with $393 a month under railroad

retirement.

The logic of my working people is that if the contribution rate

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goes up automatically and if railroad retirement is already a family income maintenance system, until the Congress changes everything, benefits should be increased by the same percent. To do anything less will be an injustice to the working man and will have destroyed the explicit promise of the Commission not to interfere in the collective bargaining

process.

Senator CRANSTON. Thank you very much. That was very helpful, and I certainly appreciate your presence.

We will now proceed with Lester P. Schoene, representing the Congress of Railway Unions and the Railway Labor Executives' Association.

STATEMENT OF LESTER P. SCHOENE, CONGRESS OF RAILWAY UNIONS AND THE RAILWAY LABOR EXECUTIVES' ASSOCIATION, ACCOMPANIED BY J. TAYLOR SOOP, EXECUTIVE SECRETARY, RAILWAY LABOR EXECUTIVES' ASSOCIATION; AND DONALD S. BEATTIE, SECRETARY AND TREASURER, CONGRESS OF RAILWAY UNIONS

Mr. SCHOENE. My name is Lester P. Schoene. I am a lawyer and a member of the firm of Bernstein, Alper, Schoene & Friedman, with offices at 818 18th Street NW., Washington, D.C. I have been engaged in the practice of law here in Washington since 1944. My specialty has been representing railway labor organizations and this representation has involved rather substantial experience in the various aspects of the Railroad Retirement Act. From 1937 to 1942 I was general counsel to the Railroad Retirement Board.

I appear this afternoon on behalf of both the Congress of Railway Unions and the Railway Labor Executives' Association. Both of these organizations are federations of unions representing employees in the railroad industry. Together they represent all the organized railroad employees that are represented by standard labor organizations.

I have enumerated in my statement the names of all the organizations that are affiliated with these two federations. I will not read them into the record, but I would appreciate it, Mr. Chairman, if this statement itself could be copied into the record.

Senator CRANSTON. Yes, that will go in the record at the conclusion of your testimony.

Mr. SCHOENE. I believe I can shorten my testimony considerably, sir. I realize it is getting late, and I would like to direct myself very specifically to the precise question that is before this committee, namely, why should you enact a 20-percent increase in benefits at this time.

I submit to you this is a matter of simple equity among our beneficiaries. It has not been brought out so far in the hearing, but the fact is that right now on the basis of legislation Congress has already enacted, almost one-third of the beneficiaries under the Railroad Retirement Act have gotten a 20-percent increase in benefits.

The reason is that under the Railroad Retirement Act we have what is called the overall social security minimum benefit provision. Under that provision everyone under the railroad retirement system is guaranteed a minimum benefit equal to the amount of benefit or additional benefit that he would have gotten if railroad employment had been covered by social security.

There are about 255,000 beneficiaries under the Railroad Retirement Act who get that minimum benefit. They are basically the aux

iliary beneficiaries, that is to say, the widows, children, or shortservice employees.

The bulk of our beneficiaries fall into the other two-thirds who do not have this benefit. In addition to the 255,000 beneficiaries, who already have this 20-percent increase, there are approximately 30,000 wives who will get about a 20-percent increase as a result of the social security legislation. The reason for that is that there is a maximum on spouses' benefits under the Railroad Retirement Act which limits that benefit to no more than could be paid to a spouse in that month under the Social Security Act.

By increases in social security benefits all spouses paid under that maximum get their benefits increased almost 20 percent, so we have altogether about 285,000 people who get, beginning September 1, under the Railroad Retirement Act an increase of 20 percent in benefits.

The problem this committee has to decide is will that same 20-percent increase be extended to the other two-thirds who are the longservice workers, the career workers in the industry.

In addition to that I would like to call your attention to something Mr. Dennis has already mentioned, but I think needs to be mentioned again.

As a result of the social security amendments which this Congress has already passed, our people-every employee in active service will be subjected on January 1, before you will get a chance to consider, and give proper attention to the report of the Railroad Retirement Commission, to an increase in his contributions.

Most of our people-not all of them, of course-today earn the maximum of taxable and creditable compensation. On January 1, 1973 their contributions will be increased by $17.62 per month.

Gentlemen, our constituents in this matter are also some of your constituents. I do not believe that we can live with a situation in which one-third of our beneficiaries have on the books right now an increase of 20 percent in their benefits, and at the same time say to our people in active service, "you are going to be subjected on January 1, 1973, to a $17.62 increase in contributions", and not at the same time say to them, "you will all get the same 20-percent increase that has been granted to the social security people."

I am not going to go into any discussion about the financial situation of the railroad retirement system. I have some disagreements with some of the other people about this, but it is a very complicated matter, and I believe you will have plenty of time at the next session of Congress to consider this.

We are not asking that the 20-percent increase be made permanent, any more than we are asking that the existing 15- and 10-percent increases be made permanent. They all expire next June 30, and between now and then you will have plenty of opportunity in which to give thorough consideration to the benefits and the financing on a long-term basis of this entire system.

But you are confronted with an immediate question of great urgency, and I urge you to report favorably on the bill that you have before you; that is, S. 3852.

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