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TRANSMITTAL LETTER

COMMISSION ON RAILROAD RETIREMENT,

Washington, D.C., June 30, 1972.
HON. CARL ALBERT,
Speaker of the House of Representatives,
Washington, D.C.
Hon. SPIRO T. AGNEW,
President of the Senate,
Washington, D.C.

DEAR MR. SPEAKER:
DEAR MR. PRESIDENT:

I have the honor to transmit herewith the report of the Commission on Railroad Retirement, including findings and recommendations.

The Commission was created by Public Law 91–377, approved August 12, 1970. By Public Law 92-46, the Commission was required to transmit to the President and the Congress its report, together with its recommendations, no later than July 1, 1972.

Public Law 91–377 directed the Commission to conduct a study of the railroad retirement system and to recommend changes in the system to provide adequate levels of benefits on an actuarially sound basis. We hope our work will contribute to a better understanding of the problems involved and thus to their resolution on a sound, constructive basis. Respectfully,

THEODORE O. YNTEMA,

Chairman. Enclosure

(III)

PREFACE

This report of the Commission on Railroad Retirement is pursuant to the directives of the Congress set forth in P.L. 91–377. The report consists of an overall summary of findings and recommendations and 12 chapters containing more detailed analysis and specific recommendations. These are supported by a series of separate monographs.

This study was carried out under rather difficult circumstances. First, the time was limited: the Commission was first convened on January 20, 1971, and despite an extension of one year, was required to recruit a staff, to do its research, and complete its report within slightly more than 17 months. Second, the railroad retirement system is one of the most complicated pension plans in the country. Third, the Commission found it necessary to break new ground by building an actuarial model of the system to make projections of the receipts and expenditures of the system and analyze the consequences of prospective

changes in railroading and in the economy. The Congress specified in detail the subjects which the Commission was to study. These are covered in the various chapters of the report as best the Commission could within the time and the finances allotted. The chapters on the separate topics contain some duplication. This occurs partly because the different topics are interrelated and partly because it was thought desirable for the individual chapters to be as rounded and complete as possible. Each topic-eg., adequacy, dual benefits, financing, coordination, and organization and administration-is discussed in a chapter which is largely self-contained and which endeavors to assemble the relevant information in one place.

The Commission on Railroad Retirement met as a body 19 times. At these meetings the work plan was developed, the progress of the staff was periodically reviewed, the staff factfinding reports were received and discussed, and the major issues and recommendations were ironed out. An interim report outlining the Commission's work pro gram was made to the President and the Congress as of July 15, 1971, as required by P.L. 92–46, approved July 2, 1971.

Because of the short deadline for the entire study and the complexities of the issues, the Commission as a body was not able to review all the materials prepared by its staff in detail. The summary of findings and recommendations received word-by-word consideration by the Commissioners in their meetings. Likewise, some of the chapters were carefully read and discussed, but this was not possible for all the material.

Thus, the 12 chapters of the Commission's report are largely the product of the Commission's staff, which worked under the supervision of the Chairman and reported periodically to all the Commissioners. These chapters are in general conformity with the broader conclusions outlined in the overall summary. However, not every idea and every

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sentence in the 12 chapters (and particularly in the supporting staff monographs) was scrutinized by all the Commissioners.

In submitting its report the Commission wishes to express its appreciation to the many agencies, organizations, and individuals who cooperated. While it is not feasible to name them all, many rendered indispensable service. The Commission is particularly indebted to the Railroad Retirement Board and the Social Security Administration for their assistance. It is also grateful to the members of the actuarial profession who served as its Actuarial Consultants and to members of the Actuarial Advisory Panel and Federal Actuarial Advisory Group. It could not have done its job without the cooperation of the House Committee on Interstate and Foreign Commerce, the Senate Labor and Public Welfare Committee, the House and Senate Committees on Appropriations, and the Office of Management and Budget in approving an extension of its enabling legislation and providing appropriations to finance the Commission.

The members of the Commission, individually and as a group, wish to express their appreciation to the members of their staff. The Commission's tasks could not have been completed in the time allotted without the dedication and able performance of the Executive Director, Dr. Michael S. March, and the other talented people who comprised the regular staff of the Commission. Likewise, the Commission was privileged to have the assistance of able consultants. The National Planning Association, in the economic area ; The Hendrickson Co., in computer programming; The Wyatt Co., in actuarial support as contractors made indispensable contributions to the pathbreaking analytic efforts of the Commission. The several individual contractors also made valuable contributions. The performance of the professional staff was made possible by the dedicated work of the office manager and other supporting personnel.

Commissioners Kenneth Black, Jr., Charles L. Dennis, Louis W. Menk, and Theodore 0. Yntema have concurred in this summary of Major Findings and Principal Recommendations, and in the case of Commissioners Charles L. Dennis and Louis W. Menk, subject to certain supplementary and qualifying comments. Commissioner George E. Leighty has filed a minority dissent and recommendation. The individual comments and dissent appear immediately following the main body of the summary.

The Commission has endeavored to base its own recommendations on organized and systematic analysis. It hopes that the factual data and information will prove useful to the President and the Congress in subsequent stages of the effort to reform and preserve the railroad retirement system for the years ahead.

THEODORE O. YNTEMA,
Chairman (Public Member).

KENNETH BLACK, Jr.,
Vice Chairman (Public Member).
CHARLES L. DENNIS

(Labor Member). GEORGE E. LEIGHTY

(Public Member). LOUIS W. MENK

(Management Member).

PART I

MAJOR FINDINGS AND PRINCIPAL RECOMMENDATIONS

OF THE COMMISSION ON RAILROAD RETIREMENT

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