Railroad Retirement Board RRB

Railroads had some of the earliest private pension plans, but many collapsed in the Depression. Congress passed a federal railroad retirement law in 1934, which the Supreme Court struck down in Railroad Retirement Board v. Alton Railroad on May 6, 1935, and then enacted new laws in 1935 and 1937 that withstood challenge, all before the first Social Security benefits were paid. The Railroad Retirement Board is headquartered in Chicago and led by three members appointed by the President with Senate confirmation: one recommended by rail unions, one by rail employers, and a chair who represents the public.

Railroad workers and their employers pay into the Railroad Retirement system instead of Social Security. Its benefits come in two tiers: Tier I roughly matches what Social Security would pay, and Tier II works like a private pension on top of it. The RRB also administers unemployment and sickness insurance for rail workers, pays disability and survivor benefits, and coordinates closely with Social Security and Medicare. It pays benefits to roughly half a million retirees, survivors, and other beneficiaries.

The Railroad Retirement and Survivors' Improvement Act of 2001 created the National Railroad Retirement Investment Trust to invest Tier II reserves in stocks and bonds rather than only Treasury securities, and it lowered tax rates and expanded benefits. As rail employment has fallen from over a million workers in the 1940s to under 200,000 today, the system depends on investment returns and transfers from Social Security. Supporters say it gives rail workers a benefit tailored to their industry, while critics, including some government auditors, have questioned the cost of running a separate agency and suggested merging its functions into the Social Security Administration.