John Shaw: “The Railroad Retirement and Survivors Improvement Act makes important changes to the Railroad Retirement System that…”

“The Railroad Retirement and Survivors Improvement Act makes important changes to the Railroad Retirement System that will enhance benefits, increase the industry's responsibility over its pension system, and set the stage for more substantial reforms in the future that would make the program a free-standing pension plan. The Railroad Retirement System is divided into two tiers: The first tier resembles Social Security, and the second tier resembles a defined benefit employer pension plan. The second tier is very unique. It resembles a private pension plan, but it is administered by the Federal Government. Benefits are entitled under Federal law. The legislation before us today deals primarily with the second tier, the industry's pension plan. H.R. 4844 makes many improvements to the industry's pension. First, it allows the industry to diversify its assets portfolio by investing in private securities. There is not one single private or state pension system out there today that invests 100 percent of its assets in Treasury bills. Secondly, it allows the industry to invest its pension contributions outside of the Federal Government and outside the Government's control. Third, the proposal increases the industry's responsibility over the financial soundness of its pension plan.”