Carriers turn down compromise Railroad Retirement proposal

A compromise proposal by Representative Jim Oberstar (D-MN) to resolve the impasse over changes to the railroad retirement system was rejected in late March by Ed Hamberger, President of the American Association of Railroads.

The impasse arose over opposition by the Brotherhood of Locomotive Engineers and the Brotherhood of Maintenance of Way Employes to a railroad retirement reform package that would give the nation's railroads a windfall of over $400 million annually, beginning in 2003, as a result of proposed reductions in carrier contributions to the industry's pension plan, known as Tier II. The two unions represent nearly 40% of railroad industry workers.

The basis for this proposal was data released by the Railroad Retirement Board in mid-March, which established that the industry's take from the deal would be as much as 20% higher than originally estimated. The figures also showed that the package could be restructured to permit a full annuity at age 58, and still generate approximately $100 million annually in savings for the carriers.

In the hopes of producing consensus among all parties, which historically has been required in order for Congress to enact changes to the Railroad Retirement system, Congressman Oberstar proposed the changes to the draft railroad retirement legislation that is being lobbied on Capitol Hill.

Congressman Oberstar proposed to amend the draft legislation to provide for:

1) an actuarially reduced pension for those who wish to retire at ages 58 and 59, similar to the actuarially reduced pension for those who currently retire at ages 60 and 61;

2) GA 46000 insurance coverage for those who take a reduced pension at 58 and 59; and

3) spousal eligibility at the earlier age.

BLE President Edward Dubroski strongly condemned the AAR's rejection of the compromise proposal. "We deeply appreciate Congressman Oberstar's efforts to improve our pension benefits, which still would have treated the industry very generously," Dubroski said. "I'm outraged that the carriers' greed in looting our pension fund will cost BLE members the opportunity to retire two years earlier."

The BLE expects the railroad retirement legislation to be introduced before the end of April or in early May.

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