WASHINGTON — The House passed gave final passage Tuesday to legislation allowing a $15 billion railroad retirement fund to be invested in stocks and bonds for the first time, a wire service reports.
The bill, which passed the House on a 369-33 vote, would cut payroll taxes for rail companies; allow workers with 30 years’ service to retire at age 60, down from 62; and would increase benefits for surviving spouses of railroad retirees by an average of $300 a month, according to the Association of American Railroads.
The Senate passed the bill last week on a 90-9 vote. The House action sends it to president Bush, and sponsors said he will sign it into law.
“This is the workers’ own money,” said Rep. Jack Quinn, R-N.Y. “They deserve to raise its rate of return.”
Rail retirement benefits are paid under a 1930s-era program older than Social Security. The legislation would involve only part of the fund, moving $15.6 billion out of lower-earning Treasury bonds and into private markets.
Advocates of the change say investing the pension fund in private securities will increase its earnings. If the opposite happens, payroll taxes on the railroads would be raised to meet any shortfall. Under the bill, assuming a 2 percent increase in rate of return, those taxes are to be cut from 16.1 percent to 14.2 percent by 2003 for the rail companies and would never rise above the current 4.9 percent for employees.
Opponents had warned that the bill puts taxpayer money unduly at risk, and the transfer would increase the federal budget deficit.
The bill is H.R. 10.