Passenger Trains > NJ NJ Port Authority and Railroad Retirement

There's an interesting article in NJ.com about the outgoing executive director of the Port Authority of New York and New Jersey and his participation in Railroad Retirement. PANYNJ operates the Port Authority TransHudson service, a heavy rail passenger service between NY and NJ. It also operates toll bridges, airports, port facilities and the World Trade Center.

Pat Foye, as executive director of the PA, also serves as president of PATH. Under the PA's reasoning, he is an employee of the railroad, and thus, under federal law, must participate in the Railroad Retirement program. No way to opt out.  He contributed funds from his salary.  Mr Foye has said he will donate the proceeds to NJ and NY charities when he begins to receive the $2,500 annual payments.

The RRB requirement was sent to NY for review in 2014, apparently the state voiced no objections to his participation or that of his predecessor.  Mr Foye has worked for Andrew Cuomo in a series of government related jobs over the years, and has been a long time participant in the NY state employee pension program.  (Many state bureaucrats in both NJ and NY finish out their careers in public authorities to increase their pension payments with (much) higher paying authority jobs contributing to their final average pay.)


Two retirement checks, better than just one


 

I thought RR Retirement was similar to, and more generous than, Social Security. How can his ANNUAL payment be so low?

There are two tiers. Tier 1 is similar to SSI and Tiet 2 pays more but you contribute more into it.

The percentages and figures are on the rrb site

So now we know why the Port Authority does not try terribly hard to extricate PATH from the FRA. PATH looks and smells like a subway, has a subway signal system, most track connections to the former PRR have been severed, yet it is grandfathered to FRA jurisdiction.

CPR_4000 Wrote:
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> I thought RR Retirement was similar to, and more
> generous than, Social Security. How can his ANNUAL
> payment be so low?

It could be that he has just a few years service as a covered employee.  His prior and continuing service as a state employee wouldn't count against RRB time before 2012.

(But the PA general counsel apparently has decades of service as a covered rail employee, in addition to his day job. That could be a decent chunk of change.)

The reason for his magnanimous gesture to donate the $2500 a year is that RRB annuities are offset by "public purpose pensions", a provision established when RRB and Social Security were "combined"; to prevent "double dipping", although the prohibition only applies to local and state government pensions, and not dual Federal pensions.  In short, he would not have kept much of his RRB pension anyway.
Any one have any more  notes about this?

Norm

Norman Orfall
Helendale, CA
TIOGA PASS, a private railcar



Edited 1 time(s). Last edit at 01/03/17 18:24 by aronco.

If you retire under the RRB, to receive a full penion, you have to be vested, which last time I checked took 10 years of paying into the RRB, and you have to have a deemed current connection to RRB-covered employment.  Whatever SSI payments you made before or in the middle of your RR career gets rolled into your RRB credits, which are used in calculating your monthly pension amount (that $2,500 quoted eariler is probably a monthly amount).

>It could be that he has just a few years service as a covered employee.  His prior and continuing service as a state employee wouldn't count against RRB time before 2012.
>(But the PA general counsel apparently has decades of service as a covered rail employee, in addition to his day job. That could be a decent chunk of change.)

If what's his name worked at an RRB covered job, then wokred at a non-rrb covered job, and finally wound up retiring from an RRB covered job, he would get an RRB pension. Receiving pensions concurrently from other sources can reduce your monthly RRB payments, but I forget the details.

>So now we know why the Port Authority does not try terribly hard to extricate PATH from the FRA. PATH looks and smells like a subway, has a subway signal system, most track connections to the former PRR have been severed, yet it is grandfathered to FRA jurisdiction.

I'm not sure what you're getting at here. The FRA has nothing to do with the RRB (and vice versa). The FRA is probably excercising jurisdiction over PATH because it's in close poximity to general system RRs in quite a number of places and/or crosses a navigable waterway. Otherwise PATH could apply for reclassification.

>The reason for his magnanimous gesture to donate the $2500 a year is that RRB annuities are offset by "public purpose pensions", a provision established when RRB and Social Security were "combined"; to prevent "double dipping",

Lest any of our readers misinterpret this, RRB and SSI are two separate government run pension plans. "Double dipping" when two spouses retire has also been done away with: the wife no longer gets a full RRB pension even though she worked for the RR, just a spousal one, which is 1/2 of a regular one.

I have a hard time understanding why this thread is even interesting to rail enthusiasts.

I'll stick to threads that actually affect movement of trains but just had to ask the question. Seems more like a thead for Governmentblogger.com than TRAINorders.com

Posted from iPhone



Edited 2 time(s). Last edit at 01/04/17 06:13 by Model_L.

RRB maxes out at i believe at $4400 a month ... so he didnt work a full vested 30 years under RRB ...

Railroading is a business, with all the issues that a business will have, not simply a source of entertainment for railfans.  Railroad labor relations, including employee pensions, is a business issue that has a number of unique features compared to other businesses.  Railroading also has its own unique relationship to government, including government-owned railroads like NJT.  These are all things that many people intested in railroading find important to know and explore.  I like watching trains and taking train pictures as much as (or more than) anyone else, but I also care about the economic effects of railroading and the way that the unique characteristics of railroading affects the lives of the people who do the work.

Model_L Wrote:
-------------------------------------------------------
> I have a hard time understanding why this thread
> is even interesting to rail enthusiasts.
>
> I'll stick to threads that actually affect
> movement of trains but just had to ask the
> question. Seems more like a thead for
> Governmentblogger.com than TRAINorders.com
>
> Posted from iPhone

As a recent retiree, I received a letter in the mail from my union, UTU / SMART, and, with the new Administration coming into power in a couple weeks, things don't appear as bleak as some would have us believe.  

To quote from the letter:

As you know, the railroad industry is one of the most heavily regulated industries in America.  Sometimes that works against us, and sometimes it works for us.  For example, Railroad Retirement is dependent on how members of Congress vote on this issue.  In 2001, Congress voted to reduce our retirement age from 62 to age 60 with 30-years of service.  Not to put a scare into anyone, but this law can change by a simple vote of Congress.  We just have to think back a few years when Paul Ryan proposed rolling Railroad Retirement into Social Security.  

The good news is that we have friends on both sides of the aisle in Congress.  We endorsed 46 Republicans that won eletion in 2016, and they will be in the majority party.  Combine our Republican friends with the 194 recommended Democrats, and we have a workable majority of 240 members of the U.S. House of Representatives that have listened to concerns that affect retirees and members.  And if they all stick, we'll be able to defeat the bad ideas and hopefully see some good laws passed.   

 

Labor law tends to be very complicated.  Lowering a retirement age can be done fairly easily because you're not taking away anything or any benefit from anybody who has vested rights. The carriers, as a contributing party, might object, but probably wouldn't.

Increasing a retirement age, or increasing qualifications to take the age 62 deal, or taking away certain funding etc is much more complicated. Anybody who has been disadvantaged could file suit to block that change.  Private companies found that out when many attempted to switch from defined benefit retirement plans to cash balance or super 401k plans.  Labor law gives a number of remedies to people who relied on the old law.  IBM was forced to roll back its changes for anyone over the age of 40, and transition people between 40-47, IIRC. People aver 47 kept their old plan. Even the plan to increase the age for social security full benefits phases in over a decade.

In collectively bargained, multiemployer pension plans few things are easy or easily described...

>Labor law gives a number of remedies to people who relied on the old law.  IBM was forced to roll back its changes for anyone over the age of 40, and transition people between 40-47, IIRC. People aver 47 kept their old plan. Even the plan to increase the age for social security full benefits phases in over a decade.

>In collectively bargained, multiemployer pension plans few things are easy or easily described...

IBM isn't a railroad, so none of this applies to the RRB situation. I've never even heard of the RRB getting excerised over "ouside" income from somone's personal investments, which is what a 401k plan is. Eligibility for an RRB pension has never been part of a union agreement, except for the change-over to it in the early 1930s, so it's not subject to collective barganing. As for "labor laws",  there is only one labor law which applies to the railroads: the RLA, and it doesn't apply to non-railroads like IBM (although it does apply to airlines).

EtoinShrdlu Wrote:
-------------------------------------------------------
> >Labor law gives a number of remedies to people
> who relied on the old law.  IBM was forced to
> roll back its changes for anyone over the age of
> 40, and transition people between 40-47, IIRC.
> People aver 47 kept their old plan. Even the plan
> to increase the age for social security full
> benefits phases in over a decade.
>
> >In collectively bargained, multiemployer pension
> plans few things are easy or easily described...
>
> IBM isn't a railroad, so none of this applies to
> the RRB situation. I've never even heard of the
> RRB getting excerised over "ouside" income from
> somone's personal investments, which is what a
> 401k plan is. Eligibility for an RRB pension has
> never been part of a union agreement, except for
> the change-over to it in the early 1930s, so it's
> not subject to collective barganing. As for "labor
> laws",  there is only one labor law which applies
> to the railroads: the RLA, and it doesn't apply to
> non-railroads like IBM (although it does apply to
> airlines).

A  401k is technically an employer sponsored retirement arrangement, even if the company doesn't contribute.  A 401k rolled over into a personal IRA would become tax sheltered personal savings, however. They're treated differently under federal law, especially as applied to distributions.  No idea how or if the RRB has an interest or offset in that.

The bigger picture is why this is happening at PANYNJ. My guess is that when the PA took over the Hudson & Manhattan in the early 1960s, they created a separate company to administer what became PATH.  Walled it off from the two state plans plus PA's own retirement plan.

But, the takeover likely required that certain PA officers had to be corporate officers of PATH, as well. So, whoever was executive diector of the PA was also president of PATH. It's complicated enough that the article says the PA legal department had to offer legal opinions on how to handle the issue. And probably went outside for specialist opinions. Mr Foye is already covered as a NY state employee, and likely has credits from the Lower Manhattan Development Commission and other agencies on which he served. Which is likely why the article says he attempted to decline the small pension from RRB in the first place.

Since Mr Foye's base pay is considerably above the federal pension base, the PA may have a supplemental pension for people earning over the section 415 limit. And their design may have triggered the offset, since his PA pension would likely have a social security offset, even if RRB doesn't have one.  There would be too few people in this situation to build plan provisions, so they just wing it for the small amount.


(This stuff is enormously complicated, even for people who are experts, which I'm not. The fact that, and Congress some of the most highly paid benefits lawyers and experts in the country could trigger a firestorm with the IBM cash balance is a good example of why experts try not to change laws and regs unless they are forced to.  Just too many moving parts.  Changing ObamaCare will be far worse...)