Railroad Retirement System Message to the Congress Transmitting a Report.

To the Congress of the United States:

I hereby transmit the Annual Report of the Railroad Retirement Board for Fiscal Year 1979.

This report includes the 14th triennial actuarial valuation of the railroad retirement system, which was completed in August 1979. It is the first Board analysis to project the fund's future income and outgo under five sets of economic and legislative assumptions. This approach, involving alternate sets of assumptions, more thoroughly takes into account the variable factors which can significantly affect the system in the coming years, and provides more information for an examination of the system's financial condition. The general conclusion is that the railroad industry retirement system has an acute short-term financial problem as well as long-term financial problems, and corrective legislation is needed to assure sound financing of benefits by the railroad sector.

The 1979 14th valuation projected a cash shortfall under all but the most optimistic set of assumptions. Chairman Adams has advised me that the situation has become markedly worse and that funds will be inadequate to pay rail industry benefits by 1983. The latest projections, based on the economic assumptions used in the March 1980 revisions to the Budget, indicate that the railroad retirement trust fund will exhaust its balance during fiscal year 1983, and could run out of cash in fiscal year 1982.

As discussed by Chairman Adams in the report, the Administration has proposed legislation to protect current and future railroad beneficiaries by sponsoring a fair and evenhanded method for sound financing of the rail industry pension without additional subsidies from general tax revenues. A financially sound rail industry pension is vital to the one million annuitants now receiving benefits, and to the half-million workers now qualified for benefits in the future. The Administration invited, for the second year, a rail management and labor proposal to restore solvency to the rail industry pension without additional general revenue subsidies. Resolution of the system's financial problems is a serious, pressing concern for rail workers, the rail industry, and the million rail pension beneficiaries.

JIMMY CARTER

The White House,

August 18, 1980.