Railroad Retirement:

Future Rail Employment and Trust Fund Solvency

HRD-89-30: Published: Apr 5, 1989. Publicly Released: May 8, 1989.

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In response to a congressional request, GAO assessed the railroad retirement program, focusing on: (1) factors influencing the level of railroad employment; and (2) independent estimates of rail employment used to project the financial state of the railroad retirement trust fund.

GAO found that: (1) railroad employment had dropped over 40 percent since 1980 and was likely to continue to decline to 200,000 or less due to evolution to a more service-oriented economy, economic conditions, and deregulation; (2) three organizations' rail employment forecasts, which presented optimistic, intermediate, and pessimistic employment scenarios, showed the level of rail employment by 2010 ranging from 185,000 to 71,000; (3) the forecasts projected that the railroad retirement account would pay benefits into the next century, but difficulties would begin to occur in about 2009; (4) although a 1988 rail payroll tax increase averted a cash-flow crisis that appeared imminent several years ago, a similar crisis could develop sometime after 2005 if current pessimistic projections become true; and (5) unanticipated declines in employment could accelerate the cash-flow crisis date.

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