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Why Didn’t I Receive a Cost-of-Living Adjustment?

Annually in October, the Social Security Administration (SSA) and the Railroad Retirement Board (RRB) announce the cost-of-living adjustment (COLA) for the upcoming year. Every year there are questions from a new widow(er) pertaining to why they did not receive a COLA. They are worried they are not receiving their benefits properly and do not understand why others received them but did not. In some cases, due to a rise in Medicare premiums, they actually see their take-home amount lowered as well. 

The answer to these questions can be found in the 2001 amendments to the Railroad Retirement Act (RRA), also commonly referred to as, The Railroad Retirement and Survivors’ Improvement Act of 2001. During negotiations of changes to the RRA, rail labor and the National Association of Retired and Veteran Railway Employees (NARVRE) were in agreement that an improvement to survivor’s benefits was necessary. Yet, the next question was, what funds could be made available to make these changes for survivor’s benefits, and exactly what changes would be made with the available funds? 

The primary benefit NARVRE felt needed improvement was the survivor benefits for widow(er)s. Before 2001, the beginning point for a widow(er)s annuity was 100% of the employee’s Tier 1 and 50% of the employee’s Tier II. Because Tier I already used 100% of the employee’s annuity as the starting point, the goal was to improve the amount payable for Tier II. Ideally, the improvement would look the same as the Tier I computation and use 100% of the employee’s Tier II as the starting point for the survivor’s Tier II. Sadly, there were insufficient funds to make this change and pay 100% of Tier II COLAs for the remainder of the widow(er)s life. However, the RRB’s chief actuary worked with the parties to find a solution with the available funds. The solution everyone agreed upon is known as the Widow’s Initial Minimum Amount (WIMA). 

RRB states it this way: 

Widow(er)s Benefits. The legislation established an “initial minimum amount” based on the two-tier annuity amount that would have been payable to the railroad’s employee at the time the widow(er)s annuity is awarded, minus any applicable reductions. Widow(er)s annuities computed based on the initial minimum amount will not increase until the amount payable under the previous law plus the cost-of-living increases is higher than the initial minimum amount. This provision was effective February 1, 2002, and was not retroactive. 

You can find a chart on the website that will help explain exactly how it is calculated. It is important to remember that railroad benefits are individually calculated and based on many factors unique to each person. For example, a widow(er)s benefits are decreased if the widow(er)s has not reached full retirement age yet on the day the survivor annuity begins, among other factors. 

If you are or were a railroad employee and not yet a member of NARVRE, we encourage you to join as soon as possible. We will always be here for our members. Our mission is to PROTECT, PRESERVE, and PROMOTE your retirement benefits. You can join for less than $40 a year, which is worth every penny. 

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