In connection with the retirement program, the RRB has administrative responsibilities under the Social Security Act for certain benefit payments and railroad workers' Medicare coverage.
The Department of Labor proposed its own plan in response, eventually compromising with the workers to produce the Railroad Retirement Act of 1934.
This legislation anticipated the Social Security Act of 1935, which covered most other employees, and was tailored to address the specific concerns of railroad workers.
They relocated to Chicago, IL, as part of a decentralization of government offices after the attack on Pearl Harbor and the entry of the United States into World War II.
However, for survivor benefits, there is an additional requirement that the employee's last regular employment before retirement or death was in the railroad industry.
In addition, both employees and employers pay tier II taxes which are used to finance railroad retirement benefit payments over and above social security levels.
These tier II taxes are based on the ratio of certain asset balances to the sum of benefit payments and administrative expenses.
Additional trust fund income is derived from the financial interchange with the social security trust funds, revenues from federal income taxes on railroad retirement benefits, and appropriations from general treasury revenues provided after 1974 as part of a phase-out of certain vested dual benefits.
Each employer's payroll tax rate is determined annually by the RRB on the basis of benefit payments to the railroad's employees.
The Railroad Retirement Board is headed by three members appointed by the President of the United States, with the advice and consent of the Senate.
To this end, the RRB employs field representatives to assist railroad personnel and their families in filing claims for benefits, examiners to adjudicate the claims, and information technology staff, equipment and programs to maintain earnings records, calculate benefits and process payments.
The Inspector General employs auditors and investigators to detect any waste, fraud, or abuse in the benefit programs.
The Occupational Disability only requires that applicants possess certain ailments which are deemed by law as an inability for them to safely perform their particular regular job.
In 2008, more than 90 percent of Long Island Rail Road (LIRR) retirees were receiving occupational disability payments.
[12] A former LIRR pension department manager was arrested and charged with official misconduct for allegedly "taking money to help railroad employees find a doctor and fill out paperwork for federal disability payments".
[13] All charges of corruption and official misconduct were dismissed by Supreme Court Judge Kase on December 11, 2009,[14] who stated the prosecution had misled the Grand Jury in the indictment.
The report found no fraud or wrongdoing, but noted that in "prior work, we found that numerous claims with evidence from the same doctors can be an indicator of potential fraud or abuse"; unlike sister agency Metro-North Railroad, LIRR disability evidence was provided primarily by one of three doctors.
[20] In February 2014, physician Peter J. Lesniewski was charged for providing "fraudulent medical narratives in support of the disability applications of at least 230 LIRR employees.