As provided for in the Act, the Trust began its work on February 1, 2002.

The Act authorizes the Trust to invest the assets of the Railroad Retirement Account in a diversified investment portfolio in the same manner as those of private sector retirement plans.  Prior to the Act, investment of Railroad Retirement Account assets was limited to U.S. government securities.  In addition, to carry out its mandate, the Trust's Board of Trustees ("Board") is authorized to make rules to govern its operations, to employ professional staff, and to contract with outside advisors to provide legal, accounting, investment advisory or other services necessary for the proper administration of the Trust.  Administrative expenses of the Trust are paid out of Trust assets.

The Trustees' terms are for three years and are staggered.  The Act provides that on the initial Board, one each of the Labor and Management members would be selected for three year terms, one each for two year terms, and one each for a one year term.  Thereafter, all terms are three years.  The independent Trustee's initial and succeeding terms are three years.

The Trustees selected by the railroad carriers are: Paul R. Goodwin, Vice Chairman and Chief Financial Officer, CSX Corporation; Thomas Hund, Executive Vice President and Chief Financial Officer, Burlington Northern Santa Fe; and Bernie Gutschewski, Vice President for Taxes, Union Pacific Corporation.

The Independent Trustee is John MacMurray, a pension fund professional with 30 years of experience in the field.

These reports will be posted on this web page as they are submitted. 

• Fund Reserves:  The Act is designed to maintain four to six years' worth of benefits in reserve to ensure a significant safety margin (Over most of the past 40 years, the reserve in the RRA has been less than four years.)
• Automatic Tax Adjustment:  The tier 2 tax rate on employers and employees would be adjusted automatically pursuant to a statutory schedule that is designed to maintain a fund balance sufficient to pay between four and six years of benefits.  If any tax increases are necessary, they would be borne entirely by rail employers. The rate for employees would never rise above the current 4.9 percent. Because the tax rate would be adjusted by formula rather than requiring congressional action, retirees would be assured of timely and effective tax adjustments in the event of a period of lower-than-expected investment returns.
• Asset Management:  The Trust will manage Railroad Retirement assets in the same way as private pension funds, providing the opportunity to earn a higher rate of returnin a diversified portfolio than the six percent annual return that had been projected for the RRA. Higher investment returns would provide additional resources to fund benefit payments.

Pursuant to the Act, the Trustees have adopted Investment Guidelines which address such issues as the diversification of Trust assets into broad asset classes: equity and fixed income, as well as targets for sub-classes of assets, such as domestic and international equity; private equity; and investment grade and high yield bonds. These Guidelines are implemented by the Trust's professional staff and outside investment managers who may be retained by the Trust. Investment performances are rigorously monitored by the Trustees, Trust's Chief Investment Officer and are subject to oversight by the Board of Trustees.

The Act authorizes the Trust to diversify the investment of the assets of the Railroad Retirement system into asset classes in a manner similar to defined benefit plans of other U.S. industries. The Act directs the Board of Trustees to retain (1) independent advisers to assist them in the formulation and adoption of investment guidelines, and (ii) independent investment managers to invest the assets of the Trust in a manner consistent with the investment guidelines. Under the Investment Guidelines adopted by the Trust, no more than 10% of the Trust's assets may be invested by an individual investment manager. (This limitation does not apply to assets invested by a manager retained to invest in index accounts.)