In addition to tiers I and II annuities, the RRB pays a VDB to employees at age 62
and to younger RR workers who meet SS disability benefit requirements. VDB annuitants
must have met insured status requirements for both RR and SS benefits prior to 1975,
along with other vesting conditions.
RRB computes the VDB using the SS benefit formula in effect at the end of 1974, counting
earnings before 1975 or through the last year before 1975 with RR employment. The
VDB equals the benefit based solely on RR earnings plus the benefit based solely on
SS earnings, less the benefit based on combined RR and SS earnings. RRB raised the
final amount by the cumulative cost-of-living increases that occurred after 1974 through
the date of retirement, but not after June 1981.
The VDB protects the equity earned under SS prior to 1975. RRB pays the VDB from appropriated
general funds rather than the RRB trust funds. Thus, an insufficient fiscal year appropriation
causes a benefit reduction. This first occurred in October 1981, when VDB benefits
were reduced 21%.
An employee who does not meet the vesting requirements for the VDB based on his or
her earnings record may be eligible to receive a refund of excess SS taxes paid during
the years 1951 through 1974. For more information on excess RR taxes, see RS 01601.210.