Senate approves COLA hike for disabled vets

The legislation (S. 894) provides a 3.6 percent COLA increase for disabled vets, effective Dec. 1 with payouts starting in early January 2012. Federal retirees and Social Security recipients automatically receive COLAs tied to the Consumer Price Index, but Congress must introduce specific COLA legislation for disabled vets.

The measure also affects payments in vets' disability compensation, dependency and indemnity compensation for surviving spouses and children as well as clothing allowances. The House passed a similar bill (H.R. 1407) in May. The two chambers still must send one version to the White House for President's Obama's signature before the law takes effect.

"A cost-of-living increase for our veterans is long overdue and well-deserved," said Sen. Patty Murray, D-Wash. "Particularly in this difficult economy, our veterans deserve a boost in their benefits to help make ends meet." Murray is also co-chair of the joint congressional Deficit Reduction Committee.

The Social Security Administration last week released the 2012 COLA, the first increase in two years. Federal retirees under the Civil Service Retirement System as well as Social Security recipients will receive the full 3.6 percent COLA increase. Those annuitants in the Federal Employees Retirement System will receive a 2.6 percent bump in 2012. If the full COLA increase is 3 percent or higher, as it is for 2012, FERS retirees receive 1 percent less than the full increase. If the increase is less than 2 percent, FERS retirees receive the same as CSRS retirees. Active federal employees do not receive a COLA increase.

The Consumer Price Index, a measure of the average change over time in the prices urban consumers pay for goods and services, rose 3.9 percent between September 2010 and September 2011, largely due to an increase in gasoline and food prices. COLAs are based on the CPI-W, a formula that takes into account increases in the CPI for urban wage earners and clerical workers. The government typically publishes the annual cost-of-living adjustments in late October, based on the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective. SSA announced the last COLA increase in October 2008, when it rose 5.8 percent.