Retirees to get 4.1 percent cost-of-living adjustment
Increase for members of Civil Service Retirement System is highest in more than a decade.
Federal retirees under the Civil Service Retirement System will receive a 4.1 percent boost to their pensions in 2006, the largest hike in 14 years.
Federal officials unveiled the 2006 cost-of-living allowance Friday. It is based on the change in the Consumer Price Index for urban wage earners from the third-quarter of one year to the third-quarter of the next. The index is compiled by the Labor Department.
This year's 4.1 percent gain is the highest since 1991, when there was a 5.4 percent increase. In recent years, gains have been much lower. In 2005 the increase was 2.7 percent. In 2004 it was 2.1 percent, in 2003 it was 1.4 percent and in 2002 it was 2.6 percent.
The COLA will not be the same for retirees in the Federal Employees Retirement System. If the change in the CPI is more than 3 percent, FERS retirees get the COLA minus 1 percent. So FERS members will get 3.1 percent adjustments next year.
FERS retirees only get the cost-of-living allowance if they are 62 years of age or older.
CSRS annuitants must have been retired one full year to receive the full COLA. Newer retirees will receive prorated annuities, encompassing one-twelfth of the applicable increase for each month they've received their pension.
The 4.1 percent does not apply to current employees in the civil service. Employees are subject to a pay raise determined by Congress and approved by the president. Employees are on track to receive a 3.1 percent increase for 2006, including a 2.1 percent across-the-board increase and a 1 percent locality increase. The full Senate and President Bush have not yet approved that number, however.
Federal retirees will receive their first checks reflecting the increase in January 2006.