COLA Clash

THE DAILY FED

COLA Clash

Retirees enrolled in the Civil Service Retirement System (CSRS) will receive a 2.9 percent increase on January 2. Those enrolled in the Federal Employees Retirement System (FERS) will receive a 2 percent increase.

To get the full increase under both plans, retirees must have begun receiving benefits before December 31, 1995. Retired civil servants who have been on the rolls for less than a year are due a prorated increase. For each month they received benefits they will get one-twelfth of the full increase for their plan. For example, a retiree who enrolled in the FERS in July 1996 will receive a 0.8 percent increase. (See chart below.)

The cost-of-living increases were determined by computing the percentage increase in the Consumer Price Index (CPI) for urban wage earners and clerical workers from the third quarter average of 1995 to the third quarter average of 1996. The CPI is calculated by the Bureau of Labor Statistics.

Meanwhile, the National Association of Retired Federal Employees has expressed concern that the Clinton Administration is contemplating permanently delaying future COLA increases.

For the past three years, COLA increases for federal retirees have been delayed from January to April. Congress and the Clinton Administration allowed the delay to lapse last fall in the rush to complete the work of the 104th Congress before the elections. Now, NARFE officials say that "knowledgeable sources in the Administration report" that the Office of Management and Budget will recommend in the President's fiscal 1998 budget legislation that the January-to-April shift be made permanent. COLAs for Social Security recipients and military retirees have not been delayed.

"Any budget recommendation to again single out the nation's two and one-half million federal civil service retirees and survivors for COLA delays not required of any other retirees is totally unacceptable to NARFE," said the organizations leaders in a message to retirees.