Retiree COLAs lowest in 12 years

Retired federal employees will receive a 1.3 percent cost-of-living increase in their pensions next year, the smallest increase in 12 years.

The Office of Personnel Management said Friday the cost-of-living adjustment (COLA) will be the same for both retirees covered by the Federal Employees Retirement System and those under the Civil Service Retirement System. The COLA is also 1.3 percent for Social Security beneficiaries. The increase is low this year because inflation has been kept under control.

Retirees will see the increases in the checks they receive in January 1999, which cover the month of December. In 1994, 1995 and 1996, the COLAs were delayed until April to save the government money, but no delay will occur this year.

The formula for determining COLAs, which is set in law, 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 year.

The COLA has not been so low since 1986, when Civil Service Retirement System retirees received a 1.3 percent increase. The Federal Employees Retirement System was not established until 1987, so it has never had such a low COLA.

For the last six years, COLAs under FERS have been 2 percent, while CSRS increases have ranged from 2.1 to 3 percent. The two systems use slightly different formulas, which tend to give CSRS annuitants a higher annual increase.