Counting on COLAs to Bring Relief
With consumer prices on the rise, federal retirees are paying more attention to inflation trends and what they mean for their pensions.
Several callers this week pointed to a notice posted by the National Active and Retired Federal Employees Association that showed that most government retirees have banked 2.9 percent toward their next cost-of-living adjustment. The calculation, based on a Labor Department index showing that consumer prices rose again in May, suggests that federal retirees could be in line for a jumbo COLA in January.
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Of course, it's too early to tell if the run-up in inflation -- a reflection of $3-a-gallon gasoline and other, higher consumer prices -- will continue into the fall, when officials will crunch the numbers for the 2007 COLA.
But, regardless of whether the inflation trend line goes up or down, the federal COLAs have proved to be an important benefit, helping lower-income retirees cope with increased costs for fuel, housing and health care.
As Patrick Purcell , a social policy specialist at the Congressional Research Service, wrote in a recent report, COLAs typically do not make retirees better off financially but merely protect them from becoming financially worse off over time.
At the start of this year, federal retirees covered by the Civil Service Retirement System received a 4.1 percent COLA, and retirees in the newer Federal Employees Retirement System who were at least 62 received a 3.1 percent increase. That COLA was the biggest in 15 years.
Nationwide, there were nearly 1.8 million civil service retirees on the government's annuity roll as of Oct. 1, according to the Office of Personnel Management. Of those, 1.57 million retired under the CSRS and about 220,000 under FERS.
(The tallies by the OPM are partial snapshots of the government retirement community: They do not include retirees from the military, the U.S. Postal Service, and the congressional and judicial branches of government.) Last year, the OPM counted 265,277 civil service retirees in the District, Maryland, Virginia and West Virginia. An additional 77,574 people in the region received survivor benefits.
The average annuity for a CSRS retiree is $2,396 per month. The average pension for a FERS retiree, who receives a Social Security benefit, is $868 monthly.
2.7 Percent for Whom?
As expected, the House this week approved a fiscal 2007 spending bill that includes a 2.7 percent pay raise for civil service employees next year. The bill requires that the raise also go to employees in the departments of Defense and Homeland Security, which are replacing the government-wide pay system with performance-oriented systems.
The Bush administration, which had recommended a 2.2 percent raise, objected to the House action and urged deletion of the provision covering Defense and Homeland Security employees. "The provision is ambiguous as to how the increase would be applied to employees covered under these departments' modernized pay systems and will unnecessarily complicate their implementation," the White House budget office said.
But Darryl Perkinson , president of the Federal Managers Association, welcomed the House action, saying employees in the two departments are concerned about "what will happen to their pay." He added, "It's positive to see that for 2007, at least, we are assured that they will be recognized for their dedication and commitment to serving America."
The Senate plans to address federal pay issues later this year, aides said.
Talk Shows
Gary A. Amelio , executive director of the Federal Retirement Thrift Investment Board, will be the guest on "FEDtalk" at 11 a.m. today on http:/
Vice Adm. Justin D. McCarthy , director of Navy material readiness and logistics, will be the guest on "The IBM Business of Government Hour" at 9 a.m. Saturday on WJFK radio (106.7 FM).
Stephen Barr's e-mail address isbarrs@washpost.com.