An October federal military pension increase of at least $30 million a month will be triggered Thursday when the Consumer Price Index is released. The CPI is the national barometer of living costs, and the next Thursday figure will show changes from May to June.
The CPI is a vital economic index. It controls some alimony and child-support settlements, triggers pay increases in many union wage agreements and has a multimillion-dollar impact twice each year as 1.5 million ex-civil servants, military aides and their survivors get cost-of-living raises. Those retirees now get monthly pensions worth $750 million.
In this area, more than 100,000 people depend in while or part on government retirement checks.They have been expecting a minimum 3.6 per cent increase that would be effective Sept. 1, and in checks mailed to them for October delivery. But that cost-of-living raise could be higher if the CPI data to be released Thursday indicates even a slight jump in living costs.
Federal and military pensions are tied, by law, to the CPI. Twice each year, the million and a half retirees (or their survivors) get adjustments based on living-cost increases over the previous six months. Those automatic adjustments go into effect each March 1 and Sept. 1, and are reflected in pension checks the following month.
Everytime the CPI figure is announced, many retirees get out their pocket calculators and conclude that the government added wrong. That is because they forget the CPI is a point index which translates into percentages. The May CPI hit 180.6. That equals a 3.6 per cent rise in the cost of living.
To give retirees and would-be retirees an idea of the CPI situation, the following is the table the government uses to translate CPI points into actual percentage increases.
This is the tablw worked up by federal actuaries showing (left hand column) possible CPI readings for June and (right hand column) the percentage increase that each reading would trigger.