Federal and military retirees whose monthly $1 billion-plus pensions are protected by one of the best inflation-insurance guarantees would lose much of that protection under a proposal picking up steam in Congress.
The plan, coming out of the influential Senate and House budget committees, would trim an estimated $450 million from cost-of-living raises for retirees beginning in 1981.
Retired civil servants or their survivors now get two cost-of-living raises each year to help them keep pace with inflation as measured by the Consumer Price Index (CPI). Those boosts come automatically by law each March and September. They go to more than 1 million retired civilians and almost a half-million of their survivors, plus military retirees and survivors.
Under a plan abandoned by the White House and since revived in Congress, retirees would be cut to a single cost-of-living adjustment every 12 months. That would eliminate much paperwork in calculating two raises a year, supporters of the plan say, and also save the government millions of dollars from the cost of compounding raises.
Nearly 100,000 Washington area residents are retired from either the federal government, postal service or the military.
The proposal for a single, annual cost of living raise originally came from the Carter administration. But it was dropped when the Pentagon objected to including military retirees in any such change before it completes a study on military pensions.
But the plan for a once-a-year raise is alive again in the Senate and House budget committees. Both have approved recommendations that Congress scrap the March and September adjustments for federal and military retirees, and substitute a single raise each July, like that given to social security recipents.
The committee's plan would allow retirees to get the second raise due them this year in September. But the proposal - if Congress buys it - would wipe out the March 1980 raise that retirees now stand to get. Instead, they would get an adjustment in July 1980, and one raise each July after that.
Both proposals have to go through regular congressional procedures, with approval by the House Post Office-Civil Service Committee and the Senate Governmental Affairs Committee. Leaders of federal, postall and retiree groups believe they have the clout to block the proposals in committee.
However, under a little known congressional rule, the two budget committees do have authority to force another committee to report out legislation of that sort. Apparently it has never been done, but it could be.
The pension reduction plan would be politically popular (except with government workers and their families). The fact that the White House once considered the idea, now working its way through the congressional budget process, has government union leaders worried. And for good reason.