More than 3 million retired federal, postal and military personnel will get a near-record 6.9 percent cost-of-living raise effective Sept. 1. This is the second inflation-triggered federal-military boost this year. Retirees received a 3.9 percent increase in March.
The latest cost of living boost became official yesterday. The Bureau of Labor Statistics announced that the adjusted Consumer Price Index figure that controls federal-military pensions had jumped one percent from May to June. It put the CPI at 216.9. (Wednesday's column contained a table showing retirees how to convert CPI data into percentage increases).
More than 100,000 retirees here will benefit from the 6.9 percent raise that will first show up in October paychecks. Unlike Social Security, which is tax-free, civil service pensions are subject to federal and state taxes.
Under the system set up to keep former government workers and retired military personnel reasonably current with jumps in living costs, pensions are adjusted every six months - in March and September.
Although the 6.9 percent annuity increase is high, retirees are still behind the rate of inflation. For the first six months of this year inflation was running at an annual rate of more than 13 percent. The actual increase between June, 1978, and June, 1979, as measured by the CPI's Revised Index for Urban Wage Earners and Clerical Workers, was 11.1 percent.
The coming annuity increase does not cover federal employes or active duty personnel. Their pay is adjusted unde a different catchup-with-industry system. Although indications are that they would be due to receive a raise of more than 10 percent this October (to maek up in part for increases denied in 1978). President Carter has again imposed a 5.5 percent limit on white collar federal pay raises.
News of the 6.9 percent pension hike may prompt a number of longservice, top-paid federal executives and military officers to retire soon. Their pay has been "frozen" at the $47,500 level, and indications are that the freeze will continue this year. This means that they may get nothing if they remain on the job, but would get a 6.9 percent annuity increase if they retired.
Because of double-digit inflation and top-level federal pay freezes, some government retirees now get annuity checks that are bigger than their pre-retirement paychecks.
Both the Senate and House have approved budget language to eliminate one of the two annual cost-of-living raises. Instead of March and September adjustments, there would be only one raise each year, in July. Even if the proposal becomes law this year, retirees will still get the 6.9 percent raise.