Government retirees would have to wait until they are 65 to get twice-yearly COL (cost of living) raises under legislation proposed by Sen. Ted Stevens (R-Alaska). Stevens' bill, which would cut COL raises for younger retirees, is designed to protect the twice-yearly COL catchup system from Senate-House budget cutters who want to limit all U.S. retirees to a single annual inflation catchup.
Stevens' measure would have a major impact on the Washington area, which has 100,000 government retirees who now get full COL catchups every six months. It is designed as a compromise to the Reagan administration plan to cut all federal-military retirees back to one raise annually.
The plan (we tipped you on Feb. 25 that Stevens was considering it) would cut the frequency of COL raises, or the size of the raises for persons under 65. This is the plan:
Federal-military retirees who are 65 or older would continue to get full inflation adjustments -- based on the Consumer Price Index -- each March and September.
Persons between the ages of 60 and 65 would get one COL raise a year, the same as persons under Social Security.
Persons under age 60 would get only one raise each year and it would be only half the rate of inflation as measured by the price index.
Disabled retirees would continue to get full COL raises every six months regardless of their age.
Stevens, ranking majority member of the Senate Governmental Affairs Committee and one of the best friends retirees have in Congress, doesn't expect U.S. personnel to stand up and cheer for his bill. He feels Congress will make drastic changes in the federal pension system this year, and is offering the tough compromise in hopes of saving the twice-yearly adjustments at least for the oldest retirees. Congressional budget experts say the shift to a single annual COL adjustment would save the taxpayers around $900 million a year.
With the backing of the Carter administration, Congress last year endorsed the cutback to one COL per year. But heavy lobbying by unions and retiree groups, and the pressure of the upcoming November elections forced Congress to back off. Candidate Ronald Reagan promised not to tamper with U.S. retiree raises if elected. But he has since endorsed, and pushed, the COL cutback in his budget.
The Senate Budget Committee has already voted to limit all federal-military retirees to a single COL raise annually. With the new economy mood, Congress and the White House are almost certain to cut back federal retirement benefits in the same way. The mood on Capitol Hill has changed: As one House staffer put it, "Retirees seem to think they have Congress on a leash. They did last year. But this is this year." He, and many others, feel changes in the COL system are inevitable, and that retirees will be "lucky" if the worst thing that happens to them is the Stevens compromise.
The COL cutback plan affects everybody working in government, no matter what their age. The typical government worker retires before age 60. For him or her, it would mean a single annual raise, equal to half the inflation rate until age 60 and then only one "full" COL adjustment each year until he or she turned 65.