Retiree COLA Gets Sweeter

Halfway through the annual inflation-countdown, federal-military and Social Security retirees are due a cost of living adjustment of at least 2.7 percent in January. The retiree COLA is not related to the still-to-be-determined federal pay raise that also takes effect in January.

The amount of the 2009 COLA, which is automatic, will be higher if living costs continue to increase between now and the end of September. The COLA countdown measures the rise in inflation from the third quarter of 2008 over the third quarter of the previous year.

Unlike private sector pensions which are fixed at time of retirement, federal benefits are on an escalator that helps them keep pace with the rate of inflation. That escalator goes in only one direction. Federal annuties go up if inflation increases, but do not go down during rare periods of deflation when living costs actually drop.

For federal civil servants there are two major retirement plans and two COLA catch-up systems. The vast majority of current retirees are under the older Civil Service Retirement System. CSRS employees get larger civil service annuities, and get a full COLA each year regardless of their age.

The vast majority of current federal workers (about 3 of every 4) are under the newer Federal Employees Retirement System. FERS workers have a less generous pension-formula, but they do earn Social Security coverage and get matching contributions (from the government) of up to 5 percent to their Thrift Savings Plan accounts. FERS employees get a reduced COLA (usually 1 percentage point less than the actual rise in inflation) starting at age 62.

Military retirees and people who get Social Security benefits (which are typically much smaller than CSRS or FERS annuities) get the full COLA. That’s the same percentage that goes to CSRS retirees.

Feds with dual coverage (that is time under both CSRS and FERS) will get the full COLA at any age for the CSRS portion of their annuity. On the FERS portion they will get the so-called diet COLA formula with that raise beginning when they hit age 62.

If you like to track the Consumer Price Index, which determines the size of the COLA (or if you are simply a glutton for punishment), the National Active and Retired Federal Employees Association has a tracker you can see if you click here.

Political Endorsements

As covered in an earlier column, two of the largest federal unions, representing workers in the government’s second largest agency, have endorsed presidential candidates. Different candidates. The American Postal Workers Union cast its lot with Sen. Barrack Obama (D-Ill.). The National Association of Letter Carriers earlier had endorsed Sen. Hilliary Rodham Clinton (D-Ill.). In the case of the APWU, representing clerks, the executive board made the call. The NALC, representing city letter carriers, picked Clinton in a post-card mail ballot.

But some readers don’t like the idea of blanket endorsements.

For example:

What you have reported in the column is who the unions endorse. It does not necessarily speak to how the majority of us feel. What you may have missed is that most of us in the Postal Service endorse Sen. John McCain (D-Ariz.) because he represents values that we believe in. We believe in saving money for our customers, eliminating waste in government and supporting family life. We just do our endorsing the silent way…we vote. The leaders of the Unions are nothing more than politicians themselves and do not speak for the majority of us. That is where reporters and pollsters get it wrong….you ask the wrong people.” David D.

Nearly Useless Factoid

Play-Doh was originally a wallpaper cleaner. See kids, when coal was used in homes for heating, people needed to clean their wallpaper more than they do now, and that’s why Captain Kangaroo’s help was needed to… oh nevermind.

To reach me: mcausey@federalnewsradio.com

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