Despite a slight dip in living costs in November, federal and military retirees, and people who get Social Security benefits will get a 3.6 percent cost-of-living adjustment in their January checks or direct deposits.
People retired under the CSRS program, which is most current retirees, will get the full 3.6 percent increase. Those retired under the FERS program will get 2.6 percent if they are 62 or older. FERS retirees get so-called “Diet COLAs” that are one percentage point less than the full increase in inflation. Congress set it up that way to make up for the fact that FERS workers are eligible for a tax-deferred 5 percent matching government contribution to their Thrift Savings Plan accounts.
Most retirees are under the older CSRS system. Most current workers are under FERS.
Some retirees are eligible for benefits under FERS, CSRS, the military retired program and Social Security. Feds who retired with both CSRS and FERS credit will get the full COLA on the CSRS portion of their annuity, and the Diet COLA (in this case 2.6 percent) on the FERS portion if they are 62 or older.
The drop in inflation — as measured by the Labor Department’s Consumer Price Index — won’t impact the upcoming COLA for 2012. That increase is based in the rise in the CPI from the third quarter of this year (the months of July, August and September) over the previous years’ third quarter.
All of the above — the retirement systems, the COLA systems, the age-based requirements — were designed by previous sessions of Congress and signed into law by presidents of both political parties. They are also the reason that a high percentage of reporters and editors who cover and follow civil service matters are subject to uncontrolled bursts of laughter at inappropriate times, or frequently burst into tears for no apparent reason.
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