Congress and the White House can and have blocked federal pay raises. But since January, adjustments for retirees are linked to inflation — they can’t touch the former feds!
Or can they?
Short answer: Yep!
Of all the legislative threats facing active/retired feds, the least visible (and worst) is probably the most likely to happen to them. A lobbyist compared it to an alligator lurking in a deep, dark swamp. “All you can see are the eyes, until it’s gotcha!”
This creature from the black lagoon is called the “chained CPI.” If it were used to determine future cost-of-living adjustments for retirees, they would get slightly smaller raises each year. Nothing you would notice at first, then, wham!
Many members of Congress, and the White House love it. Switching to the chained CPI to determine future inflation-triggered raises for retirees would, over time, save the government billions of dollars.
Experts say the new measure, if it becomes law, would slowly but surely reduce the value of each future COLAs for retirees. By some estimates, switching to the chained CPI to calculate retiree living costs would trim about $3 per month off the likely 2014 rise in Social Security payments. Over a decade, the slightly smaller chained-CPI raises would total about $30 less per month than under the current CPI system. Because their annuities are generally higher than Social Security benefits, the impact on federal-postal-military retirees would be greater. All would continue to get COLAs, but they would be smaller.
Groups like the National Active and Retired Federal Employees and AARP are dead set against the chained CPI. They say retirees have sacrificed enough, and that switching the way inflation is measured would hurt retirees because it doesn’t take into account certain realities, like their higher medical costs.
Each side in the chained CPI argument says understanding it proves they are right.
By far, most of the comments we’ve gotten — as you would expect from a largely federal audience — are anti-chained CPI. And they’ve been good arguments from people who signed on, believe they had a contract with Uncle Sam and don’t expect him to change the rules now.
But there are some who see it another way. Here are a few:
“I am a dedicated federal worker, and I am also a dedicated U.S. citizen and, lest we forget, a long-time taxpayer. I understand the concept of the chained CPI and while I must disagree with some of the assumptions, I think anything that would save so much money at such a slight cost to retirees, is worth trying. Let’s give it a try. I’m retiring Dec. 31. Bring it on!” — Will With The Air Force
“The chained CPI makes as much sense as other things we have tried. I have a lot of problems with the BLS (Bureau of Labor Statistics) method of measuring inflation and with its market-basket of good. However, the current system appears to be overstating inflation, therefore producing overly generous retiree COLAs.” — Roger F.
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