Retirees to Get Big Cost-of-Living Raise

Increases to be Reflected in January Annuity Checks

October 16, 2008

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Postal and federal workers who retired under the Civil Service Retirement System (CSRS) will soon receive the largest cost-of-living adjustment (COLA) in more than 25 years, and the COLA for the Federal Employee Retirement System (FERS) is its largest COLA ever, according to information released by the Department of Labor. The increases will become effective Dec. 1 and will be reflected in January annuity checks.

For CSRS annuitants the COLA will be 5.8 percent; for Federal Employee Retirement System FERS annuitants the increase will be 4.8 percent. Cost-of-living increases are granted to FERS employees once they reach age 62, except for disability, survivor benefits, and other special provisions.

“The COLA raises will provide welcome relief to retirees who have been struggling to keep up with recent spikes in the price of gas, food, and other necessities,” said APWU President William Burrus. “The cost-of-living increases are among the most important benefits our retirees receive, and they demonstrate how important it is for APWU retirees and other senior citizens to engage in political activity to protect these benefits.”

COLA Computations 

The CSRS COLA is based on the increase in the third quarter (July, August, and September) average of the Consumer Price Index for urban wage earners and clerical workers (CPI-W) over the same quarterly average from the previous year.

The FERS COLA also is based on the increase in the third quarter average of the CPI-W over the same quarterly average from the previous year, but the calculations differ:

When the increase in the CPI-W is 2 percent or less, the COLA is equal to the CPI-W increase. 

When the CPI-W increase is more than 2 percent but less than 3 percent, the COLA is 2 percent. 

When the CPI-W increase is 3 percent or more, the COLA is set at the increase minus one percent. 

“The cost-of-living formula for FERS retirees unfairly limits the increases they receive,” said APWU Retirees Department Director Judy Beard. “We will continue to fight so that all of our retirees receive annual cost-of-living adjustments regardless of their age or retirement option — and that those adjustments accurately reflect the increasingly high rates we pay for living expenses.”

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