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Articles | REPORT: Difference Between Increases in Federal Employee Pay and Retiree COLAs
REPORT: Difference Between Increases in Federal Employee Pay and Retiree COLAs
January 27, 2010
Pay increases for current federal employees and cost-of-living adjustments
(COLAs) for retired federal employees often differ because they are based on
changes in different economic variables, according to a new report released this
month by the Congressional Research Service.
"Increases in pay for civilian federal workers are indexed to wage and salary
increases in the private sector, as measured by the Employment Cost Index (ECI),
whereas federal retirement and disability benefits are indexed to price
increases as measured by the Consumer Price Index (CPI)," the report notes.
In 2010, there was no COLA for recipients of Social Security benefits or
federal civil service pensions because the price level as measured by the CPI
fell between 2008 and 2009.
"Because COLAs for retirees do not reflect increases in the productivity of
people who are still in the work force, COLAs do not make retirees financially
better off. COLAs merely protect retirees from becoming financially worse-off as
prices rise over time," the report indicates.
Overview - CSRS
