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.

To read full the report, go to: href="http://opencrs.com/document/94-971/">http://opencrs.com/document/94-971/