Retirees Will Receive a Cost-of-Living Increase of at Least 2 Percent

By Stephen Barr

Friday, October 17, 2003; Page B02

It's a COLA with some fizz.

The annual cost-of-living adjustment for retirees was announced yesterday by the government, and it breaks down this way:

Retirees covered by the Civil Service Retirement System and those with military and Foreign Service annuities will receive a 2.1 percent increase in their January retirement checks.

People who retired under the newer Federal Employees Retirement System and who are 62 or older will receive a 2 percent increase.

The increases reflect low inflation rates over the past year, but are higher than the 1.4 percent COLA that government retirees received this year.

The annual adjustment is an important part of the federal retirement system. The COLA goes to nearly 2.4 million federal retirees and survivors and about 1.89 million military retirees across the nation. About 320,700 federal civilian retirees and survivors and about 164,500 military retirees in the District, Virginia and Maryland will see their monthly checks rise.

According to the most recent data from the Office of Personnel Management, the median CSRS annuity is $1,867 a month. The 2.1 percent COLA will result in an increase of $39.21. The median FERS annuity is $501, which will go up by $10.02 with the 2 percent COLA increase.

The median monthly annuity paid to spouses of deceased retirees under CSRS and FERS is $913, OPM data show. That monthly check will also rise, depending on the retirement system.

Federal retiree COLAs are linked to the annual adjustment in Social Security benefits, which are going up by 2.1 percent next year. The average monthly Social Security check for an individual will rise from $903 to $922. For a couple receiving Social Security, the average monthly check will increase from $1,492 to $1,523, the Social Security Administration said.

Low-income federal retirees, however, may find much of their 2004 COLA eaten up by rising health care costs.

Premiums in the Federal Employees Health Benefits Program are increasing by an average of 10.6 percent next year. FEHBP enrollees who have self-only coverage will pay about $5 more biweekly; those with family coverage will pay $11.95 more biweekly.

The monthly Medicare Part B premium is jumping 13.5 percent in 2004, one of the largest increases in recent memory. The Part B premium, which covers physician services, outpatient hospital services and some home health care, is going up by $7.90, to $66.60 monthly.

COLAs are based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W, which covers households that represent about 32 percent of the population. Numerous retirees believe the index does not capture the rising costs they face for medical care, gasoline and food.

The National Association of Retired Federal Employees, a 400-member group, would prefer to see COLAs based on the Consumer Price Index for All Urban Consumers, the CPI-U, which covers about 87 percent of the population, including retirees and others not in the labor force.

"The fact that it is a broader base gives you a more accurate reflection," said Judy Park, the NARFE legislative director. Still, she acknowledged, "over time, there is not a huge difference in the two."

According to BLS data, the CPI-U rose by 27.6 percent during the September 1993 to September 2003 period. The CPI-W, the index used to compute retiree COLAs, rose 26.9 percent during that period.

The difference amounts to less than a dollar per $100 of retirement income, a BLS official said.

Talk Shows

Bethany Young Hardy, press secretary for the Partnership for Public Service, will discuss the winners of the 2003 Service to America Medals on "FEDtalk" at 11 a.m. today on federalnewsradio.com.

Emil Frankel, assistant secretary for transportation policy at the Transportation Department, will be the guest on "The Business of Government Hour" at 9 a.m. tomorrow on WJFK radio (106.7 FM).

"Do Union and Equal Employment Opportunity Procedures Work Against Employees?" will be the topic on the

Imagene B. Stewart call-in program at 8 a.m. Sunday on WOL radio (1450 AM).

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