[Vision2020] Fwd: FW: 2012 COLA

[Tom Trail]

>Visionaries:  Good news for Federal Retirees.


Tom Trail

>
>Sent: Thursday, October 20, 2011 5:04 AM
>Subject: 2012 COLA
>
>A  2012 COLA to be applied to CSRS and FERS annuities - the CSRS 
>COLA will be 3.6% and the FERS COLA will be 2.6%.
>
>The COLA adjustment of annuities is discussed in Chapter 2 of the 
>CSRS and FERS Handbook, found at 
><http://www.opm.gov/retire/pubs/handbook/C002.pdf>http://www.opm.gov/retire/pubs/handbook/C002.pdf 
>.
>
>Cost-of-living adjustments (COLAs) for the Civil Service Retirement 
>System (CSRS) and the Federal Employees Retirement System (FERS) are 
>based on the rate of inflation as measured by the Consumer Price 
>Index for Urban Wage Earners and Clerical Workers (CPI-W), which is 
>published monthly by the Bureau of Labor Statistics.  As applicable 
>to CSRS and FERS, 5 U.S.C. 8331(15) provides that "'price index' 
>means the Consumer Price Index (all items - United States city 
>average) published monthly by the Bureau of Labor Statistics." 
> However, the BLS no longer publishes a CPI exactly as described in 
>that definition. Accordingly, the OPM uses the CPI for Urban Wage 
>Earners and Clerical Workers (CPI-W), as published monthly by the 
>BLS, selected to be the index most similar to the statutory 
>requirement. The CPI-W is also used by the Social Security 
>Administration as their indexing base
>
>COLAs for both CSRS and FERS are based on the percentage increase in 
>the CPI-W for the most recent third quarter (July-September) 
>compared to the most recent quarter upon which an increase was 
>based. If consumer prices as measured by the CPI-W do not increase 
>from the third quarter of one year to the third quarter of the next 
>year, there is no COLA for annuities paid under CSRS or FERS. For 
>example, from the third quarter of 2008 to the third quarter of 
>2009, the CPI-W fell by 2.1%. Therefore, there was no COLA under 
>either CSRS or FERS in December of 2009 (which would have been 
>reflected in the January checks).  The third quarter of 2008 will be 
>the base to which the third quarter of 2010 will be compared.
>
>Under both CSRS and FERS, the annual COLA increase, if any, is made 
>for annuities effective on December 1, appearing in the payment made 
>the first business day of January. Also, if an individual retires 
>during the year immediately preceding a COLA, the first COLA is 
>prorated.
>
>However, there are a couple of differences regarding COLAs under 
>CSRS and FERS.
>
>CSRS annuitants receive a COLA that is equal to the percentage 
>change in the CPI-W.  However, under FERS, the basic retirement 
>annuity is fully indexed if inflation is under 2% per year and 
>partially indexed if inflation exceeds 2%:
>
>          If the CPI-W increases by up to 2%, then the FERS annuity 
>increases by the same percentage.
>          If the CPI-W increases by 2% to 3%, the FERS annuity increases by 2%.
>          If the CPI-W increases by more than 3%, the FERS annuity 
>increases by the rise in the CPI-W minus one percentage point.
>
>All CSRS retirees and survivors receive COLAs. However, under FERS, 
>COLAs are applied only to annuities of retirees who are age 62 or 
>older, individuals who retired under specified special retirement 
>provisions (such as law enforcement officers and fire fighters), 
>individuals who retired by reason of disability, and to survivor 
>annuitants. Other FERS retirees receive no COLAs while they are 
>under age 62.
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-- 
Dr. Tom Trail
International Trails
1375 Mt. View Rd.
Moscow, Id. 83843
Tel:  (208) 882-6077
Fax:  (208) 882-0896
e mail ttrail at moscow.com
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