Upcoming Cost-of-Living Adjustment (COLA) for Social Security beneficiaries and federal annuitants. Plus, proposed legislation about both COLA and leave.
COLAs for federal retirees’ pension income and social security benefits are linked to inflation, which is measured by one of the Consumer Price Indices (CPI). The one that affects FERS, CSRS, and Social Security COLAs is the CPI for Urban and Clerical Workers, referred to as “CPI-W.” If the CPI-W goes up during the Fiscal Year 2023 (10/1/22 – 9/30/23), then there is a COLA. If inflation stays the same or decreases, there is no COLA.
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The net inflation so far (as of January 31st) for the fiscal year is 0.6% – indicating there might be a COLA much lower than the 2023 COLA, which resulted from an 8.7% increase in the CPI-W in FY 2022. We’ll see how the price index moves in the remaining nine months.
Proposed Legislation
Legislation has been introduced in Congress that would impact both federal employees’ leave options and COLAs for FERS retirees. Regarding COLAs, the “Equal COLA Act” was re-proposed around February 8th by Representative Connolly (D-VA), who first introduced it in 2021. Currently, if the COLA for CSRS and Social Security is 3% or more, retired feds who receive a pension under FERS get a COLA equal to the CPI-W index increase minus 1%. If inflation is between 2% or 2.99% – FERS annuitants receive a flat 2% COLA. The reintroduced act would eliminate this and make the FERS COLA equal to the CPI-W index increase, just like the Social Security and CSRS adjustments.
Unrelated to COLAs, but still significant to feds, another bill introduced this month was the Comprehensive Paid Leave for Federal Employees Act. If passed, this would give feds up to twelve weeks of paid leave each year to deal with a personal health condition, to care for a family member with a medical situation, or to handle circumstances surrounding a family member’s call to active duty. Right now, feds can take unpaid medical leave for such purposes, but there is only paid leave available for the birth or adoption of a new child.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
