NCPA - National Center for Policy Analysis

Excessive Cost-Of-Living Increases

January 17, 1997

Federal cost-of-living adjustments (COLAs) are out of control and should be reined in, a number of budget analysts contend. They say that millions of federal retirees receive multiple federal pensions and multiple COLAs.

  • More than 130,000 federal retirees get benefits from one pension alone which are larger than those of the average retired congressman.
  • Since 1957, all military retirees get Social Security in addition to their military pension.
  • According to the Social Security Administration, 73 percent of retired civil service beneficiaries also get Social Security.
  • The present value of the long-term cost for federal retirement is $1.8 trillion -- half of which is for cost of living increases.

The National Committee on Public Employee Pension Systems (PEPS) suggests this reform:

  • Grant COLAs only on the amount of federal pension income equivalent to the Social Security maximum benefit.
  • This adjustment would cut the future cost of federal pensions in half -- saving up to $900 billion.

Massachusetts has had a somewhat similar plan for 20 years.

Source: Hastings Keith (PEPS), "Cost of Luxury Adjustments," Washington Times, January 17, 1997.


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