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There will be a 0.3 percent cost-of-living adjustment (COLA) for civil service annuities, Social Security benefits and military retirement annuities in 2017.
Each year’s COLA is determined by comparing the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from year to year, based on the average of the third-quarter months of July, August and September. To trigger a COLA for the upcoming year, the average CPI-W for the third quarter must be greater than the highest previous third-quarter average.
The September CPI-W was 235.495. Combined with the CPI-W for July (234.771) and August (234.904), the 2016 third-quarter average is 235.057, or 0.3 percent greater than the average CPI-W for the third quarter of 2014, which was 234.242. Because there was no COLA for 2016, the 2014 third-quarter average continues to be the reference figure for determining the 2017 COLA.
NARFE continues to support strong COLAs based on fair assessments of increases in consumer prices to protect the value of federal annuities from inflation. NARFE specifically supports a switch to the Consumer Price Index for the Elderly (CPI-E), which would result in higher COLAs, and opposes a switch to the Chained CPI, which would result in lower COLAs.
As noted above, COLAs for federal retirement annuities, as well as for military retiree annuities and Social Security payments, are determined in reference to the CPI-W, which is calculated by economists and statisticians with the Bureau of Labor Statistics (BLS). The CPI-W is the current index used for measuring increases in the prices of consumer goods, including food and beverages, housing, clothing, transportation, medical care, recreation, education, communication and more. To learn more about how the BLS calculates the CPI-W, please click here.
Implications for Medicare Part B Premiums
A 0.3 percent COLA will cause a disproportionate increase in Medicare Part B premiums for many federal retirees, unless Congress acts. NARFE President Richard G. Thissen has called on both Congress and the Administration to prevent this unfair increase for federal retirees and millions of others. NARFE members (and others) can join him by sending a letter to their members of Congress.
Individuals receiving insurance benefits under the Federal Employees’ Compensation Act (FECA) received a 0.40 percent COLA in March 2016.
Because the December 2015 CPI-W figure (230.791) was 0.4 percent higher than the December 2014 CPI-W figure (229.909), FECA benefits increased 0.4 percent in March.
FECA COLAs are determined by a different statutorily set methodology than the COLA for federal retirees. Benefits awarded under FECA to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W.
Looking ahead to the 2017 FECA COLA, the September 2016 CPI-W figure (235.495) is 2.04 percent higher than the December 2015 CPI-W figure (230.791).
The Consumer Price Index for October 2016 is scheduled to be released on Thursday, November 17, 2016, at 8:30 a.m. (EDT).
|CPI-W||Monthly % Change||% Toward 2017 COLA|
NARFE (National Active and Retired Federal Employees Association)
606 N. Washington St., Alexandria, VA 22314, Phone: (703) 838-7760, Fax: (703) 838-7785.
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