While we won’t know until October how much of a Cost of Living Adjustment (COLA) there will be for federal retires in 2018, it’s not too early to begin tracking consumer prices and their impact on COLA payments.
Current federal retiree annual COLAs to annuities are based on the CPI-W, or Consumer Price Index for Urban Wage Earners and Clerical Workers. Military retirees and Social Security recipients also see their monthly payments adjusted annually by this same index. Measured by the Bureau of Labor Statistics, the CPI-W is designed to track the prices paid by consumers through detailed surveys for all goods and services, including shelter, food, utilities, transportation, medical care, apparel, vehicles and user fees.
The new CPI-W increased 0.08 percent in March 2017. For the third quarter of 2016, there has been a 1.11 percent higher than the average CPI-W, which will be used to determine the 2018 COLA. While the 2018 COLA amount is still unknown, at this half-way point, federal retirees are on track to receive a higher COLA in 2018 than the 0.3 percent COLA to their civil service annuities in January 2017.
Over the years, there have been a variety of calls to change the way COLAs are calculated for retirement benefits or to eliminate them entirely. NTEU constantly fights to retain COLAs for federal retirees, and we are carefully watching Congress and the administration. Some in Congress have proposed abandoning the CPI-W and replacing it with the Chained CPI, which would not protect pensions against inflation. NTEU will continue to oppose any harmful changes to how COLAs are calculated.