RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

COLA 2009 UPDATE August 29, 2008

Posted by Service Officer on August 29th, 2008

In a story posted earlier this month, 2009 COLA was listed at 2.8%. That was dated information provided by Sen. Daniel Akaka (D-HI), Chairman of the Senate Committee on Veterans’ Affairs and not reflective of the impact on inflation the oil crises has generated this year. The first bad news item is inflation jumped 0.5% for the month of July. The higher cost of living is primarily the result of the ripple effect (on food and other items) because of the high price of oil. The good news is that federal and postal retirees under the old CSRS retirement system, retired military people and folks who get Social Security payments are now due a JAN 08 cost of living adjustment of 6.2%. Last month the 2008 COLA had hit the 5.7% level. The second round of bad news involves retired Americans who don’t get a federal or military retirement benefit. Most of them don’t qualify for any kind of pension from their former employer. Of those that do get a pension, the rise in living costs has no effect on that benefit. The overwhelming majority of those pensions were frozen at the time of retirement.

How much the January federal-military-Social Security COLA be depends on how much living costs rise (or not) this month and again in September. The COLA is based on the change in the Consumer Price Index from the third quarter of the current year (2008) over the CPI level for the third quarter of the previous year. In this case 2007. That means if the CPI holds steady for August and September the COLA payment will be 6.2%. If the CPI goes up either or both months the COLA will increase accordingly. If the CPI should decline the COLA will be adjusted according. Meaning it could, in theory, be less than 6.2%. But there would still be an increase. If you would like to run the numbers for yourself, check out this explanation from the National Active and Retired Federal Employees NARFE website www.narfe.org/departments/leg/guest/articles.cfm?ID=942 . It also gives the projected COLA increase for employees retired under the FECA program. [Source: Mike Causey’s Federal Report 15 Aug 08 ++]

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