Cost Of Living Change

A proposal to alter cost-of-living adjustments in the president's 2014 budget request is causing heartburn with federal employees. President Barack Obama is proposing switching to the chained consumer price index or "chained CPI" to calculate COLAs to federal civilian and military retirement annuities, as well as Social Security, veterans' and disability insurance benefits. These benefits are currently determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPI-W. The National Association of Active and Retired Federal Employees says by using the chained CPI instead of the CPI-W, COLAs would be reduced by about 0.3 percent per year. Over time, that would mean benefits would be 3 percent lower after 10 years. NARFE offers a calculator to estimate how the proposal would reduce an earned federal annuity. The House Committee on Ways and Means Subcommittee on Social Security takes up the issue Thursday.