Cost-of-Living Adjustment Processes for Federal Annuities Need To Be Changed

FPCD-76-80: Published: Jul 27, 1976. Publicly Released: Jul 27, 1976.

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GAO commented on the cost-of-living adjustment processes to the Federal annuity system The comments are generally limited to the civil service retirement system, since it is the largest system and often leads the other systems to change. Most of the observations also pertain to the other Federal systems.

The cost-of-living adjustment processes for Federal retirement annuities have resulted in annuities increasing faster than the cost-of-living and Federal white-collar pay rates. This has been caused by the extra 1-percent increase granted to annuitants by law each time their annuities are adjusted for increases in the cost of living. The Federal annuity adjustment processes are more liberal than those of non-Federal pension systems. Existing law also permits new retirees to benefit from increases in the cost-of-living which occurred long before they retired.

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