Q: Regarding the recent freeze on COLA, are these paid from appropriation type funds or from the “residuals” of the CSRS? Residuals being money made by the fund and that remain behind in the event the retiree dies before drawing all their contributions out as annuity payments? Even if a survivor gets half of the employee’s monthly payment, but still retired employee still has to buy an annuity for the survivor after retiring to keep health benefits. Just seems like lots of funds going in with only some coming out. I believe CSRS was established to run without appropriated funds and if true, my belief is that COLA should not have been frozen for CSRS retirees.
A: Your argument is based on a false premise.The amount of each COLA adjustment is determined by the average Consumer Price Index of Urban Wage Earners and Clerical Workers for the third quarter of each year over the third quarter CPI-W index of the previous year. If the index is negative, by law no COLA can be paid. In short, the amount of any year’s COLA is determined by the economy, not be contributions made by employees and their agencies.
