John Sheely: Federal and Social Security pensioners beware
FOR the life of me I cannot understand how Congress without any quilt can continue to shaft the senior citizens. But they are about to do it again to those under Social Security and federal pensions if action is not taken soon.
First, let me tell you I have talked with many people on Social Security as well as federal retirees and active federal employees and very few know about this issue. The AARP has sent out several petitions to their members to sign and send back but still the subject is not hitting home.
The issue is as follows: Congress wants to change how Cost-Of-Living-Adjustments (COLA's) are computed for social security and federal pensions. Currently the government uses the CPI-W (Consumer Price Index) method but they want to change to the Chained CPI method. To save space, I won't go into how each works, but the bottom line is the Chained CPI will reduce any future COLAs for social security and federal pensions by 0.3 percent each year.
This may not sound like much but let me give you an example how that would have worked this year with the 1.7 percent COLA on social security and federal pensions.
If your monthly pension check was $1,250 in 2012, the 1.7 percent would raise it to $1,271.25 each month for 2013. If the Chained CPI had been in place the COLA would have been 1.4 percent and the monthly pension check would have been $1267.50 or $3.75 less each month and $45 less for the year.
Again, that might not seem like a big reduction, but if the COLA is the same next year, the difference increases to $7.61 a month and $91.32 for the year or a total of $136.32 lost pension money for the two years. And this keeps compounding year after year.
So you should now be getting the picture but just in case that doesn't get your attention, let me hit you with the following information.
Assume you have an annual federal pension of $15,000. After 5 years, 10 years and 15 years, the cumulative losses under the Chained CPI would be $728, then $2,936 and then $7,056.
For someone with a $30,000 annual pension those figures would be $1,456, $5,873 and $14,111.
So the longer you draw SS or a federal pension the more you lose.
So I ask the question for those under social security or a federal pension -- are you going to sit by and let this happen?
Please take the time to send a brief hand written note to your two Senators and Representative to let them know you expect them to vote against the Chained CPI.
Send any letters to their local state office because mail going to their Washington, D.C. offices can take several months and it could be too late by then.
In addition to the letters, telephone the U.S. Capitol switchboard at 202-224-3121 and ask the operator to transfer you to your Senator's office. You will need to repeat this for the other Senator and again for your representative.
Once you reach the particular Congressional office politely tell them your name, address, and telephone number. Then tell them you are either under social security or have a federal pension and that you expect the Senator or Representative to vote against the Chained CPI even if it is included in other legislation they would like to see pass.
This issue is likely to be in legislation that Congress shoves through in the next few weeks or months. So, if you don't mind losing more of your pension so Congress can balance the budget on your back, don't do anything.
If you care write your letters and make the telephone calls.
Sheely is a member of the National Active & Retired Federal Employees Association. He worked for the IRS for 37 years.