THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, October 21, 1996 TAG: 9610190156
SECTION: BUSINESS WEEKLY PAGE: 08 EDITION: FINAL
SOURCE: BY MIKE CAUSEY, THE WASHINGTON POST
DATELINE: WASHINGTON LENGTH: 79 lines
Areas where there are plenty of retired feds as well as military personnel will get a massive jolt of the green stuff from Uncle Sam in January. The retiree raises will come just as active duty feds and military people are getting a similar - but different - raise.
All the retirees will get a 2.9 percent cost of living adjustment next year. Federal and military personnel can expect a pay raise of about 3 percent.
This will be the first time in several years the retired feds got a COLA in January instead of April. Four years ago the then Democrat-controlled Congress ordered a ``temporary'' three-month delay in federal retiree COLAs as part of a budget-cutting exercise.
That ``temporary'' delay was scheduled to end this year. But early this year, the Republican-controlled Congress (with the blessings of the White House) recommended that the April COLA pay date for federal retirees remain in effect through the year 2002.
But Congress failed to act on the legislation that would have continued the COLA delay allowing it to revert to January.
The 2.9 percent adjustment is similar to - but not the same as - the raise for federal workers, although politicians, the media and many workers and retirees incorrectly refer to both as a COLA. In fact, the retiree raise is a COLA while adjustments for federal workers are still largely determined by budgetary and political considerations.
Under the 1990 pay law, federal workers are due a total pay increase (including national and locality adjustments) of nearly 6 percent in January. But an escape clause in the law allows the President to set a different (usually lower) amount, which goes in effect unless overruled by Congress.
President Clinton proposed that feds will get a national adjustment in January of 2.3 percent. At the end of November he is expected to authorize locality increases that will average 0.7 percent. That will bring the total 1997 raise - for most feds - to 3 percent.
Federal workers have two can't-miss, don't-mess-up events next month. They are - forgive me, political junkies - probably a lot more important to individual feds than the presidential, congressional and local elections that also happen to occur in November.
One involves 1997 health coverage for workers and family members. The other is a critical long-range decision that could make the difference between a retirement spent in comfort or one where every day is a miserable battle of penny-pinching.
The start of the November this-is-your-life hunting season is when feds must make decisions involving their emotional, financial and physical health. Example:
The health insurance hunting season runs from Nov. 11 through Dec. 9. Five million federal workers and retirees must pick a health plan. That group includes dependent children, ex-spouses, new workers who just turned 18 and several hundred former workers who are past age 100. The government's health insurance program is the nation's biggest.
Careful shoppers can easily save hundreds of dollars next year (by picking the right plan), yet still get the best coverage available for everything from routine checkups and dental visits to catastrophic illness or accident.
During the open season, we will have a series of columns in which specialists will evaluate the plans by cost and coverage for singles, family members, retirees with and without Medicare, people looking for the best dental and mental benefits, and those needing specialized or nontraditional care.
All the federal health plans are good, and there is no single ``best'' plan. But some have gaps, and others are simply too expensive. We'll keep you up to date.
From Nov. 15 to Jan. 31, feds will have an open season when they can join their tax-deferred thrift savings plan or reallocate where future payroll contributions will go in the government 401(k) plan.
Because of the impressive gains in recent years in the savings plan's stock index fund (C-fund), some financial planners now believe that workers invested in that fund over a full career will get half their total retirement income from that investment and earnings.
We'll also have a series of columns during the savings plan open season featuring advice from specialists on the best strategy for workers based on their age, salary, risk tolerance and long-range goals.
KEYWORDS: MILITARY RETIREE PAY RAISE by CNB