Bill Overview
Title: Equal COLA Act
Description: This bill revises the formula used to calculate the cost-of-living adjustment for annuities paid under the Federal Employees Retirement System.
Sponsors: Sen. Padilla, Alex [D-CA]
Target Audience
Population: Federal employees and retirees under the Federal Employees Retirement System
Estimated Size: 2470000
- The bill affects the cost-of-living adjustment (COLA) for annuities under the Federal Employees Retirement System (FERS).
- FERS is one of the two main retirement systems for United States federal employees, the other one being the Civil Service Retirement System (CSRS).
- As of recent data, there are approximately 2.6 million federal civilian employees in the U.S.
- Not all federal employees are under FERS; it primarily covers employees hired after 1983.
- Approximately 95% of current federal employees are under FERS.
- This means FERS covers at least 2.47 million federal employees plus federal retirees already under this system.
Reasoning
- The policy impacts federal employees and retirees under FERS. Some may see a direct impact on their retirement benefits through adjusted COLA rates, while others, especially those not yet retired, may not feel the immediate effects but expect long-term changes to their retirement planning.
- Considering the budget constraints, the policy may directly influence those retirees receiving annuities, expecting modest annual per-annuitant adjustments given the budget spread over a large population.
- Because FERS primarily affects U.S. federal employees and retirees, our interviews focus on both demographics in diverse geographic and socioeconomic contexts.
- Many federal employees are spread throughout various agencies, and their occupational backgrounds can influence their perspectives on retirement benefits and policies impacting them.
- Since the policy is specific to cost-of-living adjustments, individuals in areas with high costs of living may perceive the policy more positively or negatively, depending on their COLA experience.
Simulated Interviews
Retired Federal Employee (Washington, D.C.)
Age: 65 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This policy seems necessary as living expenses continue to climb.
- The adjustment might help maintain my current standard of living in such an expensive city.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 6 | 5 |
Current Federal Employee (Texas)
Age: 52 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- I'm not retiring soon, but it's reassuring to know that my future annuities could be better protected against inflation.
- I hope this adjustment makes the government more attractive to potential employees.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 6 |
Retired Federal Employee (California)
Age: 70 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Good to see these adjustments being made, they certainly help with the rising costs here in California.
- I've seen many colleagues struggle with fixed incomes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 5 |
| Year 20 | 7 | 4 |
Federal Wildlife Biologist (Montana)
Age: 45 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- Any improvement to future financial stability in retirement is welcome, especially given economic uncertainties.
- Small changes now could mean better security when I retire.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 6 |
Retired Federal Employee (Colorado)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The adjustment might make a significant difference in helping me cover healthcare costs.
- I hope the government continues to recognize the needs of retirees like myself.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Federal Research Analyst (New York)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I'm glad the government is taking steps to ensure that our benefits will keep up with inflation when I'm ready to retire.
- It's a long-term benefit that many might not think about now but is crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 8 | 7 |
Retired Federal Engineer (Florida)
Age: 61 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- These COLA adjustments are much needed, especially in a fixed-income retirement scenario.
- Retirees need to keep pace with inflation, especially with healthcare and housing costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 6 | 5 |
Federal Correctional Officer (Ohio)
Age: 46 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- Even though I won't notice an immediate change, it's important for securing a fair retirement package.
- Policy adjustments like these show a commitment to federal workers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 7 | 6 |
Retired Federal Nurse (Arizona)
Age: 68 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This increase might help me afford better care, considering how expensive healthcare has become.
- I am relieved the government is recognizing our increased expenses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 5 | 4 |
Federal IT Specialist (Illinois)
Age: 55 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- Although it won't impact me right away, any boost to future financial security is beneficial.
- Especially working in tech, understanding the need for constant updates applies here too.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $5000000000 (Low: $4000000000, High: $6000000000)
Year 2: $5250000000 (Low: $4200000000, High: $6300000000)
Year 3: $5512500000 (Low: $4410000000, High: $6615000000)
Year 5: $6050625000 (Low: $4845000000, High: $7267500000)
Year 10: $7689031250 (Low: $6150000000, High: $9225000000)
Year 100: $100000000000 (Low: $80000000000, High: $120000000000)
Key Considerations
- Potential changes in inflation and wage growth will affect the COLA magnitude and, thus, overall costs.
- The bill's long-term fiscal impact depends on demographic factors and how they influence the federal workforce and retiree distributions.