About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

HEHS-95-219R 1 (1995-08-11)

handle is hein.gao/gaobackxi0001 and id is 1 raw text is: (3 O United States G AO() General Accounting Office Washington, D.C. 20548 Health, Education and Human Services Division B-261335 August 11, 1995 The Honorable Sam Gibbons Ranking Minority Member Committee on Ways and Means House of Representatives The Honorable Barbara B. Kennelly House of Representatives This letter responds to your inquiry about cost-of-living adjustments (COLA) to the benefits retirees receive from public and private pension plans. Two types of adjustments affect retirees' pensions: (1) cost-of-living adjustments, or COLAs, which are automatic, annual adjustments that primarily affect public sector pensions; and (2) postretirement benefit increases, which are COLAs provided at the employer's discretion. Both types of COLAs are used to increase benefit payments to offset inflation. Because inflation can severely reduce the purchasing power of retirees' pensions, COLAs are an important attribute of retirement benefits. For example, if inflation averages 5 percent each year, the purchasing power of a dollar falls by one-half in about 14 years. To help you in better understanding how COLAs are used, you specifically asked us for information on the frequency of use and characteristics of COLAs that federal pensions and Social Security, state and local governments, and private pension plans have paid retirees in recent years. To develop our information, we reviewed the available information on COLAs in public and private sector pension plans. Although many types of pension plans are available to retirees, we focused our work on defined benefit pension plans rather than on the other main category of pension plans--defined contribution plans--because defined contribution plans do not pay COLAs.1 We obtained the most 'A defined contribution plan, such as a 401(k) plan, generally specifies the level of employer and employee contributions to each employee's account. Benefits paid by the fund are determined by the amount of earnings in the fund at retirement. Distributions can occur in a lump sum or as an annuity. GAO/HEHS-95-219R Pension COLAs

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most