§8462 Cost-of-living Adjustments

Summary

Annuities from this fund are checked each year and may be raised on December 1 when the cost-of-living index has gone up. The "base quarter" is the three months ending September 30, and the quarter's index is the average of those three months. The percent change is found by taking the difference between that quarter’s index and the index for the last year an increase was made, dividing by the earlier index, and multiplying by 100. If an increase is due, the raise on December 1 is set this way: if the percent change is 3% or less, the raise equals the smaller of the percent change (rounded to the nearest 0.1%) or 2%; if the percent change is more than 3%, the raise equals the percent change (rounded to the nearest 0.1%) minus 1%. A raise happens only when the base quarter index is higher than it was the last time an increase was made. Whether an annuity gets a raise depends on its start date on the effective date. First-time raises may be prorated by month (one-twelfth of the percent change times up to 12 months). Survivors (other than certain children or special cases) get the same total percent increases the deceased annuitant received. An annuitant under 62 at the time an increase would start generally does not get that increase, with some limited exceptions described in other sections. After a raise, the monthly payment is rounded down to the next dollar but must go up by at least $1. Also, the $15,000 figure mentioned in section 8442(b)(1)(A)(ii) is increased at the same time and by the same percent as these annuity increases.