RRB, Social Security COLAs announced
Social Security and Railroad Retirement Tier I benefits are scheduled to rise 3.5%, and Railroad Retirement Tier II benefits will increase 1.1% next year, the largest increase under the nation's retirement system in nearly a decade, federal officials said.

At the same time, Medicare Part B premiums, now at $45.50 a month, will rise to $50 a month in 2001, according to the Health Care Financing Administration.

Tier II benefits are adjusted by 32.5% of the change in the Consumer Price Index (CPI).

Vested dual benefit payments and supplemental annuities also paid by the U.S. Railroad Retirement Board (RRB) are not adjusted for the rise in the CPI.

The average Railroad Retirement employee annuity will rise $37 a month to $1,418, and the average combined benefits for an employee and spouse will increase $53 a month to $2,043. For aged widow(er)s, the average survivor annuity will rise $25 a month to $851, the RRB said.

For Social Security beneficiaries, the average monthly benefit amount for all retired workers will rise from $816 to $845. The maximum federal SSI monthly payments to an individual will rise from $512 to $530.

Like Social Security benefits, Tier I and vested dual benefits paid to employees and spouses, and Tier I, Tier II and vested dual benefits paid to survivors may be subject to deductions if post-retirement earnings exceed certain exempt amounts.

Under legislation enacted in April 2000, the retirement earnings test no longer applies to people above the normal retirement age (NRA). The NRA is age 65 for those born before 1938, and it will gradually increase to age 67. One of two different exempt amounts apply, depending on the year an annuitant attains normal retirement age (NRA).

For those who attain the NRA in 2001, the exempt amount is $25,000. Otherwise the exempt amount in 2001 is $10,680

The board withholds $1 in benefits for every $2 of earnings in excess of the lower exempt amount, and withholds $1 in benefits for every $3 of earnings in excess of the higher exempt amount. Earnings in or after the month of NRA attainment do not count toward the retirement test.

Retired employees and spouses, regardless of age, who work for their last pre-retirement nonrailroad employer are also subject to an earnings deduction, in their Tier II and supplemental benefits, of $1 for every $2 in earnings up to a maximum reduction of 50%.

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