II

104TH CONGRESS

1ST SESSION S. 822

To provide for limitations on certain retirement cost-of-living adjustments,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 18 (legislative day, MAY 15), 1995

Mr. KERREY (for himself and Mr. SIMPSON) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To provide for limitations on certain retirement cost-of-living

adjustments, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. LIMITATION IN COST-OF-LIVING ADJUSTMENTS

4 FOR CERTAIN RETIREMENT SYSTEMS.

5 (a) SOCIAL SECURITY.—

6 (1) REDUCTION IN INCREASES APPLIED TO

7 HIGHER PRIMARY INSURANCE AMOUNTS.—Section

8 215(i)(2)(A) of the Social Security Act (42 U.S.C.

9 415(i)(2)(A)) is amended—
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1 (A) by redesignating clause (iii) as clause

2 (vii); and

3 (B) in clause (ii), by striking ‘‘The in4 crease shall’’ in the matter following subclause

5 (III) and all that follows through ‘‘Any in6 crease’’ and inserting the following:

7 ‘‘(iii) With respect to the amounts described in

8 subclauses (I) and (III) of clause (ii), the increase shall

9 be derived by multiplying each of such amounts (including

10 each of those amounts as previously increased under this

11 subparagraph) by the applicable increase percentage.

12 ‘‘(iv) With respect to primary insurance amounts de13 scribed in subclause (II) of clause (ii), the increase shall

14 be derived by—

15 ‘‘(I) multiplying each of such amounts (includ16 ing each such amount as previously increased under

17 this subparagraph) by the applicable increase per18 centage,

19 ‘‘(II) determining among all such amounts as

20 increased under subclause (I) the primary insurance

21 amount which is at the 30th percentile of such

22 amounts, and

23 ‘‘(III) reducing each primary insurance amount

24 as increased under subclause (I) to the sum of such

25 amount determined as if there had been no reduc-
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1 tion in such amount under this subclause in any pre2 ceding year and the amount of the increase under

3 subclause (I) in the primary insurance amount de4 scribed in subclause (II).

5 ‘‘(v) Any amount increased under clause (iii) or

6 clause (iv) which is not a multiple of $0.10 shall be de7 creased to the next lower multiple of $0.10.

8 ‘‘(vi) Any increase’’.

9 (2) CONFORMING AMENDMENT.—The last sen10 tence of section 215(a)(4) of such Act (42 U.S.C.

11 415(a)(4)) is amended, in subclause (I), by striking

12 ‘‘clause (iii) of subsection (i)(2)(A)’’ and inserting

13 ‘‘clause (vii) of subsection (i)(2)(A)’’.

14 (3) CONFORMING AMENDMENTS TO MAINTAIN

15 CURRENT LEVELS OF COST-OF-LIVING ADJUSTMENT

16 UNDER OTHER PROGRAMS.—

17 (A) SUPPLEMENTAL SECURITY INCOME

18 FOR THE AGED, BLIND, AND DISABLED.—Sec19 tion 1617(a)(2) of the Social Security Act (42

20 U.S.C. 1382f(a)(2)) is amended by striking ‘‘by

21 the same percentage’’ and all that follows

22 through ‘‘percentage,’’ and inserting the follow23 ing: ‘‘by the applicable increase percentage

24 (within the meaning of section 215(i)(1)(C))

25 used in determining the amount by which bene-
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1 fit amounts under title II are increased for such

2 month’’.

3 (B) SUPPLEMENTARY MEDICAL INSUR4 ANCE.—Section 1839(a)(3)(B) of such Act (42

5 U.S.C. 1395r(a)(3)(B)) is amended by striking

6 ‘‘by a percentage’’ and all that follows through

7 ‘‘November 1’’ and inserting the following: ‘‘by

8 the applicable increase percentage (within the

9 meaning of section 215(i)(1)(C)) used in deter10 mining the amount by which benefit amounts

11 under title II are increased for the month of

12 December preceding the year of the promulga13 tion’’.

14 (C) CERTAIN VETERAN’S BENEFITS.—Sec15 tion 3112 of title 38, United States Code, is

16 amended—

17 (i) in subsection (a), by striking ‘‘by

18 the same percentage by which such benefit

19 amounts are increased’’ and inserting ‘‘by

20 the applicable increase percentage (within

21 the meaning of section 215(i)(1)(C) of

22 such Act) used in determining the amount

23 by which such benefit amounts are in24 creased’’; and
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1 (ii) in subsection (b)(1), by striking

2 ‘‘by the same percentage as the percentage

3 by which such benefit amounts are in4 creased’’ and inserting ‘‘by the applicable

5 increase percentage (within the meaning of

6 section 215(i)(1)(C) of such Act) used in

7 determining the amount by which such

8 benefit amounts are increased’’.

9 (D) COST-OF-LIVING ADJUSTMENTS TO

10 LIMITATIONS ON BENEFITS AND CONTRIBU11 TIONS UNDER QUALIFIED PLANS.—Subsection

12 (d) of section 415 of the Internal Revenue Code

13 of 1986 (relating to cost-of-living adjustments)

14 is amended by striking ‘‘section 215(i)(2)(A)’’

15 and inserting ‘‘section 215(i)(2)(A)(iii)’’.

16 (4) AMENDMENT TO PRIOR APPLICABLE LAW.—

17 Section 215(i)(4) of the Social Security Act (42

18 U.S.C. 415(i)(4)) is amended by adding at the end

19 the following new sentence: ‘‘The Secretary shall

20 provide by regulation for the continued application

21 of this subsection as in effect in December 1978 as

22 provided by the preceding provisions of this para23 graph and the amendments referred to therein. Such

24 regulations shall provide for the application of the

25 amendments to the preceding provisions of this sub-
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1 section made by section 2 of the COLA Limitation

2 Act of 1995 so as to have the same effect on the

3 corresponding provisions of this subsection as in ef4 fect in December 1978 and applicable in accordance

5 with this paragraph.’’.

6 (b) CIVIL SERVICE RETIREMENT SYSTEM.—Section

7 8340 of title 5, United States Code, is amended by adding

8 at the end the following new subsection:

9 ‘‘(h)(1) An annuity shall not be increased by reason

10 of any adjustment under this section by an amount which

11 exceeds the lesser of—

12 ‘‘(A) the amount that would apply if not for the

13 provisions of this subsection; or

14 ‘‘(B) the amount determined under paragraph

15 (2)(B).

16 ‘‘(2) With respect to the amount described under

17 paragraph (1)(B), the increase under this section shall be

18 derived by—

19 ‘‘(A) multiplying the amount of each annuity to

20 which this section applies by the applicable percent21 age increase under subsection (b); and

22 ‘‘(B) determining among all such amounts as

23 increased under subparagraph (A) the annuity in24 crease amount which is at the 30th percentile of all

25 such amounts.
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1 ‘‘(3) Any amount determined under paragraph (2)(B)

2 which is not a multiple of $0.10 shall be decreased to the

3 next lower multiple of $0.10.’’.

4 (c) FEDERAL EMPLOYEES RETIREMENT SYSTEM.—

5 Section 8462 of title 5, United States Code, is amended

6 by adding at the end the following new subsection:

7 ‘‘(f)(1) An annuity shall not be increased by reason

8 of any adjustment under this section by an amount which

9 exceeds the lesser of—

10 ‘‘(A) the amount that would apply if not for the

11 provisions of this subsection; or

12 ‘‘(B) the amount determined under paragraph

13 (2)(B).

14 ‘‘(2) With respect to the amount described under

15 paragraph (1)(B), the increase under this section shall be

16 derived by—

17 ‘‘(A) multiplying the amount of each annuity to

18 which this section applies by the applicable percent19 age increase under subsection (b); and

20 ‘‘(B) determining among all such amounts as

21 increased under subparagraph (A) the annuity in22 crease amount which is at the 30th percentile of all

23 such amounts.
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1 ‘‘(3) Any amount determined under paragraph (2)(B)

2 which is not a multiple of $0.10 shall be decreased to the

3 next lower multiple of $0.10.’’.

4 (d) RETIRED AND FORMER MEMBERS OF THE

5 ARMED FORCES.—

6 (1) IN GENERAL.—Section 1401a(b) of title 10,

7 United States Code, is amended—

8 (A) in paragraph (1), by striking ‘‘para9 graphs (2) and (3)’’ and inserting ‘‘paragraphs

10 (2), (3), and (5)’’;

11 (B) by redesignating paragraph (5) as

12 paragraph (6); and

13 (C) by inserting after paragraph (4) the

14 following new paragraph:

15 ‘‘(5) OVERALL LIMITATION.—

16 ‘‘(A) IN GENERAL.—With respect to the

17 retired pay of a member or former member who

18 is entitled to an adjustment under paragraph

19 (2) or (3), the retired pay shall not be increased

20 by reason of any adjustment under such para21 graph by an amount which exceeds the lesser

22 of—

23 ‘‘(i) the amount that would apply if

24 not for the provisions of this paragraph; or
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1 ‘‘(ii) the amount determined under

2 subparagraph (B)(ii).

3 ‘‘(B) AMOUNT FOR CERTAIN PERCENT4 ILE.—With respect to the amount described

5 under subparagraph (A)(ii), the increase under

6 paragraph (2) or (3) shall be derived by—

7 ‘‘(i) multiplying the amount of each

8 retired pay amount to which such para9 graph applies by the applicable percentage

10 increase under such paragraph; and

11 ‘‘(ii) determining among all such

12 amounts as increased under clause (i) the

13 retired pay increase amount which is at

14 the 30th percentile of all such amounts.’’.

15 (2) CONFORMING AMENDMENTS.—

16 (A) Section 1410(1) of such title is amend17 ed by striking ‘‘section);’’ and inserting ‘‘sec18 tion), subject to paragraph (5) of that section;’’.

19 (B) Section 1434(e) of such title is amend20 ed by striking ‘‘increase.’’ and inserting ‘‘in21 crease, subject to the limitation described in

22 section 1401a(b)(5) as applied to annuity

23 amounts under this subsection.’’.

24 (C) Section 1451(g)(1) of such title is

25 amended by striking ‘‘pay).’’ and inserting
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1 ‘‘pay), subject to the limitation described in sec2 tion 1401a(b)(5) as applied to annuity amounts

3 under this subsection.’’.

4 (D) Section 1451(h)(1) of such title is

5 amended by striking ‘‘increased.’’ and inserting

6 ‘‘increased, subject to the limitation described

7 in section 1401a(b)(5) as applied to base

8 amounts under this subsection.’’.

9 (E) Section 1457(d)(1) of such title is

10 amended by striking ‘‘Plan.’’ and inserting

11 ‘‘Plan, subject to the limitation described in

12 section 1401a(b)(5) as applied to annuity

13 amounts under this subsection.’’.

14 (e) EFFECTIVE DATE.—The amendments made by

15 this section shall apply with respect to adjustments effec16 tive with months after the date of the enactment of this

17 Act.

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