A bill to provide for limitations on certain retirement cost-of-living adjustments, and for other purposes.

SECTION 1. LIMITATION IN COST-OF-LIVING ADJUSTMENTS FOR CERTAIN 
              RETIREMENT SYSTEMS.

    (a) Social Security.--
            (1) Reduction in increases applied to higher primary 
        insurance amounts.--Section 215(i)(2)(A) of the Social Security 
        Act (42 U.S.C. 415(i)(2)(A)) is amended--
                    (A) by redesignating clause (iii) as clause (vii); 
                and
                    (B) in clause (ii), by striking ``The increase 
                shall'' in the matter following subclause (III) and all 
                that follows through ``Any increase'' and inserting the 
                following:
    ``(iii) With respect to the amounts described in subclauses (I) and 
(III) of clause (ii), the increase shall be derived by multiplying each 
of such amounts (including each of those amounts as previously 
increased under this subparagraph) by the applicable increase 
percentage.
    ``(iv) With respect to primary insurance amounts described in 
subclause (II) of clause (ii), the increase shall be derived by--
            ``(I) multiplying each of such amounts (including each such 
        amount as previously increased under this subparagraph) by the 
        applicable increase percentage,
            ``(II) determining among all such amounts as increased 
        under subclause (I) the primary insurance amount which is at 
        the 30th percentile of such amounts, and
            ``(III) reducing each primary insurance amount as increased 
        under subclause (I) to the sum of such amount determined as if 
        there had been no reduction in such amount under this subclause 
        in any preceding year and the amount of the increase under 
        subclause (I) in the primary insurance amount described in 
        subclause (II).
    ``(v) Any amount increased under clause (iii) or clause (iv) which 
is not a multiple of $0.10 shall be decreased to the next lower 
multiple of $0.10.
    ``(vi) Any increase''.
            (2) Conforming amendment.--The last sentence of section 
        215(a)(4) of such Act (42 U.S.C. 415(a)(4)) is amended, in 
        subclause (I), by striking ``clause (iii) of subsection 
        (i)(2)(A)'' and inserting ``clause (vii) of subsection 
        (i)(2)(A)''.
            (3) Conforming amendments to maintain current levels of 
        cost-of-living adjustment under other programs.--
                    (A) Supplemental security income for the aged, 
                blind, and disabled.--Section 1617(a)(2) of the Social 
                Security Act (42 U.S.C. 1382f(a)(2)) is amended by 
                striking ``by the same percentage'' and all that 
                follows through ``percentage,'' and inserting the 
                following: ``by the applicable increase percentage 
                (within the meaning of section 215(i)(1)(C)) used in 
                determining the amount by which benefit amounts under 
                title II are increased for such month''.
                    (B) Supplementary medical insurance.--Section 
                1839(a)(3)(B) of such Act (42 U.S.C. 1395r(a)(3)(B)) is 
                amended by striking ``by a percentage'' and all that 
                follows through ``November 1'' and inserting the 
                following: ``by the applicable increase percentage 
                (within the meaning of section 215(i)(1)(C)) used in 
                determining the amount by which benefit amounts under 
                title II are increased for the month of December 
                preceding the year of the promulgation''.
                    (C) Certain veteran's benefits.--Section 3112 of 
                title 38, United States Code, is amended--
                            (i) in subsection (a), by striking ``by the 
                        same percentage by which such benefit amounts 
                        are increased'' and inserting ``by the 
                        applicable increase percentage (within the 
                        meaning of section 215(i)(1)(C) of such Act) 
                        used in determining the amount by which such 
                        benefit amounts are increased''; and
                            (ii) in subsection (b)(1), by striking ``by 
                        the same percentage as the percentage by which 
                        such benefit amounts are increased'' and 
                        inserting ``by the applicable increase 
                        percentage (within the meaning of section 
                        215(i)(1)(C) of such Act) used in determining 
                        the amount by which such benefit amounts are 
                        increased''.
                    (D) Cost-of-living adjustments to limitations on 
                benefits and contributions under qualified plans.--
                Subsection (d) of section 415 of the Internal Revenue 
                Code of 1986 (relating to cost-of-living adjustments) 
                is amended by striking ``section 215(i)(2)(A)'' and 
                inserting ``section 215(i)(2)(A)(iii)''.
            (4) Amendment to prior applicable law.--Section 215(i)(4) 
        of the Social Security Act (42 U.S.C. 415(i)(4)) is amended by 
        adding at the end the following new sentence: ``The Secretary 
        shall provide by regulation for the continued application of 
        this subsection as in effect in December 1978 as provided by 
        the preceding provisions of this paragraph and the amendments 
        referred to therein. Such regulations shall provide for the 
        application of the amendments to the preceding provisions of 
        this subsection made by section 2 of the COLA Limitation Act of 
        1995 so as to have the same effect on the corresponding 
        provisions of this subsection as in effect in December 1978 and 
        applicable in accordance with this paragraph.''.
    (b) Civil Service Retirement System.--Section 8340 of title 5, 
United States Code, is amended by adding at the end the following new 
subsection:
    ``(h)(1) An annuity shall not be increased by reason of any 
adjustment under this section by an amount which exceeds the lesser 
of--
            ``(A) the amount that would apply if not for the provisions 
        of this subsection; or
            ``(B) the amount determined under paragraph (2)(B).
    ``(2) With respect to the amount described under paragraph (1)(B), 
the increase under this section shall be derived by--
            ``(A) multiplying the amount of each annuity to which this 
        section applies by the applicable percentage increase under 
        subsection (b); and
            ``(B) determining among all such amounts as increased under 
        subparagraph (A) the annuity increase amount which is at the 
        30th percentile of all such amounts.
    ``(3) Any amount determined under paragraph (2)(B) which is not a 
multiple of $0.10 shall be decreased to the next lower multiple of 
$0.10.''.
    (c) Federal Employees Retirement System.--Section 8462 of title 5, 
United States Code, is amended by adding at the end the following new 
subsection:
    ``(f)(1) An annuity shall not be increased by reason of any 
adjustment under this section by an amount which exceeds the lesser 
of--
            ``(A) the amount that would apply if not for the provisions 
        of this subsection; or
            ``(B) the amount determined under paragraph (2)(B).
    ``(2) With respect to the amount described under paragraph (1)(B), 
the increase under this section shall be derived by--
            ``(A) multiplying the amount of each annuity to which this 
        section applies by the applicable percentage increase under 
        subsection (b); and
            ``(B) determining among all such amounts as increased under 
        subparagraph (A) the annuity increase amount which is at the 
        30th percentile of all such amounts.
    ``(3) Any amount determined under paragraph (2)(B) which is not a 
multiple of $0.10 shall be decreased to the next lower multiple of 
$0.10.''.
    (d) Retired and Former Members of the Armed Forces.--
            (1) In general.--Section 1401a(b) of title 10, United 
        States Code, is amended--
                    (A) in paragraph (1), by striking ``paragraphs (2) 
                and (3)'' and inserting ``paragraphs (2), (3), and 
                (5)'';
                    (B) by redesignating paragraph (5) as paragraph 
                (6); and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) Overall limitation.--
                    ``(A) In general.--With respect to the retired pay 
                of a member or former member who is entitled to an 
                adjustment under paragraph (2) or (3), the retired pay 
                shall not be increased by reason of any adjustment 
                under such paragraph by an amount which exceeds the 
                lesser of--
                            ``(i) the amount that would apply if not 
                        for the provisions of this paragraph; or
                            ``(ii) the amount determined under 
                        subparagraph (B)(ii).
                    ``(B) Amount for certain percentile.--With respect 
                to the amount described under subparagraph (A)(ii), the 
                increase under paragraph (2) or (3) shall be derived 
                by--
                            ``(i) multiplying the amount of each 
                        retired pay amount to which such paragraph 
                        applies by the applicable percentage increase 
                        under such paragraph; and
                            ``(ii) determining among all such amounts 
                        as increased under clause (i) the retired pay 
                        increase amount which is at the 30th percentile 
                        of all such amounts.''.
            (2) Conforming amendments.--
                    (A) Section 1410(1) of such title is amended by 
                striking ``section);'' and inserting ``section), 
                subject to paragraph (5) of that section;''.
                    (B) Section 1434(e) of such title is amended by 
                striking ``increase.'' and inserting ``increase, 
                subject to the limitation described in section 
                1401a(b)(5) as applied to annuity amounts under this 
                subsection.''.
                    (C) Section 1451(g)(1) of such title is amended by 
                striking ``pay).'' and inserting ``pay), subject to the 
                limitation described in section 1401a(b)(5) as applied 
                to annuity amounts under this subsection.''.
                    (D) Section 1451(h)(1) of such title is amended by 
                striking ``increased.'' and inserting ``increased, 
                subject to the limitation described in section 
                1401a(b)(5) as applied to base amounts under this 
                subsection.''.
                    (E) Section 1457(d)(1) of such title is amended by 
                striking ``Plan.'' and inserting ``Plan, subject to the 
                limitation described in section 1401a(b)(5) as applied 
                to annuity amounts under this subsection.''.
    (e) Effective Date.--The amendments made by this section shall 
apply with respect to adjustments effective with months after the date 
of the enactment of this Act.

Summary: Amends the Social Security Act (SSA) and other Federal law to provide for reduction in cost-of-living adjustments (COLAs) applied to: (1) higher primary insurance amounts under SSA title II (Old Age, Survivors and Disability Insurance) (OASDI), tying OASDI COLA determinations based on applicable increase percentages to similar determinations under other specified Federal benefit programs, including the Supplemental Security Income program under SSA title XVI; and (2) annuities under the civil service and other specified retirement systems for Federal employees and members of the armed forces.