The value of money, like the value of anything else, is whatever it can be exchanged for – in other words – it’s purchasing power. A rise in prices means that the value money has fallen (buying less with what you have); a fall in prices means that the value of money has risen.
Employees, pensioners, etc. want their incomes to increase so as to keep up with rising prices – inflation.
Cost of living increase, and in its abbreviated terms, COLA, adjusted yearly, is an increase in income to mitigate rising prices and maintain a specific standard of living.
The adjustment to the cost of living is announced during the yearly budget speech and comes into effect in January of the following year.
A full-time employee is entitled to the full increase, pensioners are awarded another weekly amount over and above COLA, and part-time employee receive the cost of living bonus in proportion to the hours worked.
For year 2020, employees as well as pensioners got an increase of €3.49 weekly. Furthermore pensioners are benefitting from a further increase of €3.51 per week, over-and-above COLA thus total increase for pensioners amounts to €7.00.
In other words, the cost of living for year 2020 for employees is €3.49 weekly * 52 weeks = €181.48 yearly.
Two-thirds of the weekly cost of living increase and the extra amount payable to pensioners is added to the pension rate and the other one third is added to the cost of living bonus.
Both are issued in one pension payment, payable every four weeks.
€3.49 cost of living is adjusted as follows –
• (two thirds) €2.33 is added to the pension rate of previous year,
• (one third) €1.16 is added to the cola increase of previous year,
• €3.51 is given to pensioners over and above COLA
€2.33, €1.16 and €3.51 add up to €7 weekly / €364