Cost-of-Living Adjustments to Civil Service Retirement Benefits
Here are frequently asked questions and answers about Cost-of-Living Adjustments to civil service retirement benefits. Select a question to read the answer.
How is the Cost-of-Living Adjustment (COLA) determined?
The U.S. Department of Labor calculates the change in the
Consumer Price Index (CPI) for urban wage earners and clerical workers from
the third quarter average of the previous year to the third quarter average for the current year.
For Civil Service
Retirement System (CSRS) or Organization and Disability Retirement System (ORDS) benefits, the increase percentage is applied to
your monthly benefit amount before any deductions, and is rounded down
to the next whole dollar.
For Federal Employees Retirement System (FERS) or FERS Special benefits, if the
increase in the CPI is 2 percent or less, the Cost-of-Living Adjustment (COLA)
is equal to the CPI increase. If the CPI increase is more than 2 percent
but no more than 3 percent, the Cost-of-Living Adjustment is 2 percent.
If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is
rounded down to the next whole dollar.
To get the full COLA, a retiree or survivor annuitant must have been in receipt of payment for a full year. If not, the increase is prorated under both plans. Prorated accounts receive
one-twelfth of the increase for each month they received benefits. Cost-of-Living Adjustments were first prorated in April 1982. Adjustments to benefits for children are never prorated.
Federal Employees Retirement System (FERS) and FERS Special Cost-of-Living Adjustments
are not provided until age 62, except for disability, survivor
benefits, and other special provision retirements. FERS disability retirees get the adjustment, except when they are receiving a disability annuity based on 60 percent of their high-3 average salary. Also, under FERS, if you have a
CSRS component, the component is subject to the CSRS COLA calculation.
Note: A benefit will not be increased if it would cause the annuitant to receive
payments in excess of any cap amount specified by law.
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When is the Cost-of-Living Adjustment (COLA) paid?
Cost-of-Living Adjustments are effective each December
first. The adjustment appears in your payment on the first
business day of January, which is when your benefit for December is paid.
Federal Employees Retirement System (FERS) and FERS Special Cost-of-Living Adjustments
are not provided until age 62, except for disability, survivor
benefits, and other special provision retirements. FERS disability retirees get the adjustment, except when they are receiving a disability annuity based on 60 percent of their high-3 average salary. Also, under FERS, if you have a
CSRS component, the component is subject to the CSRS COLA calculation.
What is the amount of the Cost-of-Living Adjustment (COLA)?
Please select the retirement system and date of adjustment from this list.