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2013 COLA Update

Federal retirees in the CSRS and FERS retirement systems will receive a COLA increase of 1.5% percent in 2014. Complete COLA information is available on this site. Active fedeal employee's pay will increase 1% in 2014. 

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Cost of Living Adjustments (COLAs)

 

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2012 COLA Update Federal retirees in the CSRS & FERS retirement systems will receive a COLA increase of 1.5 percent in their annuities in 2014.

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Cost of Living Adjustments

 

Cost-of-Living Adjustments (COLAs) are effective each December first. The adjustment appears in your January payment on the first business day of the month, 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. Also, under FERS, if you have a CSRS component, the component is subject to the CSRS COLA.

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 (ODRS) 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 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.

Retirement Date Issue

 

 

Don’t confuse your “Annuity Start Date” with your “Date of Final Separation” that you list in block 2, Section B on your SF-2801 CSRS or the SF-3107 FERS Retirement Application Forms. I attended two retirement seminars the last three years I was employed by the Federal Aviation Administration. I recall being advised that if you retired December 31 in stead of January 1 you would get the entire COLA the following year. Unfortunately, I assumed that my retirement annuity start date was the date that I entered on my retirement application. Also, as a CSRS employee voluntarily retiring, I discovered after leaving that I would have had to retire the last day of November to get a full COLA in January a year later.

The date of final separation that you put on your forms is your last day of work with the agency, retirement is effective at the close of business (COB) that same day. However, to get a full COLA next year you would have to put December 30 in block 2 of Section B for FERS employees and involuntarily separated CSRS employees and your retirement would start on December 31st.

OPM’s COLA memo for 2006 states, “To get the full COLA, a FERS retiree survivor annuity must have begun no later than December 31, 2004. If not, the increase is prorated under both plans. Prorated accounts receive one-twelfth of the increase for each month they received benefits. For example, if the benefit commenced November 30, 2005, the prorated COLA would be one-twelfth of the full COLA." To get a COLA for the following month you have to officially be retired on the last day of the proceeding month. This basically means that you have to place the second to last day of the month you retire in block 2 of Section B to have your retirement start on the last day of the preceding month.

The following table shows the annual COLA payout for both CSRS and FERS retirees. 

 

RETIREE COLAs

Year

CSRS Rate

FERS Rate
2014 1.5 1.5
2013 1.7 1.7
2012 3.6 2.6
2011 0 * 0 *
2010 0 * 0 *
2009 5.8 4.8
2008 2.3 2.0
2007 3.3 2.3
2006 4.1 3.1
2005 2.7 2.0
2004 2.1 2.0
2003 1.4 1.4
2002 2.6 2.0
2001 3.5 2.5
2000 2.4 2.0
1999 1.3 1.3


* Due to a negative CPI, the COLA for 2010 and 2011 was zero.



 

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