Helping Federal Employees and Annuitants Understand Their Benefits

 

Cost of Living Adjustment (COLA)

FERS & CSRS COLA Annuity Adjustments



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Updated 10/18/2016

 

2017 COLA 0.3%

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. 

2012 COLA Update Social Security Recipients and Federal retirees in the CSRS & FERS retirement systems will receive a 0.3 percent COLA increase in 2017. If your gross annual annuity is $35,000 your increase with a .3 percent increase is only $105 or $8.75 per month. The 2016 increase was 0.0 percent. View the table of all COLAs from 1999 to the present that is located at the bottom of this page. 
 

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Retirement Date Issue

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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.

COLA Proration

According to section 2A3.1-1 of the CSRS and FERS Handbook, the amount of an annuitant's first COLA is prorated. The proration is based on the number of months from the annuity commencement date to the effective date of the first COLA after the commencement date.

  1.  Retirees receive one-twelfth of the applicable cost-of-living increase for each month, not to exceed 12 months, that they are in receipt of an annuity before December 1.
  2.  To receive the full December 1 increase, a retiree's commencing date for retirement can be no later than December 31 of the previous year.

The rules in section 2A3.1-1 on proration of the first COLA for CSRS apply under FERS.

For FERS annuitants who are not eligible to receive a COLA during their first year (or more) on the annuity roll, the initial COLA they receive (after becoming eligible) is the full COLA without proration. The annuitants who fall in this category are:

  •  Annuitants under age 62 whose annuity commences at least 1 year prior to reaching age 62;
  •  Disability annuitants whose annuity benefits are based on 60 percent of average pay.

 

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

 

RETIREE COLAs

Year

CSRS Rate

FERS Rate
2017 0.3 0.3
2016 0 0
2015 1.7 1.7
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, 2011, and 2016 was zero.