Federal Employee's CSRS & FERS Federal Civil Service Retirement
& Financial Planning Resources
Explore
online degrees and certificates to pursue your interests & hobbies in
retirement.
COLA Menu
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.
Don’t confuse your “Retirement 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 date
was the date that I entered on my retirement application. Also, as a CSRS
employee voluntarily retiring I would have had to retire the last day of
November to get a full COLA in January a year later.
The date you put on your forms is your last day of work with the agency ─ not
your retirement date. 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 official retirement date would have been
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 officially be retired 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 |
|
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 will be zero.
