2021 COLA Announced - 1.3%
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.
Social Security Recipients and Federal retirees will receive a 1.3% COLA adjustment in 2021 as determined by the Consumer Price Index (CPI) upward trend. The 2021 cost-of-living adjustment (COLA) of 1.3% for CSRS and FERS annuitants was announced on October 13, 2020. View the table located at the bottom of this page for listing of all COLAs from 1999 to the present.
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.
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.
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:
The following table shows the annual COLA payout for both CSRS and FERS retirees.
|2011||0 *||0 *|
|2010||0 *||0 *|
* Due to a negative CPI, the COLA for 2010, 2011, and 2016 was zero.