Expert's View


In 2008 the cost-of-living increase for CSRS retirees is 2.3 percent. FERS retirees will only get 2.0 percent. However, retirees who have been retired less than one year – December 2006 to December 2007 – will receive a COLA that is proportional to the amount of time they were on the annuity roll. For example, if you were on the annuity roll in January 2007, you’d only receive 11/12ths of the adjustment, rounded to the nearest 1/10th of a percent. That’s 2.1 (CSRS) or 1.8 (FERS).

FERS retirees have two legitimate gripes. Here’s the first. Unlike CSRS retirees who can begin receiving COLAs regardless of their age at retirement, FERS retirees aren’t eligible for their first COLA until they reach age 62 — unless they are law enforcement officers, firefighters, air traffic controllers, military reserve technicians who lost their military status due to medical reasons and were at least age 50 with 25 years of service, special CIA retirees, disability annuitants or survivors. All of them are treated the same as CSRS retirees.

Now, here’s the second gripe. FERS retirees receive a smaller COLA than CSRS retirees. The only time they are spared that indignity is if the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers is 2 percent or less. When it falls between 2 and 3 percent, as it has for 2008, they only get 2 percent. When it moves above 3 percent, they get the CPI/W minus 1 percentage point. Just as with the rule that keep most FERS retirees from receiving a COLA until they reach age 62, this is a matter of law.

Regardless of which retirement system you are in, the 2008 COLA looks pretty small. However, before you cry foul, let me remind you that they were even lower in 2003 (1.4 and 1.4) and 2004 (2.1 and 2.0). I’d further like to point out that federal retirees are luckier than most of their counterparts in the private sector, where providing cost-of-living adjustments to retiree annuities is uncommon, and getting less common with each passing year.