Every January, federal retirees enjoy a cost-of-living adjustment. If you are a CSRS retiree and have been retired for at least one year, you’ll receive the full COLA of 3.3 percent in your January 2007 annuity payment, while those eligible under FERS will receive 2.3 percent. (Why do FERS retirees get less? I’ll explain that difference in a minute.)
Anyone retired for a shorter period off time will receive proportionately less. To figure out how much your COLA will be, use the following formula and round the answer off to the nearest 1/10th of 1 percent:
COLA rate/12 x Number of months on annuity roll = Prorated COLA
For example, if you were a CSRS retiree who had been on the annuity roll for six months, your COLA would be 2 percent (3.3 ÷ 12 = 0.275 percent x 6 = 1.7 percent (1.65 rounded to the nearest 1/10th of 1 percent). Under FERS it would be 1.1 percent.
To determine how long you’ve been on the annuity roll, use this chart:
If your monthly annuity begins during (see month), then the number of months on the roll is (= #):
December of previous year = 12
January = 11
February = 10
March = 9
April = 8
May = 7
June = 6
July = 5
August = 4
September = 3
October = 2
November = 1
Now, let’s get back to that question I raised in the first paragraph. Why do FERS retirees get less? Because it’s the law. When Congress established the Federal Employees Retirement System, it decided that if the annual change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI/W) increases up to 2 percent, the FERS COLA will be increased by the full amount. Between 2 and 3 percent, it will increased by 2 percent. When it’s 3 percent or more, it will be the CPI/W minus 1 percentage point.
One last thing to chew on. CSRS COLAs are payable no matter the age at which you retire. The same is true for the COLAs given to CSRS survivors, disability retirees, and special category employees, such as law enforcement officers and firefighters. On the other hand, FERS COLAs begin at age 62 for everyone other than FERS special category employees and survivors.
