The payout of the upcoming 3.1 percent average raise for federal employees won’t affect the January COLA payout for retirees, which will be 1.6 percent for those eligible to receive COLAs.
The 3.1 percent raise will be the largest since 2009, while the COLA falls about within the range of recent years. In some years the raise and COLA are about the same but in some years one has been significantly larger; there is no formal linkage between them and they are determined in different ways. And while the raise varies by locality, that is not the case with COLAs.
The COLA is set automatically by a consumer price index measure, with the same figure also applying to Social Security, military retirement, and survivor benefits. In contrast, the raise is set during the congressional budget process and the payouts by locality are determined by measures of local labor markets (not living costs).
Also, while all CSRS retirees receive the COLA, FERS annuities are not increased until age 62 except for disability retirees, survivor beneficiaries and those under mandatory retirement systems. Because the number fell below 2 percent, another difference—a mechanism that caps the payout for FERS retirees when the number is above that figure—doesn’t apply for 2020.
Under both retirement systems, the initial COLA payout is prorated according to the number of months a person has been on the retirement roll, if less than 12. A full COLA will be paid only to those who retired no later than December 3, 2018 under CSRS and no later than November 30, 2018 under FERS.
Read more about COLAs – Federal Cost of Living Adjustments at ask.FEDweek.com