Federal retirement benefits are increasing with the January payments by 2 percent for CSRS retirees and for FERS retirees eligible for a COLA (FERS annuities are not increased for those under age 62 except for disability retirees, survivor beneficiaries and those under mandatory retirement systems). The same COLA also applies to Social Security, military retirement, and survivor benefits.

For CSRS retirees and eligible FERS retirees who have been on the annuity rolls for less than 12 months, the initial COLA is pro-rated.

COLAs often stoke confusion in the federal community since many employees refer to their raises as COLAs, and some retirees refer to their COLAs as raises. They are two different things. A COLA goes to those who are retired (as well as to benefits paid to eligible surviving spouses and children) and is linked to the consumer price index for urban wage earners. It is automatic unless reduced or blocked by Congress and the White House.

A raise goes to current employees. Under federal pay law, a base raise is supposed to be linked to the employment cost index and locality pay to close local pay gaps is supposed to be paid on top. The ECI is a measure of private sector wage growth–not living costs–and is based on a different measuring period than the CPI figure used for the COLA.