The COLA increase also applies to Social Security benefits, which are paid to FERS retirees but not to most CSRS retirees, except those in the hybrid CSRS-Offset system in which CSRS benefits are reduced when Social Security payments begin. Unlike civil service annuities, the full increase is paid on Social Security benefits even if the recipient has been drawing benefits for less than a year. The Social Security 6.2 percent withholding tax will apply to earnings up to $117,000, up from $113,700 (the 1.45 percent Medicare tax has no cutoff). Employees in FERS and CSRS-Offset pay that “FICA” tax, but while the withholding cuts off for FERS employees at that level, CSRS-Offset employees continue to pay the same total contribution percentage, with all of it going into the federal retirement trust fund.
