The retirement COLA to be paid effective Saturday (January 1)—5.9 percent to those retired under CSRS and 4.9 percent to those retired under FERS who are eligible for COLAs—will be the largest since the 8.7 percent paid in 1982, before the latter system even existed.
Those retired under CSRS or CSRS Offset receive a COLA regardless of their age. Those retired under FERS don’t receive COLAs until age 62 unless they retired on disability or under the special retirement provisions for law enforcement officers, firefighters or air traffic controllers. Survivor beneficiaries under each system receive COLAs regardless of age.
In addition, the payout to those eligible under FERS is reduced by 1 percentage point when, as this time, the basic amount exceeds 3 percent.
A 5.9 increase also will be paid on Social Security benefits. That’s primarily of interest to FERS retirees, for whom Social Security is a basic part of the retirement benefit, but it also of interest to CSRS Offset retirees who have Social Security coverage as part of their benefit. Also, some “pure” CSRS retirees qualify for Social Security through from military service or earnings covered under that system before, after—and in some cases from outside earnings during—their CSRS working years. In many cases those benefits are reduced by the “windfall elimination provision” however.
Federal retirement COLAs are prorated for those who retired, or who will retire, in the 2021 calendar year. Social Security COLAs are not prorated for recent retirees.
The retiree COLA is not directly linked to the pay raise for active federal employees. While the former is determined automatically by an inflation count, the latter is determined through the congressional budget process or is set by Presidential action, as it was for 2022, in the absence of a decision by Congress.