Retirement Policy

Retired Federal employees and entitled surviving family members of deceased federal employees and retirees have received a Cost-of-Living Adjustment (COLA) effective December 1, 2005, which will be first reflected in the benefit payable January 3, 2006.

Under the Civil Service Retirement System (CSRS) and the Organization Retirement and Disability System (ORDS), the cost-of-living adjustment (COLA) will be 4.1 percent for those who have received benefits for at least one year. The 4.1 percent increase was determined by computing the percentage increase in the Consumer Price Index (CPI) for urban wage earners and clerical workers from the third quarter average of 2004 to the third quarter average of 2005, as provided by the U.S. Department of Labor, Bureau of Labor Statistics.

Under the Federal Employees Retirement System (FERS) and FERS Special, the COLA will be 3.1 percent for those who have received benefits for at least one year. This amount was derived from the same CPI comparison as CSRS.

Federal Employees Retirement System (FERS) and FERS Special Cost-of-Living Adjustments are not provided until age 62, except for disability, survivor benefits, and other special provision retirements. FERS disability retirees get the adjustment, except when they are receiving a disability annuity based on 60 percent of their high-3 average salary. Also, under FERS, if you have a CSRS component, the component is subject to the CSRS COLA calculation. FERS survivors receive the FERS increase on their entire annuity, even where component service is involved.

To get the full COLA, a retiree or survivor annuity must have begun no later than December 31, 2004. If not, the increase is prorated under both plans. Prorated accounts receive one-twelfth of the increase for each month they received benefits. For example, if the benefit commenced November 30, 2005, the prorated COLA would be one-twelfth of the full COLA.

Under both plans, benefits are paid on the first business day of the month after the month in which they accrue. Benefits which accrue in December 2005 are payable on January 3, 2006.

Note: A benefit will not be increased if it would cause the annuitant to receive payments in excess of any cap amount specified by law.

The tables below show the actual prorated percentages that apply, under both plans, according to the month in which the annuity began.