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Articles | 2014 Federal Retiree COLA 1.5 % (CSRS and FERS)
2014 Federal Retiree COLA 1.5 % (CSRS and FERS)
Monthly Social Security and Supplemental Security Income (SSI) benefits for
nearly 63 million Americans will increase 1.5 percent in 2014, the Social
Security Administration announced today.
The 1.5 percent cost-of-living adjustment (COLA) will begin with benefits
that more than 57 million Social Security beneficiaries receive in January
2014. Increased payments to more than 8 million SSI beneficiaries will
begin on December 31, 2013.
The COLA increase is one of the smallest since automatic adjustments were
adopted in 1975. The announcement was delayed for two weeks due to the
partial government shutdown.
COLAs for the Civil Service Retirement System (CSRS) and the Federal
Employees Retirement System (FERS) are based on the percentage increase in the
CPI-W for the most recent third quarter (July-September) compared to the most
recent quarter upon which an increase was based. If consumer prices as measured
by the CPI-W do not increase from the third quarter of one year to the third
quarter of the next year, there is no COLA for annuities paid under CSRS or
Under both CSRS and FERS, the annual COLA increase, if any, is made for
annuities effective on December 1, appearing in the payment made the first
business day of January. Also, if an individual retires during the year
immediately preceding a COLA, the first COLA is prorated.
However, there are a couple of differences regarding COLAs under CSRS
CSRS annuitants receive a COLA that is equal to the percentage change in the
CPI-W. However, under FERS, the basic retirement annuity is fully indexed
if inflation is under 2% per year and partially indexed if inflation exceeds 2%:
- If the CPI-W increases by up to 2%, then the FERS annuity increases by the
- If the CPI-W increases by 2% to 3%, the FERS annuity increases by 2%.
- If the CPI-W increases by more than 3%, the FERS annuity increases by the
rise in the CPI-W minus one percentage point.
All CSRS retirees and survivors receive COLAs. However, under FERS, COLAs are
applied only to annuities of retirees who are age 62 or older, individuals who
retired under specified special retirement provisions (such as law enforcement
officers and fire fighters), individuals who retired by reason of disability,
and to survivor annuitants. Other FERS retirees receive no COLAs while they are
under age 62.
The federal retiree COLA adjustment of annuities is discussed in Chapter 2 of
the Office of Personnel Management's CSRS and FERS Handbook, found at http://www.opm.gov/retire/pubs/handbook/C002.pdf.