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2014 Federal Retiree COLA 1.5 % (CSRS and FERS)
October 30, 2013





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

FERS.

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

and FERS.

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

    same percentage.

  • 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 href="http://www.opm.gov/retire/pubs/handbook/C002.pdf">http://www.opm.gov/retire/pubs/handbook/C002.pdf.



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