What NARFE Wants Congress to Do About the FERS COLA Gap

 

The 2027 cost-of-living adjustment (COLA) made the gap between Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS) annuitants official on October 14, and the National Active and Retired Federal Employees Association (NARFE) is now making the Equal COLA Act the centerpiece of its response.

In its November 7 grassroots newsletter, NARFE released a new COLA issue brief and video and reported 86 House cosponsors on H.R. 491 and 20 Senate cosponsors on S. 624. The argument behind it is worth understanding on its own terms: what the bill would change, what NARFE says it would accomplish, and what stands in the way.

Where the 2027 Gap Comes From

COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which the Bureau of Labor Statistics (BLS) publishes monthly. The annual adjustment compares the average CPI-W for July, August and September with the same three months a year earlier. With the September report released October 14, the 2027 figures are final: 3.6% for Civil Service Retirement System (CSRS) annuitants and Social Security beneficiaries, and 2.6% for Federal Employees Retirement System (FERS) annuitants.

The one-point difference comes from the statute that governs FERS COLAs, 5 U.S.C. 8462. It works in three tiers:

FERS COLAs generally begin at age 62, though disabled retirees and survivors are eligible at any age. The reduction applies only to the FERS annuity itself. A FERS retiree who also collects Social Security receives the full 3.6% on the Social Security benefit. The COLA Watch page tracks how the monthly CPI-W readings fed into the final number.

On the same annuity, the gap in 2027 looks like this:

Because each year’s COLA builds on the last, the difference compounds. The full breakdown of the 2027 FERS and CSRS COLAs shows how the dollars accumulate over a long retirement.

What the Equal COLA Act Would Change

The Equal COLA Act (H.R. 491 and S. 624) would amend the FERS COLA provision so that FERS annuities receive the full CPI-W increase, rounded to the nearest tenth of a percent, with no cap and no one-point reduction. It would apply to COLAs made after enactment and to annuities that began before, on or after that date. In practical terms, FERS and CSRS annuitants would receive the same percentage every year.

The House bill was introduced January 16, 2025, by Rep. Gerald Connolly of Virginia. After his death, Rep. James Walkinshaw assumed first sponsorship on September 16, 2025. Sen. Alex Padilla of California introduced the Senate companion on February 18, 2025. H.R. 491 sits in the House Committee on Oversight and Government Reform, and S. 624 in the Senate Committee on Homeland Security and Governmental Affairs. Neither has received a committee vote.

NARFE’s Case for Equal COLAs

NARFE’s issue brief frames the Equal COLA Act as its immediate priority, a direct fix for the gap between CSRS and FERS adjustments. The brief describes the reduction as a longstanding policy that trims COLAs for many FERS retirees when inflation rises above 2%, and argues that the bill would protect the value of earned retirement benefits by giving FERS annuitants the same full COLAs that CSRS annuitants and Social Security beneficiaries receive.

NARFE’s own tracker, as cited in its November 2026 communication, shows 86 House cosponsors on H.R. 491 and 20 Senate cosponsors on S. 624. Cosponsors have included at least two House Republicans, though the list remains weighted toward Democrats.

NARFE’s Second Position: Replace the CPI-W

The Equal COLA Act addresses the size of the FERS reduction. A separate NARFE position addresses the index itself. The organization supports replacing the CPI-W with the Consumer Price Index for the Elderly (CPI-E), which measures price changes for Americans age 62 and older. Its reasoning is that older households spend a larger share of their budgets on health care, and medical costs have historically risen faster than prices overall, so the CPI-W may understate what retirees experience.

The brief also acknowledges that the case for the CPI-E is weaker in some years than in others. NARFE’s stated position is that historical data still shows the CPI-E producing higher COLAs on average over time. This is a long-term priority in the brief, while equal COLAs for FERS retirees is the near-term one.

The Counterargument: Cost and Original Design

The main objection to the Equal COLA Act is cost. According to the Congressional Research Service (CRS), the capped FERS COLA and the age 62 requirement were viewed by some as a legislative compromise aimed at cost savings when Congress created FERS in 1986. Paying FERS retirees the full CPI-W increase would raise federal outlays, although Congress.gov lists no Congressional Budget Office cost estimate for either bill. Supporters of the current formula point out that FERS was designed as a three-part system of pension, Social Security and Thrift Savings Plan (TSP) savings, with a lower-cost pension component.

Equal COLA bills have been introduced in several Congresses without becoming law, and the current versions have not advanced beyond committee referral.

What This Means for Planning

Nothing in the pending legislation changes the 2027 adjustment. The Office of Personnel Management (OPM) applies the statutory formula as written, so FERS annuitants who are eligible will see 2.6% in January 2027. Anyone building a retirement income projection should use the formula in current law, and treat any change as a possibility rather than a base case. Because the reduction compounds, the way inflation behaves over the first decade of retirement matters more than any single year’s figure.

Sources used for this article include the NARFE COLA issue brief, the bill text on Congress.gov, and the CRS overview of the FERS COLA.