Cost-of-Living Adjustments for Federal Civil Service Annuities




Cost-of-Living Adjustments for Federal Civil
Service Annuities

Updated October 12, 2023
Congressional Research Service
https://crsreports.congress.gov
94-834




Cost-of-Living Adjustments for Federal Civil Service Annuities

Summary
Cost-of-living adjustments (COLAs) for the Civil Service Retirement System (CSRS) and the
Federal Employees Retirement System (FERS) are based on the rate of inflation as measured by
the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLAs for
both CSRS and FERS are determined by the change in the average monthly CPI-W during the
third quarter (July to September) of the current calendar year and the third quarter of the base
year, which is the last previous year in which a COLA was applied. The “effective date” for
COLAs is December, but they first appear in the benefits issued during the following January.
All CSRS retirees and survivors receive COLAs. Under FERS, however, nondisabled retirees
under the age of 62 do not receive COLAs. Survivors and disabled retirees are eligible for
COLAs under FERS regardless of age. CSRS pays a COLA that is equal to the percentage change
in the CPI-W during the measurement period, but COLAs under FERS are limited if the rate of
inflation is greater than 2.0%. If the rate of inflation during the measurement period is between
2.0% and 3.0%, the COLA under FERS is 2.0%. If inflation is greater than 3.0%, then the COLA
for FERS benefits is equal to the CPI-W minus one percentage point. (For background on the
legislative rationale for the FERS COLA as well as an example of legislation to make the FERS
COLA calculation the same as the CSRS COLA calculation, see CRS In Focus IF12354, The
FERS Cost-of-Living-Adjustment (COLA) and the Equal COLA Act (H.R. 866)
.)
Congress passed the first law requiring automatic COLAs for federal civil service retirement
benefits in 1962, and it has adjusted either the formula by which they are calculated or the date on
which they take effect more than 10 times since then.
If consumer prices as measured by the CPI-W do not increase from the third quarter of the base
year to the third quarter of the current calendar year, there is no COLA for annuities paid under
CSRS or FERS. For example, from the third quarter of 2014 to the third quarter of 2015, the CPI-
W fell by 0.4%. Therefore, no COLA was paid under either CSRS or FERS beginning January
2016.
From the third quarter of 2022 to the third quarter of 2023, the CPI-W increased by 3.2%.
Therefore, beginning in January 2024, the CSRS COLA is 3.2% and the FERS COLA is 2.2%.

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Contents
COLA Formulas and Amounts ........................................................................................................ 1
History of Legislation Affecting COLAs for Civil Service Annuities ............................................ 2

Tables
Table 1. COLAs in Civil Service Retirement Benefits .................................................................... 3

Contacts
Author Information .......................................................................................................................... 5

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Cost-of-Living Adjustments for Federal Civil Service Annuities

COLA Formulas and Amounts
Only federal employees hired before 1984 participate in the Civil Service Retirement System
(CSRS). The CSRS is closed to new entrants and will expire with the death of the last CSRS
annuitant sometime around the year 2075. Civilian federal employees who were hired in 1984 or
later participate in the Federal Employees Retirement System (FERS), as do employees who
voluntarily switched from CSRS to FERS during “open seasons” that were held in 1987 and
1998. The FERS program began operating on January 1, 1987.
Cost-of-living adjustments (COLAs) for CSRS annuities are based on the average monthly
increase in the CPI-W in the third quarter (July to September) of the current calendar year
compared with the third quarter of the base year, which is the year in which the last COLA was
applied.1 If there is no increase or if the percentage change in the CPI-W between the two periods
is negative (i.e., as happened in 2009, 2010, and 2015), there is no COLA applied. The base year
for determining the COLA effective in December 2023 (paid out in 2024) is 2022.2 Adjustments
are effective on the first day of the month preceding the month in which they are first paid.3
COLAs for benefits paid under FERS also are based on any increase in the CPI-W from third
quarter to third quarter, but payment of COLAs under FERS is limited according to the eligibility
category of the beneficiary and the rate of inflation.4 COLAs are not paid to nondisabled FERS
retirees as long as they are under the age of 62. COLAs are paid to survivors of FERS retirees and
disabled FERS retirees of any age after the first year of disability. All COLAs paid under FERS
are limited if the rate of inflation exceeds 2.0%, according to the following formula:
Increase in CPI-W
Increase (COLA) in FERS Benefits
Under 2.0%
Same as CPI-W increase
2.0% to 3.0%
2.0%
More than 3.0%
Increase in CPI-W minus 1 percentage point
From the third quarter of 2022 (the current base year) to the third quarter of 2023, the CPI-W
increased by 3.2%. Therefore, paid out beginning January 2024, the CSRS COLA is 3.2% and the
FERS COLA is 2.2%.

1 See 5 U.S.C. §8340.
2 Between 1962 (when Congress passed the first law enacting automatic COLAs for federal civil service retirement
benefits) and 2009, the base year—the year in which the last adjustment occurred—was also the previous year. Because
the CPI-W decreased from the third quarter of 2008 to the third quarter of 2010, however, the base year for determining
the COLA that was effective in December 2011 (and paid out in 2012) remained 2008. The CPI-W also decreased from
the third quarter of 2014 to the third quarter of 2015, so the base year for determining the COLA effective in December
2016 (paid out in 2017) was 2014.
3 For example, the 2015 CSRS COLA of 1.7% was effective December 1, 2014, and first applied to benefits paid in
January 2015. It was equal to the average monthly percentage change in the CPI-W between the third quarter of
calendar year 2013 and the third quarter of 2014. Because there was no increase in the CPI-W between the third quarter
of 2014 and the third quarter of 2015, there was no CSRS COLA paid out beginning in January 2016. In addition, the
third quarter of 2014 remained the base on which the COLA for 2016 (paid out beginning in January 2017) was
calculated. From the third quarter of 2014 to the third quarter of 2016, the CPI-W increased by 0.3%. Therefore, the
COLA for 2016 (paid out beginning in January 2017) for both CSRS and FERS was 0.3%.
4 See 5 U.S.C. §8462. For background on the legislative rationale for the FERS COLA as well as an example of
legislation to make the FERS COLA calculation the same as the CSRS COLA calculation, see CRS In Focus IF12354,
The FERS Cost-of-Living-Adjustment (COLA) and the Equal COLA Act (H.R. 866).
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Cost-of-Living Adjustments for Federal Civil Service Annuities

History of Legislation Affecting COLAs for Civil
Service Annuities
P.L. 87-793 (enacted in 1962) was the first law that provided for automatic adjustments in civil
service retirement and disability benefits whenever the CPI in the current year exceeded the CPI
in the base year (the year in which the last adjustment occurred) by 3.0% or more. In 1965, this
was changed to require an adjustment in benefits whenever the CPI for a given month was at least
3.0% higher than in the month when the last adjustment was made, and remained at that level or
higher for three consecutive months.
P.L. 91-93 (enacted in 1969) added one percentage point to COLAs in addition to the percentage
change in the CPI to offset the erosion of benefits that had occurred as a result of the time lag in
the adjustment formula. (P.L. 91-179 did the same for COLAs paid to military retirees.)
P.L. 94-440 (enacted in October 1976) repealed the one percentage point addition to COLAs. In
addition, this law provided for automatic semiannual adjustments in benefits based on the change
in the CPI from June to December (effective the following March 1) and December to June
(effective the following September 1).
P.L. 97-35 (Omnibus Budget Reconciliation Act of 1981) replaced semiannual COLAs with
annual COLAs based on the December-to-December change in the CPI, payable in March of the
following year.
P.L. 97-253 (Omnibus Budget Reconciliation Act of 1982) delayed the implementation of COLAs
by one month in FY1983, FY1984, and FY1985. The FY1983 COLA was effective April 1 rather
than March 1. The FY1984 COLA was scheduled for May 1 and the FY1985 COLA was
scheduled for June 1. This law also mandated that nondisabled retirees under the age of 62 would
receive 50% of the projected increase in the CPI plus the full difference in the actual increase in
the CPI over these projections, if greater. The law specified that the projected increase in the CPI
was 6.6% for 1983, 7.2% for 1984, and 6.6% for 1985. This provision was repealed by the
supplemental appropriations law that was passed in August 1984. COLAs for January 1985 and
thereafter were to be the full amount for all retirees.
P.L. 97-253 limited COLAs in certain cases. Under the restriction, an annuity could not be
increased by a COLA to an amount that exceeded the greater of the maximum pay for a GS-15
federal employee or the final pay of the employee (or high-3 average pay, if greater), increased by
the average annual percentage change (compounded) in rates of pay of the General Schedule for
the period beginning on the retiree’s annuity starting date and ending on the effective date of the
adjustment.
P.L. 98-270 (Omnibus Budget Reconciliation Act of 1983, enacted April 1984) delayed the COLA
scheduled for May 1984 until December (payable in January 1985). Thereafter, all COLAs were
to be effective in December and payable in January and were to be based on the change in the
average monthly CPI-W from third-quarter to third-quarter. This formula and schedule are the
same as those used to calculate COLAs in the Social Security program, as required by P.L. 98-21
(Social Security Amendments of 1983).
P.L. 98-369 (Deficit Reduction Act of 1984) specified that civilian and military retirement
COLAs are to be paid in checks issued on the first business day of the month following the month
in which they are effective. (COLAs that are effective in December are to be paid in checks
issued in January.)
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P.L. 99-177 (Balanced Budget and Emergency Deficit Control Act of 1981 [Gramm-Rudman-
Hollings]). This law suspended all civil service retirement COLAs for FY1986 and for all
subsequent years in which the specified deficit reduction targets for the year would not otherwise
be met.
P.L. 99-509 (Omnibus Budget Reconciliation Act of 1986). This law reinstated COLAs for
programs in which they were subject to suspension under P.L. 99-177 for FY1987-FY1991.
P.L. 100-119 (Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987). This
law permanently exempted the programs subject to suspension of COLAs under P.L. 99-177 from
the suspensions required by that law.
P.L. 103-66 (Omnibus Budget Reconciliation Act of 1993). This law postponed the effective date
of COLAs from December to March for FY1994-FY1996. The CPI measurement period was not
changed.
Table 1 provides historical data on CSRS COLAs, FERS COLAs, and the CPI changes during the
COLA measure periods.
Table 1. COLAs in Civil Service Retirement Benefits
CSRS Benefit
FERS Benefit
CPI Change During COLA
Effective Datea
Increase
Increase
Measurement Period
December 1965
6.1%

4.6%
January 1967
3.9

3.9
May 1968
3.9

3.9
March 1969
3.9

3.9
November 1969
5.0

4.0
August 1970
5.6

4.6
June 1971
4.5

3.5
July 1972
4.8

3.8
July 1973
6.1

5.1
January 1974
5.5

4.5
July 1974
6.3

5.3
January 1975
7.3

6.3
August 1975
5.1

4.1
March 1976
5.4

4.4
March 1977
4.8

4.8
September 1977
4.3

4.3
March 1978
2.4

2.4
September 1978
4.9

4.9
March 1979
3.9

3.9
September 1979
6.9

6.9
March 1980
6.0

6.0
September 1980
7.7

7.7
March 1981
4.4

4.4
March 1982
8.7

8.7
April 1983
3.9

3.9
December 1984
3.5

3.5
December 1985
0.0

3.1
December 1986
1.3

1.3
December 1987
4.2

4.2
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CSRS Benefit
FERS Benefit
CPI Change During COLA
Effective Datea
Increase
Increase
Measurement Period
December 1988
4.0
3.0
4.0
December 1989
4.7
3.7
4.7
December 1990
5.4
4.4
5.4
December 1991
3.7
2.7
3.7
December 1992
3.0
2.0
3.0
March 1994
2.6
2.0
2.6
March 1995
2.8
2.0
2.8
March 1996
2.6
2.0
2.6
December 1996
2.9
2.0
2.9
December 1997
2.1
2.0
2.1
December 1998
1.3
1.3
1.3
December 1999
2.4
2.0
2.4
December 2000
3.5
2.5
3.5
December 2001
2.6
2.0
2.6
December 2002
1.4
1.4
1.4
December 2003
2.1
2.0
2.1
December 2004
2.7
2.0
2.7
December 2005
4.1
3.1
4.1
December 2006
3.3
2.3
3.3
December 2007
2.3
2.0
2.3
December 2008
5.8
4.8
5.8
December 2009
0.0
0.0
-2.1
December 2010
0.0
0.0
-0.6
December 2011
3.6
2.6
3.6
December 2012
1.7
1.7
1.7
December 2013
1.5
1.5
1.5
December 2014
1.7
1.7
1.7
December 2015
0.0
0.0
-0.4
December 2016
0.3
0.3
0.3
December 2017
2.0
2.0
2.0
December 2018
2.8
2.0
2.8
December 2019
1.6
1.6
1.6
December 2020
1.3
1.3
1.3
December 2021
5.9
4.9
5.9
December 2022
8.7
7.7
8.7
December 2023
3.2
2.2
3.2
Source: The Congressional Research Service.
Notes: Includes pensions for Members of Congress. P.L. 87-793 (enacted in 1962) was the first law that
provided for automatic adjustments in civil service retirement and disability benefits based on certain changes in
the Consumer Price Index; however, December 1965 was the first month in which an automatic adjustment was
effective.
a. Benefit increases are actually paid the fol owing month.
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Cost-of-Living Adjustments for Federal Civil Service Annuities


Author Information

Katelin P. Isaacs

Specialist in Income Security




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