Legislation Would Boost COLAs for Some Federal Retirees

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By on November 20, 2018 in Retirement with 0 Comments
Congressman Gerry Connolly (D-VA)

Congressman Gerry Connolly (D-VA)

Congressman Gerry Connolly (D-VA) introduced legislation that would increase the amount of the Cost of Living Adjustment paid to some retired federal employees in certain cases.

The Equal COLA Act (H.R. 7165) aims to bring equity to the way the cost-of-living adjustment (COLA) is determined under the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS). It would amend U.S. Code so that COLAs for retirees under the FERS system will be calculated the same way as COLAs for retirees under CSRS going forward.

Connolly says that the current process for determining COLAs under FERS is unfair. “Over time, we now realize that this two-tiered system fails to protect FERS retirees who are living on a fixed income,” Connolly said. “This legislation will rectify this unfair system and ensure these dedicated public servants are protected throughout their retirement.”

The COLA that was recently announced that will take effect in 2019 for retirees is an example of what Connolly takes issue with in his bill. The 2019 COLA was determined to be 2.8%, but federal retirees under FERS only get 2% in most cases.

Under FERS or for FERS Special benefits, if the increase in the Consumer Price Index (CPI) is 2 percent or less, the COLA is equal to the CPI increase. But, if the CPI increase is more than 2 percent but no more than 3 percent, the COLA is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar.

The table below illustrates this.

If the CPI is: Then the COLA is:
<= 2% COLA = CPI increase
> 2% and <= 3% COLA = 2%
> 3% COLA = CPI – 1%

Retired federal employees under CSRS get the full COLA.

For additional details, be sure to see 2019 to Have Largest COLA Increase in 7 Years and How is the Annual COLA Different from an Annual Pay Raise?.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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