CSRS and FERS COLA
Civil Service Retirement System (CSRS) annuities and Social Security benefits will increase through a 8.7 percent cost-of-living adjustment (COLA) for 2023. Federal Employees Retirement System (FERS) annuities will receive a 7.7 percent COLA.
How FERS COLA’s are determined:
Each year’s COLA is determined by comparing the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from year to year, based on the average of the third-quarter months of July, August and September.
If the annual CPI-W increase is 3 percent or more, FERS COLAs are reduced by 1 percent. If the CPI-W increase is between 2 percent and 3 percent, FERS enrollees only receive a 2 percent COLA. When the CPI-W increase is under 2 percent, the COLA matches the price index increase.
What if you retired this year:
According to section 2A3.1-1 of the CSRS and FERS Handbook, the amount of an annuitant’s first COLA is prorated. The proration is based on the number of months from the annuity commencement date to the effective date of the first COLA after the commencement date.
Retirees receive one-twelfth of the applicable cost-of-living increase for each month, not to exceed 12 months, that they are in receipt of an annuity before December 1.
To receive the full December 1 increase, a retiree’s commencing date for retirement can be no later than December 31 of the previous year.
