Federal employee groups touted legislation introduced in Congress that would ensure retirees federal receive the same annuity increase each year.

Federal employee groups touted legislation introduced in Congress that would ensure retirees federal receive the same annuity increase each year. Kevin Dietsch / Getty Images

COLA adjustments will slim for federal retirees in 2024

The annual announcement that some retired federal workers will receive a 3.2% increase in their annuity payments, while others will get only a 2.2% boost, has revived calls to standardize annual adjustments across retirement systems.

After two consecutive years of record increases, the annual cost-of-living adjustment for federal retirees will start to come back to earth in 2024, as federal employee groups revive their effort to end the two-tiered system for calculating the annual annuity increase.

The Social Security Administration on Thursday announced that Social Security beneficiaries will receive a 3.2% cost-of-living adjustment in January, a decrease from the four-decade high 8.7% imposed in 2023 and 5.9% in 2022, albeit still higher than most years in recent memory. SSA calculates the annual increase in annuities based on the annual change in the third quarter consumer price index for workers.

Federal retirees enrolled in the Civil Service Retirement System also will receive a 3.2% annuity increase, but former feds who are part of the newer Federal Employees Retirement System, which came into being in the 1980s along with the 401(k)-style Thrift Savings Plan, will receive only a 2.2% cost-of-living adjustment.

That’s because FERS’ annual increases are calculated based on an extrapolation of the Social Security and CSRS adjustment. Each year, if CSRS sees an increase of under 2%, FERS retirees receive the full COLA, while if the adjustment is between 2% and 3%, FERS enrollees only receive a 2% increase. And if the CSRS COLA is 3% or more, FERS retirees receive the Social Security and CSRS adjustment, minus 1 percentage point.

As was the case for the last two years, the announcement of a full 1 percentage point split between CSRS and FERS cost-of-living adjustments for 2024 has revived calls among employee organizations for Congress to pass the Equal COLA Act, legislation most recently introduced last February, to ensure retirees in both systems receive the same annuity increase each year.

“While NARFE celebrates the COLA announcement, not all in the federal community will reap its full benefits,” said National Active and Retired Federal Employees Association President William Shackleford. “FERS COLAs are capped at 2% when consumer prices increase between 2% and 3%, and are reduced by 1 percentage point when consumer prices increase by 3% or more. This inequitable policy, enacted in the 1980s with the creation of FERS, fails to fully protect the earned value of FERS annuities.”

When FERS was developed in the 1980s alongside the Thrift Savings Plan, lawmakers saw the lower COLA as a way to compensate for the fact that CSRS enrollees don’t have access to the 401(k)-style retirement savings plan. But in a blog post on its website, the American Federation of Government Employees, the largest labor union in the federal government, argued that the reduced annuity increases have real consequences for retirees, particularly during periods of high inflation.

“The difference for an average retiree is $18.37 a month, but over time, this could set FERS employees back thousands or even tens of thousands in retirement benefits, especially if we have a lot of high-inflation years,” the union wrote. “Already, someone who retired under FERS two years ago with an average benefit would have seen their pension fall $440 behind what their yearly benefit should be if it kept up with inflation.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.