“Can you explain the logic of the prorated FERS COLA? There is no prorated COLA for new federal employees. There is no prorated COLA for new Social Security recipients. Why do retired FERS employees get subjected to a prorated COLA?”
There are two different provisions of law involved. One affects the salaries of employees; the other the annuities of retirees. The annual pay adjustment for most general schedule employees consists of two parts: a national, across-the-board increase, and a locality-based pay adjustment, both normally effective at the start of the first full pay period each January. The annual cost-of-living adjustment for newly retired employees are prorated based on the month in which their annuity begins.
For example, to get the full 2023 COLA, a retiree’s annuity would have had to being no later than November 30, 2022. To determine the amount of a COLA for a retiree or survivor who has not been on the annuity roll for at least 12 months, divide the COLA rate by 12, multiply the result by the number of months on the annuity roll, then round to the nearest 1/10th of 1 percent.
Note: The law governing COLAs is different for CSRS and FERS retirees, with the amount FERS retirees are entitled to generally being 1 percent lower.
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Reg Jones, a charter member of the senior executive service, is the resident expert on retirement and the federal government at Federal Times. From 1979 until 1995, he served as an assistant director of the U.S. Office of Personnel Management handling recruiting and examining, white and blue collar pay, retirement, insurance and other issues. Opinions expressed are his own.