	COLA Formulas and Amounts

Only federal employees hired before 1984 participate in the Civil Service Retirement System (CSRS). Cost-of-living adjustments (COLAs) for CSRS annuities are based on the average monthly percentage change 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. COLAs for benefits paid under FERS also are based on the percentage change 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 th e rate of inflation. COLAs are not paid to nondisabled FERS retirees as long as they are under the age of 62. All COLAs paid under FERS are limited if the rate of inflation exceeds 2.0%, according to the following formula:
From the third quarter of 2017 (the current base year) to the third quarter of 2018, the CPI-W increased by 2.8%. Therefore, paid out beginning January 2019, the CSRS COLA is 2.8% and the FERS COLA is 2.0%. 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. 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. 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. The CPI measurement period was not changed.
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 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.
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 a dozen 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 2017 to the third quarter of 2018, the CPI-W increased by 2.8%. Therefore, beginning in January 2019, the CSRS COLA is 2.8% and the FERS COLA is 2.0%.