Many federal retirees to receive 3.2% in 2024 COLA, but not everyone gets the same adjustment

Starting in January, CSRS retirees will receive the full 2024 COLA adjustment of 3.2%, while FERS retirees will see a 2.2% adjustment added to their Social Secu...

Starting in January, federal retirees and other beneficiaries will see another cost-of-living adjustment (COLA) added to their Social Security and retirement benefits.

The 2024 COLA will be 3.2%, the Social Security Administration announced Thursday. It’s a relatively smaller adjustment compared with the COLA that beneficiaries received for 2023.

The annual COLA is meant to keep federal retirees and Social Security recipients’ benefits on pace with rising inflation. COLA amounts are determined by the third quarter each year of the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

But like every year, not all federal retirees will receive the full 2024 COLA. Depending on the system under which a federal employee retires, the exact 2024 COLA amount varies.

Those in the Civil Service Retirement System (CSRS) receive the full 2024 COLA, while those in the Federal Employee Retirement System (FERS) receive less — exactly how much less depends on the actual COLA amount:

  • If the CSRS COLA increases more than 3%, FERS retirees receive 1% less than the full 2024 COLA.
  • If the CSRS COLA increases between 2% and 3%, FERS retirees receive a 2% COLA.
  • If the CSRS COLA increases less than 2%, FERS retirees receive the full 2024 COLA.

Based on these calculations, FERS retirees will receive a 2.2% COLA for their annuities starting in January.

The 2024 COLA is more modest than what beneficiaries have seen for the past couple of years. In 2023, federal retirees and other Social Security beneficiaries received an 8.7% COLA, the largest annual adjustment in more than 40 years. At the same time, FERS retirees received a 7.7% COLA.

In 2022, the COLA was 5.9% and 4.9% for CSRS and FERS retirees, respectively.

2024 3.2% 2.2%
2023 8.7% 7.7%
2022 5.9% 4.9%
2021 1.3% 1.3%
2020 1.6% 1.6%
2019 2.8% 2.0%
2018 2.0% 2.0%
2017 0.3% 0.3%
2016 0.0% 0.0%
2015 1.7% 1.7%
2014 1.5% 1.5%
2013 1.7% 1.7%
2012 3.6% 2.6%
2011 0.0% 0.0%
2010 0.0% 0.0%

SSA offers COLA data going even further back on its website.

Federal unions and organizations have long called for a full COLA for FERS retirees.

“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 American Federation of Government Employees said in a statement.

Congress originally decided to reduce the COLA for FERS retirees when the retirement system was first created in the 1980s. At the time, lawmakers said it would create balance, since employees in the newer retirement system get a matching government contribution of up to 5% in the Thrift Savings Plan, while CSRS retirees do not.

But more recently, lawmakers have said the process the government uses to calculate COLAs for FERS retirees is unfair. One bill in Congress, the Equal COLA Act, aims to address the disparity. The bicameral bill, which Rep. Gerry Connolly (D-Va.) and Sen. Alex Padilla (D-Calif.) reintroduced in February, would give FERS retirees the full COLA for their retirement benefits.

The bill “would correct this unfair policy and bring COLAs for the more than one million FERS retirees and survivors in line with the full COLAs that CSRS retirees and Social Security beneficiaries currently receive,” William Shackelford, national president of the National Active and Retired Federal Employees Association said in a statement. “COLAs are a valuable tool to ensure that decades of hard work aren’t washed away over time.”

Another bill in Congress aims to change the calculation of the COLA overall. The Fair COLA for Seniors Act, which Rep. John Garamendi (D-Calif.) reintroduced in February, would require SSA to calculate the COLA based on the Consumer Price Index for the Elderly (CPI-E), rather than the CPI-W.

The CPI-E is focused on individuals ages 62 and older, the minimum age requirement for those who receive the COLA. The price index emphasizes health care spending in its calculation. Advocates of the legislation said the CPI-W doesn’t accurately account for seniors’ spending habits, which often have larger proportions going toward health care spending.

“It only makes sense that more weight should be given to the cost of health care when determining COLAs for our nation’s seniors,” Shackelford said in a February statement. “That is exactly how CPI-E operates.”

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