Lawmakers Try Again to Standardize Cost of Living Raises for Federal Retirees

Rep. Gerry Connolly, D-Va., on Wednesday reintroduced legislation that would standardize the annual increase in annuity payments that retired federal workers receive across the government’s two primary pension systems.

The Equal COLA Act would ensure that federal retirees in the Federal Employees Retirement System and the Civil Service Retirement System both receive the same annual percentage cost of living increase each year.

Currently, the CSRS calculates cost of living adjustments based on the annual change in the third quarter consumer price index for workers, just like Social Security. But FERS COLAs are based on an extrapolation from that figure: if the CSRS sees an increase of under 2%, FERS retirees will receive the full increase. But if the adjustment is between 2% and 3%, FERS enrollees would only receive a 2% increase. And if the CSRS COLA is 3% or more, FERS retirees would receive that increase, minus 1 percentage point.

This discrepancy has garnered more ire from FERS enrollees in the last two years due to the heightened levels of inflation. In January, CSRS retirees saw an 8.7% increase in their defined benefit pension payments, while FERS enrollees only received a 7.7% adjustment.

Connolly’s bill, which he previously introduced in 2021, would tie both retirement systems’ cost of living adjustments to the CPI-W. In a statement announcing the legislation’s introduction, he called the prospect of parity between the two systems “long overdue.”

“This two-tiered system fails to protect FERS retirees who are living on a fixed income,” he said. “This legislation would rectify this unfair system and ensure these dedicated public servants are protected throughout their retirement.”

The National Active and Retired Federal Employees Association has long advocated not only for Congress to standardize cost of living adjustments for FERS and CSRS employees, but also for lawmakers to shift the underlying statistics used to calculate the raises—and Social Security adjustments—from the CPI-W to the consumer price index for the elderly, which they argue better reflects retirees’ living costs. William Shackelford, the group’s president, endorsed Connolly’s legislation Wednesday.

“The Equal COLA Act would ensure federal retirees maintain the value of their retirement annuities, earned through careers in public service, by providing full COLAs to FERS retirees,” he said. “Unfortunately, when inflation is high, as it has been recently, FERS retirees only receive a diet COLA, reduced by as much as 1 percentage point. This may not seem like a lot at first glance, but when the reduction compounds year after year, it may cost an average FERS retiree tens of thousands of dollars over the course of their retirement—and even more for some.”

The bill also has the support of the National Treasury Employees Union National President Tony Reardon.

“The time has come for parity in how cost-of-living increases are calculated for federal retirees,” he said. “The Equal COLA Act . . . is exactly the right solution, by making sure that FERS and CSRS annuitants are treated equally and fairly when economic conditions require a cost-of-living increase for these retired civil servants.”