Cost-of-living-adjustment (COLA) rates for federal annuities in 2022 were announced earlier today.
Retirees under the Civil Service Retirement System (CSRS) will receive a 5.9 percent increase while those under the Federal Employee Retirement System (FERS) will see their monthly pensions adjusted by 4.9 percent starting with January 2022 payments. This is the largest increase in nearly 40 years.
The CSRS annual annuity increase is equal to the annual change in the third quarter consumer price index for workers, but the calculation for FERS annuitants is different. Under the law, if CSRS retirees receive an increase of under 2 percent, FERS retirees will receive the full COLA. If the adjustment is between 2 and 3 percent, FERS enrollees would only receive a 2 percent increase. And if, like next year, the CSRS COLA is 3 percent or more, FERS retirees receive 1 percentage point less than CSRS retirees.
For years, NTEU has worked to protect federal retiree COLAs from severe cuts and even elimination. NTEU also fights recurring proposals aimed at replacing the formula used to determine the COLA with a “chained CPI.” Over a 10-year period, a chained CPI could reduce federal annuities by thousands of dollars.
The retiree COLA is unrelated to the pay raise for current federal employees, which will be finalized later in the year. NTEU continues to support the FAIR Act, which would enact a 3.2 percent increase for federal employees in 2022.