On Annuity COLAs, Recent Retirees Should Note Prorating

Social Security benefits also will increase by 2.8 percent. That’s primarily of interest to FERS retirees, for whom Social Security is a basic part of the retirement benefit, but is also of interest to CSRS Offset retirees, who have Social Security coverage as part of their benefit. Image: AliaksaB/Shutterstock.com
By: FEDweek Staff

A COLA is being paid with January annuity payments of 2.8 percent for those retired under CSRS and 2 percent for those retired under FERS who are eligible for a COLA, with the increases in both cases prorated for those who have been on the retirement rolls for less than 12 months.

Those retired under CSRS (or the hybrid CSRS Offset) receive a full COLA regardless of their age. While only a few percent of active federal employees are now under CSRS, about half of current federal annuitants retired under that system.

Those retired under FERS don’t receive COLAs until age 62 unless they retired on disability or under the special retirement provisions for law enforcement officers, firefighters or air traffic controllers. Further, where the COLA count falls between 2 and 3 percent—as it did in the inflation count for the 2026 adjustment—eligible FERS retirees receive a flat 2 percent; all of those provisions are part of the 1980s law that created FERS.

Also, some “pure” CSRS retirees qualify for Social Security through from military service or earnings covered under that system before, after—and in some cases from outside earnings during—their CSRS working years. As a reminder, the “windfall elimination provision” which for many years had reduced those benefits in many cases no longer applies, as it was repealed by a late 2024 law retroactive to the end of 2023.

Social Security COLAs are not prorated those drawing benefits for less than a year.

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