The 2024 cost of living adjustment (COLA) is expected to be announced on Thursday. Social Security beneficiaries and Civil Service Retirement System (CSRS) retirees are expected to receive a 3.2% COLA for 2024, while Federal Employees Retirement System (FERS) retirees, those hired in 1984 or later, will only see a diet COLA of 2.2%.
That’s because of the way COLA is calculated for FERS.
Under current law, the COLAs for Social Security, CSRS, and FERS are all calculated based on the rate of inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If CPI is 2% or less, the FERS COLA is the same as the CSRS and Social Security COLA. But if the CPI is between 2.01% and 3%, the FERS COLA is 2%. If the CPI is greater than 3%, then the COLA for FERS is 1% less than the CSRS COLA.
That’s why the CSRS COLA for 2023 is 8.7% and FERS COLA is a full percentage point lower, 7.7%. For 2024, CSRS retirees are expected to get 3.2% while their FERS counterparts are expected to get only 2.2%.
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.
Already, someone who retired under FERS two years ago with an average benefit would have seen their pension fall $440 behind what their yearly benefit should be if it kept up with inflation.
That’s why AFGE supports the Equal COLA Act, a bipartisan House bill introduced by Rep. Gerry Connolly, D-Va., earlier this year. It already has 40 co-sponsors. The bill’s Senate version is expected to be announced this week by Sen. Alex Padilla, D-Calif.
Sen. Padilla’s office will circulate a Dear Colleague letter to other Senate offices encouraging them to cosponsor this effort, and AFGE will help mobilize an advocacy effort for additional support.
You can do something to help pass the Equal COLA Act
Look for an action alert email coming soon.
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