Federal Retirees Under FERS Get a 2.6% Cost-of-Living Raise for 2027, a Full Point Less Than CSRS Retirees and Social Security

Two retired federal workers can open the same October inflation report and come away with different raises. A retiree in the Civil Service Retirement System (CSRS) gets 3.6% added to the annuity for 2027, the same as Social Security. A retiree under the Federal Employees Retirement System (FERS) gets 2.6%, a full percentage point less.

The Office of Personnel Management’s retiree guidance lists the 2027 FERS increase as 2.6 percent. The gap is built into federal law, not a clerical difference, and it applies this year because inflation ran above 3%.

Where the Missing Point Goes

The Social Security Administration announced on Oct. 1 that Social Security benefits and SSI payments rise 3.6% for 2027, reaching 76 million people. CSRS annuities follow the same percentage. FERS uses a sliding formula tied to that number.

The Congressional Research Service describes the FERS formula this way: inflation under 2.0% passes through in full, inflation from 2.0% to 3.0% yields a 2.0% COLA, and inflation above 3.0% yields the CPI-W change minus one percentage point. With the third-quarter measure at 3.6%, the FERS figure lands at 2.6%.

The National Active and Retired Federal Employees Association (NARFE) said in an Oct. 14 press release that the policy dates to the creation of FERS in the 1980s. NARFE National President William Shackelford called the reduced adjustment a “diet COLA.”

What a $3,000 Annuity Gains

Government Executive columnist Tammy Flanagan of Retirement Counseling and Training worked through examples in an Oct. 15 column. A $4,000 monthly CSRS annuity rises about $144, to roughly $4,144 before deductions. A $3,000 monthly FERS annuity rises about $78, to roughly $3,078.

The same column notes that the COLA applies to a FERS retiree’s basic annuity but not to the annuity supplement. Military retirement benefits, along with VA disability benefits, also rise 3.6%.

The raise is also not the only change in a federal retiree’s budget. NARFE’s release says the enrollee share of health insurance premiums for federal annuitants is projected to rise an average of 10.9% next year, after increases of 12.3% for 2026 and 13.5% for 2025. The association argues the COLA does not offset that rise.

On the $3,000 FERS example, a 3.6% raise would have added about $108 a month. The 2.6% adds about $78, so the one-point difference is roughly $30 a month, or about $360 over a year, before deductions. The gap compounds in later years, because each year’s adjustment is applied to an annuity that is already smaller.

Who Waits Until 62

Not every FERS retiree gets the 2.6%. According to the Congressional Research Service, nondisabled FERS retirees under age 62 do not receive the FERS COLA. Survivors and disabled retirees receive it regardless of age, with disabled retirees eligible after the first year of disability.

OPM’s guidance adds that most FERS retirees, including FERS Special, become eligible at age 62, and that retirees who left service within the last year receive a prorated amount, with OPM sending a letter explaining it. Flanagan’s column lists further exceptions to the under-62 rule, including certain law enforcement, firefighter, Capitol Police and air traffic controller retirees.

Flanagan’s column lists other rules that carry over from past years. FERS disability annuitants receiving the 60% rate during their first year on the disability roll do not get a COLA increase. For survivor annuitants, the adjustment applies to both the basic survivor annuity and the supplement, if one is payable, and a first COLA may be prorated by the months on the annuity roll.

The CSRS side has no age test. The Congressional Research Service says all CSRS retirees and survivors receive the full 3.6%.

When the Larger Payment Arrives, and How It Compares

OPM’s page on when the cost-of-living adjustment is paid says the change takes effect each December 1 and shows up in the payment received on the first business day of January, which covers the December benefit.

Social Security timing is different. The SSA announcement says Social Security increases take effect in January 2027, while SSI recipients see a higher payment starting Dec. 31, 2026. The Tonic Edit has covered the first checks with the 2027 raise and the paperless-notice deadline for reading the new amount online early.

For comparison, Flanagan’s column estimates the average retired-worker Social Security benefit rising from $2,095 to $2,170 a month under the 3.6% adjustment, consistent with the SSA’s figure of about $75 a month. Social Security beneficiaries and CSRS retirees therefore see the full percentage, while most FERS retirees over 62 see one point less.

Flanagan also lists several 2027 limits that moved with wages and prices. The FERS annuity supplement earnings limit rises to $25,560 from $24,480 in 2026, and the Social Security taxable maximum rises to $192,300 from $184,500. The FERS spousal Basic Employee Death Benefit rises to about $45,377.34 from $43,800.53.

Active employees face a different picture. Flanagan’s column reports that the president announced a 2027 pay freeze for most General Schedule base and locality rates, with law enforcement personnel slated for a 3.8% increase.

The Bill That Would Close the Gap

NARFE is urging Congress to pass the Equal COLA Act (H.R. 491 and S. 624), which would give FERS retirees the full inflation-based adjustment. According to Flanagan’s column, the bill was introduced Jan. 16, 2025, and the tracking site GovTrack gives it a nine percent chance of passing. Until it moves, the 2.6% figure stands.

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This article was produced with AI assistance and edited for accuracy against the sources linked above.

Image: G. Edward Johnson – CC BY 4.0/Wikimedia Commons