2023 COLA Is Highest in Decades, but Shortchanges Many Retirees

Over the last year, consumer prices have steadily climbed, setting highs for health care costs, gasoline prices, groceries and other consumer goods. This record inflation has driven the automatic costof-living adjustment (COLA) for federal retirees to its largest increase since 1982.

Specifically, beginning in January 2023, Civil Service Retirement System (CSRS) annuities and Social Security benefits will increase through an 8.7% COLA, while Federal Employees Retirement System (FERS) annuities will receive a 7.7% COLA.

As former NARFE National President Ken Thomas said in response to the October announcement of the rates, “With inflation so high, the security of automatic COLAs for retirement benefits becomes even more evident. Without it, seniors would see the value of their retirement income erode drastically over time.” Unfortunately, FERS retirees do not receive the full increase.

Under current law, FERS retirees do not receive a full COLA if consumer prices increase by more than 2% annually. If consumer prices increase between 2% and 3%, FERS COLAs round down to 2%. If consumer prices are above 3%, FERS COLAs are always 1 percentage point less. This policy fails to protect the earned value of FERS annuities.

FERS retirees deserve full COLAs, and NARFE has urged Congress for years to address this inequity through the Equal COLA Act. This legislation would correct this longstanding, unfair policy and bring COLAs for the more than 1 million FERS retirees and

JANUARY/FEBRUARY ACTION ALERT: URGE YOUR REPRESENTATIVE TO SUPPORT THE REINTRODUCTION OF THE EQUAL COLA ACT IN THE 118TH

CONGRESS. Dial NARFE’s toll-free number, 1-800-456-8410, and press Option 5 to get transferred to your representative’s office, or visit the Legislative Action Center at www.narfe. org to send a message. Cost-of-living adjustments (COLAs) for Federal Employees Retirement System (FERS) annuities are capped at 2% when consumer prices increase between 2% and 3%, and are reduced by 1 percentage point when consumer prices increase by 3% or more. This unfair policy fails to fully protect the earned value of FERS annuities, which decrease in value year after year—exactly what COLAs are intended to prevent. Beginning January 2023, Civil Service Retirement System (CSRS) annuitants and Social Security beneficiaries will see a cost-ofliving adjustment of 8.7%, while FERS annuitants will receive a 7.7% COLA.