Federal retirees in the Federal Employees Retirement System will see a 2.6 percent cost-of-living adjustment on their annuities in January 2027, a full point below the 3.6 percent going to retirees in the older Civil Service Retirement System. Many FERS retirees younger than 62 get no adjustment at all. The Congressional Research Service says “beginning in January 2027, the CSRS COLA is 3.6% and the FERS COLA is 2.6%.”

The timing and the dollars are what most annuitants want first. The adjustment is legally effective in December, but CRS says it first shows up “in the benefits issued during the following January.” Federal Pension Advisors lists the 2027 FERS COLA effective date as Dec. 1, 2026, and GovExec’s Tammy Flanagan wrote that a $3,000 monthly FERS annuity would increase by about $78, to approximately $3,078 before deductions.

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Why FERS gets a point less than CSRS

The gap is built into the formula. CRS explains that when inflation is under 2.0 percent, the FERS adjustment equals the full rise in the consumer price index for urban wage earners, known as CPI-W. When inflation runs between 2.0 and 3.0 percent, FERS gets a flat 2.0 percent.

When inflation is greater than 3.0 percent, the FERS COLA is the CPI-W minus one percentage point. This year’s measured increase was 3.6 percent, the same figure Social Security applies to benefits payable in January 2027, according to the Social Security Administration’s 2027 determinations notice, which is set for Federal Register publication on Oct. 26. CSRS keeps all 3.6 percent. FERS keeps 2.6.

Which FERS retirees under 62 get nothing

CRS states the rule plainly: “COLAs are not paid to nondisabled FERS retirees as long as they are under the age of 62.” A retiree who left federal service at 57, for example, sees an unchanged annuity in January and starts receiving adjustments at 62.

There are exceptions. CRS says COLAs are paid to survivors of FERS retirees and to disabled FERS retirees of any age after the first year of disability. GovExec adds retirees who left under the special provisions for law enforcement officers, firefighters and Capitol Police, those who retired under the special provision for air traffic controllers, and military reserve technicians who lost military membership because of disability.

What happens in the first year on the roll

A newer retiree who does qualify for an immediate COLA does not necessarily get the full 2.6 percent. GovExec reports that the increase is “prorated according to the annuity commencing date” during the first year on the annuity roll.

Two other groups see a different outcome. Survivor annuitants under CSRS get the same 3.6 percent, though the first adjustment may be prorated. FERS disability annuitants receiving the 60 percent rate during their first year on the disability roll do not get a COLA increase.

Is the Equal COLA Act going anywhere?

Congress has a bill that would end the one-point gap. The Equal COLA Act, H.R. 491 in the House and S. 624 in the Senate, would provide full cost-of-living adjustments to FERS annuities. It was introduced on Jan. 16, 2025 and sits at the first stage of the legislative process.

GovTrack puts its chance of passing at nine percent, according to GovExec. Until lawmakers act, the CRS figures stand: 3.6 percent for CSRS, 2.6 percent for FERS and nothing for most nondisabled FERS retirees under 62. Whether the bill moves before the next January adjustment is the open question.

Will the 2.6% in January change the tax picture?

A larger annuity check from January raises the income that decides how much of a Social Security benefit is taxed, and the 2.6 percent arrives on top of whatever a retiree already draws from savings. For FERS retirees under 62 with no adjustment, the withdrawal order matters more because the annuity does not grow.

The Retirement Tax & Withdrawal Planner includes four calculators (provisional income, IRMAA tier, RMD schedule, Roth bracket fill), the senior deduction and the account withdrawal order. It is about the tax side of a retirement income, not the federal annuity rules.

Get the provisional-income calculator and planner for a January annuity raise →

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