2 percent federal retirement COLA set for January

2 percent federal retirement COLA set for January

Most federal retirees will see their annuity benefits increase by 2 percent in January, the largest inflation-based increase since 2012 and an amount about in line with what current federal employees stand to receive as a pay raise.

The cost of living adjustment, or COLA, reflects the increase in a consumer price index measure from the third calendar quarter of one year to the next. The calculation was finalized Friday after taking into account inflation in September.

The impact on benefits will differ between the two main federal retirement systems. While more than nine-tenths of current federal employees are under the Federal Employees Retirement System — which generally covers those first hired after 1983 — two-thirds of the 2.1 million federal retirees draw benefits from the older Civil Service Retirement System.

The CSRS program provides for a full COLA adjustment to all retirees regardless of age. The average monthly annuity under that program is about $3,600, meaning that the increase will be worth about $72 monthly on average.