The 2027 COLA for Federal Retirees: 3.6 Percent Under CSRS, 2.6 Under FERS, and Who Gets Less

Bottom line

One percentage point is the gap between the two retirement systems in January. The 2027 cost-of-living adjustment is 3.6 percent for CSRS annuities, Social Security and military retirement, and 2.6 percent for FERS annuities ^{[5, 6]}. Retirees who started drawing an annuity this year, and many FERS retirees under 62, will receive less than either figure or nothing at all, and the reasons are written into the statute ^{[2, 3]}.

What happened

The number. The Social Security Administration announced the 3.6 percent figure on Wednesday, October 14, after the Bureau of Labor Statistics released September’s consumer prices that morning, according to Federal News Network ^{[1, 5]}. The index that drives federal annuities is the CPI-W, the measure for urban wage earners and clerical workers. It stood at 330.654 in September, up 3.9 percent from a year earlier ^[1].

That 3.9 percent is not the COLA. The law looks at a “base quarter,” which it defines as “the calendar quarter ending on September 30,” and compares the average index for July, August and September with the same average from the last year an adjustment was made ^{[2, 3]}. Twelve-month inflation in September alone ran higher than the quarterly comparison did, which is why the two numbers differ.

Why FERS gets less. The FERS formula has three bands ^[2]:

• If the price change is 2 percent or less, FERS annuities get the full change.
• Between 2 and 3 percent, they get 2 percent.
• Above 3 percent, they get the change minus one point.

At 3.6 percent, the third band applies, and the result is 2.6 percent ^{[2, 5]}. CSRS has no such reduction: section 8340 passes through the full percent change, rounded to the nearest tenth ^[3]. For comparison, the 2026 COLA was 2.8 percent, which fell in the middle band and gave FERS retirees 2 percent ^[5].

The difference in dollars is modest in any one month. Government Executive’s examples: a $4,000 monthly CSRS annuity rises about $144, and a $3,000 FERS annuity rises about $78 ^[6]. CSRS monthly amounts after the adjustment are rounded down to the dollar, with a floor of a $1 increase ^[3].

The legislative backdrop. The Equal COLA Act, H.R. 491 in the House and S. 624 in the Senate, would give FERS annuities the full adjustment ^[6]. Both bills were introduced January 16, 2025 ^[6]. Federal News Network reports that the House bill has 90 cosponsors and has not moved ^[5]. NARFE, the retirees’ association, backs it; its national president, William Shackelford, said FERS retirees face the same inflation as other retirees ^[5].

What it means for you

CSRS retirees and survivors. The full 3.6 percent applies, effective December 1 and paid starting with January’s payment ^{[3, 5]}. Survivor annuities that began after the retiree’s death carry forward the increases the retiree had received ^[3].

FERS retirees 62 and older. Expect 2.6 percent ^{[2, 5]}. Your Social Security benefit, if you draw one, rises the full 3.6 percent, so the combined increase on total retirement income lands somewhere between the two ^{[5, 6]}.

FERS retirees under 62. Readers should be precise about which provision they retired under. Section 8462(c)(3) says an adjustment “shall not be effective” for an annuitant under age 62, but it applies only to immediate, early and deferred retirements under sections 8412, 8413 and 8414 ^[2]. Two groups inside section 8412 are carved out: those retiring under subsection (d)(1), which covers law enforcement officers, Capitol and Supreme Court Police, firefighters, nuclear materials couriers and customs and border protection officers, and air traffic controllers under subsection (e) ^{[2, 4]}. Annuities paid under any other section of FERS are outside the age-62 limit ^[2]. A regular FERS retiree who is 59 this December gets no 2027 increase.

Anyone who retired in 2026. The first COLA on a new annuity is prorated. The statute gives one-twelfth of the percent change for each month the annuity was payable before December 1, up to 12, and “counting any portion of a month as a month” ^{[2, 3]}. By this column’s count, an annuity that began June 1, 2026 was payable for six months before December 1, which works out to roughly 1.8 percent under CSRS and 1.3 percent under FERS. OPM computes the figure that actually appears on each statement.

Retirees still working, or drawing the FERS supplement. The Social Security earnings limit rises to $25,560 in 2027 from $24,480, according to Government Executive ^[6]. That limit also governs the FERS annuity supplement, which is reduced $1 for every $2 earned above it, with exceptions for some special-provision retirees ^[6].

Active employees. None of this reaches a paycheck. The president’s alternative pay plan holds General Schedule base and locality rates at 2026 levels, Government Executive reports, while law enforcement personnel are slated for a 3.8 percent increase through special salary rates ^[6].

What will eat into the increase. Health premiums. Open season runs November 9 through December 14, and annuitants can change FEHB, PSHB and dental and vision coverage during it ^[7]. The October 1 memo covered 2027 premium rates. Medicare Part B is the other deduction: the Medicare trustees estimated a 2027 standard premium of $209.50, Government Executive reports, but CMS had not released the official figure ^[6].

• OPM’s own COLA notice and the 2027 FERS basic employee death benefit for spouses. Government Executive calculates about $45,377.34, up from $43,800.53, pending OPM’s announcement ^[6].
• The 2027 Medicare Part B premium and income-related surcharges. The surcharges will generally be based on 2025 tax returns ^[6].
• The 2027 interest rate on service credit deposits, now 4.25 percent. Treasury typically announces it in late November or December ^[6].

Questions you’re probably asking

What is the 2027 COLA for CSRS retirees?

3.6 percent, the same as the Social Security increase announced October 14 ^[5]. CSRS annuities get the full change in the CPI-W measure ^{[3, 6]}.

What is the 2027 COLA for FERS retirees?

2.6 percent. When inflation tops 3 percent, the FERS formula subtracts one point ^{[2, 5]}.

When will the 2027 COLA show up in my annuity?

The increase is effective December 1 by statute and appears in payments beginning in January 2027 ^{[2, 3, 5]}.

I retired in 2026. Do I get the full 2027 COLA?

No. A first increase is prorated at one-twelfth of the annual figure for each month your annuity was payable before December 1, counting a partial month as a full one ^{[2, 3]}.

I’m a FERS retiree under 62. Do I get the 2027 COLA?

Not if you retired under the regular immediate, early or deferred provisions; those increases start only once you reach 62 ^[2]. Retirees from law enforcement, firefighter, air traffic controller and similar special provisions are exempt from that rule ^{[2, 4]}.

What I’m watching

• Late October or November: CMS’s 2027 Part B premium, which sets how much of the January increase reaches retirees on Medicare ^[6].
• November 9 to December 14: the FEHB and PSHB open season, the last chance to change plans before the new premiums take effect ^[7].
• No date set: OPM’s 2027 COLA and death benefit announcement ^[6].