Sponsors (21)
The bill makes federal retirement COLAs more uniform and administratively simpler via a fixed base-quarter formula and 1% rounding—benefitting retirees and OPM consistency—while risking higher federal retirement costs and greater year-to-year benefit variability (and occasional smaller raises) for some retirees.
Federal retirees (current and future FERS annuitants) will get annual COLAs based on a clear, fixed base-quarter formula, making year-to-year cost-of-living adjustments more predictable.
The formula is applied to annuities regardless of their commencement date, ensuring current and future retirees are treated the same under the new COLA rule.
Standardizing rounding to the nearest 1% reduces fractional payment calculations and simplifies administration for OPM.
Taxpayers and the federal budget could face higher retirement spending if COLAs increase under the new formula, increasing fiscal costs.
Rounding COLAs to the nearest 1% may produce larger year-to-year jumps (up or down) in benefits, increasing income volatility for some retirees.
In some years the new base-quarter comparison could yield smaller COLA increases than the prior methodology, meaning some retirees might receive lower raises than under current law.
Based on analysis of 2 sections of legislative text.
Sets FERS annuity COLAs to an annual December adjustment equal to year-over-year change in the base-quarter price index, rounded to the nearest 1%.
Changes how annual cost-of-living adjustments (COLAs) are calculated for Federal Employees Retirement System (FERS) annuities so that, each year effective December 1, eligible annuities are increased by the year-over-year percent change in the applicable price index for the base quarter, rounded to the nearest 1 percent. The change applies to COLAs made after enactment and to any annuity covered by the statute regardless of its commencement date (before, on, or after enactment).
Introduced February 18, 2025 by Alejandro Padilla · Last progress February 18, 2025