((a)) ** In general** Each annuity payable from the fund shall be adjusted as follows:
((1)) Each cost-of-living annuity increase under this section shall be identical to the corresponding percentage increase under .
((2)) A cost-of-living increase made under paragraph (1) shall become effective under this section on the effective date of each such increase under . Except as provided in subsection (b), each such increase shall be applied to each annuity payable from the fund which has a commencing date not later than the effective date of the increase.
((b)) ** Eligibility** Eligibility for an annuity increase under this section shall be governed by the commencing date of each annuity payable from the fund as of the effective date of an increase, except as follows:
((1)) The first cost-of-living increase (if any) made under subsection (a) to an annuity which is payable from the fund to a participant who retires, to the surviving spouse, former spouse, or previous spouse of a participant who dies in service, or to the surviving spouse, former spouse, previous spouse, or insurable interest designee of a deceased annuitant whose annuity has not been increased under this subsection or subsection (a), shall be equal to the product (adjusted to the nearest ⅒ of one percent) of—
((A)) ⁄ of the applicable percent change computed under subsection (a), multiplied by
((B)) the number of months (not to exceed 12 months, counting any portion of a month as a month)—
((i)) for which the annuity was payable from the fund before the effective date of the increase, or
((ii)) in the case of a surviving spouse, former spouse, previous spouse, or insurable interest designee of a deceased annuitant whose annuity has not been so increased, since the annuity was first payable to the deceased annuitant.
((2)) Effective from its commencing date, an annuity payable from the fund to an annuitant’s survivor (other than a child entitled to an annuity under ) shall be increased by the total percentage increase the annuitant was receiving under this section at death.
((3)) For purposes of computing the annuity of a child under that commences after , the dollar amounts specified in shall each be increased by the total percentage increases allowed and in force under this section on or after such day and, in the case of a deceased annuitant, the percentages specified in that section shall be increased by the total percent allowed and in force to the annuitant under this section on or after such day.
((c)) ** Limitation** An annuity increase provided by this section may not be computed on any additional annuity purchased at retirement by voluntary contributions.
((d)) ** Rounding to next lower dollar** The monthly annuity installment, after adjustment under this section, shall be rounded to the next lowest dollar, except that such installment shall, after adjustment, reflect an increase of at least $1.
((e)) ** Limitation on maximum amount of annuity**
((1)) ** In general** An annuity shall not be increased by reason of an adjustment under this section to an amount which exceeds the greater of—
((A)) the maximum pay payable for GS–15 30 days before the effective date of the adjustment under this section; or
((B)) the final pay (or average pay, if higher) of the participant with respect to whom the annuity is paid, increased by the overall annual average percentage adjustments (compounded) in the rates of pay of the General Schedule under subchapter I of chapter 53 of title 5 during the period—
((i)) beginning on the date on which the annuity commenced (or, in the case of a survivor of the retired participant, the date on which the participant’s annuity commenced), and
((ii)) ending on the effective date of the adjustment under this section.
((2)) ** “Pay” defined** For purposes of paragraph (1), the term “pay” means the rate of salary or basic pay as payable under any provision of law, including any provision of law limiting the expenditure of appropriated funds.