2025 COST OF LIVING ADJUSTMENT (COLA)

October 15th, 2024 | Posted by admin in Benefits | COLA | News | Political

Most Feds to Receive Diet COLA – Again – in 2025

October 15, 2024

The 2025 cost of living adjustment (COLA) was announced last week, and most federal workers will again receive a reduced COLA due to a flawed rule in the current law.

For 2025, Social Security beneficiaries and Civil Service Retirement System (CSRS) retirees are expected to receive a 2.5% COLA, while Federal Employees Retirement System (FERS) retirees, those hired in 1984 or later, will only get a 2% increase.

Under the current law, the COLAs for Social Security, CSRS, and FERS are all calculated based on the rate of inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If CPI is 2% or less, the FERS COLA is the same as the CSRS and Social Security COLA. But if the CPI is between 2.01% and 3%, the FERS COLA is 2%. If the CPI is greater than 3%, then the COLA for FERS is 1% less than the CSRS COLA.

What does that mean for a FERS retiree? It means they will lose $128 a year just for 2025, assuming the same average pension. But for those who retired four years ago with the same average pension, their pension would have lost more than $1,000 to rising costs because the losses are compounded.

This unfair penalty places FERS retirees further away from keeping pace with the cost of living.

That’s why AFGE supports the Equal COLA Act (S. 3194 introduced by Sen. Alex Padilla and H.R. 866 introduced by Rep. Gerry Connolly) which would eliminate this unfair penalty for FERS Retirees. The legislation would also eliminate the arbitrary pension cost of living reduction federal employees face in high inflation years.

“Our nation’s public servants shouldn’t see their hard-earned retirement benefits eroded by a COLA set at the start to be arbitrarily lower the real inflation rate,” said AFGE Legislative Director Julie Tippens.