S 624119th CongressIn Committee

Equal COLA Act

Introduced: Feb 18, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Equal COLA Act would change how cost-of-living adjustments (COLAs) are calculated for federal retirement annuities under the Federal Employees Retirement System (FERS). Specifically, it would amend 5 U.S.C. 8462(b)(1) to base each annual COLA on the percent change in the price index (CPI) for the base quarter of the current year over the base quarter of the preceding year in which an adjustment was made, with rounding to the nearest 0.1 percent. The adjustment would take effect on December 1 of each year and would apply to all annuities governed by section 8462, including those beginning before, on, or after the date of enactment. The bill’s title signals an aim of parity between FERS COLAs and those for the Civil Service Retirement System (CSRS), effectively aligning how inflation adjustments are calculated across these retirement programs. In practical terms, this bill would standardize and potentially increase or decrease annual COLAs for FERS annuities (depending on CPI changes) and would apply uniformly to all affected annuities beginning at or after enactment, with the rounding rule providing a consistent 0.1 percentage point adjustment.

Key Points

1Purpose and scope: Establish parity in how COLAs are calculated for FERS annuities with respect to CSRS, by adopting a CPI-based formula for the annual adjustment.
2Method of calculation: Each December 1, the COLA would equal the percent change in the price index for the base quarter of the current year over the base quarter of the preceding year in which an adjustment was made, rounded to the nearest 0.1%.
3Effective date and applicability: Applies to any COLA made after enactment and to any annuity under 5 U.S.C. 8462 (FERS) regardless of whether the annuity commenced before or after enactment.
4Rounding rule: Adjustments are rounded to the nearest tenth of a percent (0.1%).
5Legislative intent: The bill is titled the Equal COLA Act, signaling an objective to harmonize COLA treatment between FERS and CSRS and provide consistent inflation protection for retirees.

Impact Areas

Primary group/area affected: Federal retirees receiving FERS annuities (and those whose benefits are governed by 5 U.S.C. 8462). The COLA amounts they receive would be determined under the new CPI-based formula with 0.1% rounding.Secondary group/area affected: The Civil Service Retirement System (CSRS) population, to the extent parity with CSRS is achieved by aligning the COLA methodology; the bill signals an intent to harmonize treatment between the two systems.Additional impacts:- Fiscal: The change affects the Civil Service Retirement and Disability Fund (CSRDF), which funds federal retiree benefits. Depending on CPI movements, annual outlays for COLAs could rise or fall, affecting long-term budgeting for the fund.- Administrative: Implementation would require applying the new COLA formula consistently across all qualifying annuities, including those already in payment and those beginning in the future, and ensuring rounding is uniformly applied.- Policy considerations: If CSRS COLAs use a different methodology, this bill could prompt further updates or legislative work to reconcile any remaining structural differences between the two systems.The text provided focuses on amending the FERS COLA calculation. While the bill’s title references parity with CSRS, the enacted provision directly changes how the FERS COLA is computed and applied.Definitions (e.g., which CPI series constitutes the “price index,” what constitutes the “base quarter,” and how the “preceding year in which an adjustment” is determined) would be clarified in implementing regulations or accompanying statutory notes.

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