Cost of living adjustment (COLA), is always an intriguing topic and it’s no surprise that it’s a common question of how it would affect FERS transferees. It’s good to note that most of the FERS transferees especially those that transferred to FERS in one of the two open seasons or immediately on returning to federal service have already retired.
This is why things get interesting. Every FERS transferee was eligible for a CSRS annuity for the years worked there as well as a FERS annuity for the duration worked under FERS. These two would then be combined to provide one monthly payment.
The following is an example of calculating a FERS transferee annuity. For this particular employee, he spent 15 years under CSRS then left federal service. However, on returning, he decided to get covered under FERS then retired after working there for 18 years. He finally left federal service with a high-three salary of $75,000.
|Years of service||Percentage factor||Amount|
|15 years of CSRS||26.25%||$19,687.50|
|18 years of FERS||18% at the 1% factor
19.8% at the 1.1% factor
|Total pension||If FERS time = 1%
If FERS time = 1.1%
As it with the rules and regulations, CSRS a cost of living adjustment would be conducted on the CSRS part of the pension while FERS received a FERS cost of living adjustment. This routine is entirely made to balance the amount one gets as part of their pension.
This is what the above data means in a nutshell. For the year 2019, it would mean that the CSRS part of the annuity would get the entire 2.8% cost of living adjustment and might receive 2% for the FERS portion. Also, note that an increase in the consumer price index between 2% and 3% means the FERS cost of living adjustments will be limited to 2%. Everything is related and in as much as most of these adjustments generally apply there a few specifications here and there. The reason behind the uncertainty of receiving the FERS portion is because you have to be a special category employee to get considered. The standard rule is that for the FERS COLA eligibility you have to be at least 62 years of age or above.
There are FERS rules as well and like every other thing; they have to be followed to the later especially for federal employees interested in the survivor benefits. There are other rules like those of a deposit service, redeposit and military deposits which are mainly based won when the service took place. It is worth noting that all federal employees have to stick to the rules put in place or whatever the deposit was might not count, and they would have no one to blame but themselves. Retirement is inevitable, and whether we like it or not, we will have to at some point. However, the decision of when to retire varies from one individual to the other, so it entirely depends with the options at hand.