2024 COLA Announced, Push to Reduce Disparity Among Federal Retirees
Federal retirees will receive more money as part of their annual Cost-of-Living Adjustment (COLA). However, the increase is less than the past two years as inflation wanes in the country.
The Social Security Administration (SSA) says the 2024 COLA will be 3.2 percent. That’s down from 8.7 percent in 2023 (which was the highest increase in 40 years) and 5.9 percent in 2022, as the nation dealt with inflation pressure.
Federal retirees in the Civil Service Retirement System (CSRS) will receive the full 3.2 percent COLA increase. However, federal retirees in the Federal Employees Retirement System (FERS), will receive only a 2.2 percent COLA, under a predetermined formula.
The pay disparity dates to the 1980s and the creation of the FERS system. At the time, Congress said it would create balance since employees in FERS received a matching government contribution of up to 5 percent in the Thrift Savings Plan, which CSRS retirees did not.
However, the disparity for years caught the attention of federal labor groups and members of Congress, who say it’s simply unfair in today’s inflationary environment.
“The difference for an average retiree is $18.37 a month, but over time, this could set FERS employees back thousands or even tens of thousands in retirement benefits, especially if we have a lot of high inflation years,” the American Federal of Government Employees (AFGE) said in a statement.
Congressional Action Pending
One of the bills pending in Congress it the Equal COLA Act (H.R. 866). The legislation would equalize the COLAs that FERS and CSRS retirees receive, bringing the more than one million FERS retirees and survivors in line with their counterparts.
Representative Gerry Connolly (D-VA) and Senator Alex Padilla (D-CA) sponsor the bicameral legislation.
“This two-tiered system fails to protect FERS retirees who are living on a fixed income,” said Rep. Connolly at the time of the bill’s reintroduction in February. “This legislation will rectify this unfair system and ensure these dedicated public servants are protected throughout their retirement.”
The legislation has support from many employee organizations including the National Association of Retired Federal Employees (NARFE).
“NARFE will continue to work with Congress to advance policies that bolster COLAs and protect them from misguided attempts to weaken them. COLAs are a valuable tool to ensure that decades of hard work aren’t washed away over time,” said NARFE President William Shackelford in a statement.
There’s also the Fair COLA for Seniors Act, which was reintroduced by Representative John Garamendi (D-CA). It requires SSA to calculate the COLA based on the Consumer Price Index for the Elderly (CPI-E), rather than the CPI for Urban Wage and Clerical Workers (CPI-W), as is current practice. Advocates say CPI-W doesn’t account for seniors spending habits, which often veer more toward healthcare costs.