COLA formula


Q. What formula is used to calculate the annual increase to a CSRS pension?

A. Under 5 U.S. Code 8331(15), cost-of-living adjustments are based on the rate of inflation as measured by the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), where “price index” means Consumer Price Index (all items – U.S. city average). However, according to OPM, because “the BLS no longer publishes a CPI exactly as described in that definition … OPM uses the CPI for Urban Wage Earners and Clerical Workers (CPI-W), as published monthly by the Bureau of Labor Statistics, selected to be the index most similar to the statutory requirement. The CPI-W is also used by the Social Security Administration as their indexing base.” If the new process for calculating COLAs for Social Security beneficiaries were made law, it would apply equally to federal retiree COLAs.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to

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