§4066 Cost-of-living Adjustment of Annuities

Summary

Annuity payments from the Fund must get the same cost-of-living increase and on the same date as the increase under section 8340(b) of title 5. The increase applies to any Fund annuity that began on or before that date. Extra annuities bought at retirement with voluntary contributions do not get the increase. After the increase is applied, the monthly payment is rounded down to the next whole dollar but must be at least $1 higher than before. The first increase for a newly eligible survivor or for an annuity that was not previously increased is prorated. It equals 1/12 of the percent increase times the number of months the annuity was paid (count any part of a month as a full month), then rounded to the nearest one-tenth of one percent. A survivor’s annuity starting on the participant’s death gets whatever total percentage increase the annuitant had at death. Child annuity dollar amounts ($900, $1,080, $2,700, $3,240) are raised by the same overall percentage increases under section 8340 of title 5 when the child’s annuity begins. Surviving spouses who became entitled because an annuitant before October 1, 1976 chose a reduced annuity to provide a spouse’s benefit get a 10 percent increase from their starting date. No increase may raise an annuity above the greater of (A) the FS–1 maximum pay under section 3963 as of 30 days before the increase, or (B) the former participant’s final (or higher average) pay adjusted by the compounded annual average pay changes in the Foreign Service Schedule under section 3963 from the annuity start to the increase date. “Pay” means the salary or basic pay rate.