§2131 Cost-of-living Adjustment of Annuities

Summary

Annuities paid from the fund must get cost-of-living increases that match the same percent used for federal civilian pay raises, and those increases take effect on the same dates. Who gets an increase depends on when the annuity started on the effective date. The first increase for a new retiree or for a survivor whose annuity was not yet increased is prorated: it equals 1/12 of the full percent times the number of months the annuity was paid (count any part of a month as a month, up to 12 months) and is rounded to the nearest tenth of a percent. A survivor (other than certain children) gets whatever total percent the annuitant was receiving at death. Child annuities starting after October 31, 1969 are raised by the total cost-of-living increases that have been in force since that date. No cost-of-living increase can be applied to extra annuity bought with voluntary contributions. After an increase, the monthly amount is rounded down to the next lower dollar but must go up by at least $1. An increase cannot make an annuity larger than the greater of: (1) the GS–15 maximum pay as of 30 days before the increase, or (2) the participant’s final pay (or higher average pay) grown by the compounded General Schedule pay adjustments from the annuity’s start date to the increase date. “Pay” means the rate of salary or basic pay.