COLA Update

Consumer Prices Increase in March

Relevant to the cost-of-living-adjustment (COLA) to civil service annuities for 2022, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased by 0.81 percent in March 2021.

As announced in October 2020, federal retirees received a 1.3 percent increase for Civil Service Retirement System (CSRS) annuities, Federal Employees Retirement System (FERS) annuities and Social Security benefits in January 2021.

The CPI-W figure for March 2021 was 258.935, 2.2 percent higher than the average CPI-W for the third quarter of 2020, which was 253.412 (1982-84 = 100). The annual COLA is determined by comparing the change in the CPI-W from year to year, based on the average of the third-quarter months of July, August and September.

Under current law, COLAs for federal retirement annuities, as well as for military retiree annuities and Social Security payments, are determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by economists and statisticians with the Bureau of Labor Statistics (BLS). The CPI-W is the current index used for measuring increases in the prices of consumer goods, including food and beverages, housing, clothing, transportation, medical care, recreation, education, communication, and more.

FECA COLAs

As announced in January 2021, individuals receiving benefits under the Federal Employees’ Compensation Act (FECA) received a 1.5 percent COLA in March 2021.

This number was determined by comparing the December 2020 CPI-W (254.081) to the December 2019 CPI-W (250.452). FECA COLAs are determined by a different statutorily set methodology than the COLA for other federal retirees. Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses, are adjusted according to each calendar year’s percentage change in the CPI-W (rather than as measured by the change from the highest previous third quarter average).

Looking ahead to the 2022 COLA for FECA benefits, the March 2021 CPI-W figure (258.935) is 1.9 percent higher than the December 2020 CPI-W figure (254.081).

The Consumer Price Index for April 2021 is scheduled to be released on Wednesday, May 12, 2021 at 8:30 a.m. (ET).