FERS COLA 2.6% vs CSRS 3.6% for 2027: First-Year Prorated Increase by Retirement Month

Where 3.6% and 2.6% come from

OPM describes the base: the 3.6% “was determined by computing the percentage increase in the Consumer Price Index (CPI) for urban wage earners and clerical workers from the third quarter average of 2025 to the third quarter average 2026.” The statute defines the third quarter as the “arithmetical mean” of the three months, so the arithmetic can be rebuilt from the BLS series CWUR0000SA0 (CPI-W, U.S. city average, all items, not seasonally adjusted).

Our arithmetic: 328.746 divided by 317.265 is 1.0362, a 3.62% increase, which rounds to the 3.6% SSA and OPM publish. The October 2026 CPI-W (331.147) is not used: the base quarter ends September 30.

The two programs then diverge. CSRS (5 U.S.C. 8340(b)) takes the full percent change. FERS (5 U.S.C. 8462(b)(1)) works in three steps: if the change is up to 2 percent, the same; if it is over 2 and up to 3 percent, 2 percent; if it is over 3 percent, the change minus 1 percent. At 3.6% that is 2.6%.

The 2027 proration table, month by month

OPM publishes the percentage that applies to each month an annuity began. The statute behind it, 5 U.S.C. 8340(c)(1) for CSRS and 8462(c)(1) for FERS, is one-twelfth of the percent change times the number of months the annuity was payable before December 1, 2026, up to 12, counting part of a month as a month. OPM’s own example: “if the benefit commenced November 30, 2026, the prorated COLA would be one-twelfth of the full COLA.” The last two columns are our arithmetic on a $3,000 monthly annuity, rounded down to the dollar as 5 U.S.C. 8462(d) requires; for FERS they apply only to annuitants who are 62 or in an exempt group.

Source: OPM, “Annuity Payments” page, tables for CSRS/ORDS and FERS/FERS Special, read November 11, 2026. Our arithmetic reproduces every percentage by multiplying the full rate by months over 12 and rounding half up to a tenth.

OPM’s notice says the full COLA requires that the annuity “must have begun no later than December 31, 2025”. Its tables stop at November 2026. The text we read does not give a rate for an annuity that begins in December 2026 or later; under the statute’s formula such an annuity had no month payable before December 1, 2026, so our reading is that its first COLA comes a year later, in December 2027.

Who gets nothing in January: FERS under 62

OPM says that FERS cost-of-living adjustments “are not provided until age 62, except for disability, survivor benefits, and other special provision retirements.” The statute is 5 U.S.C. 8462(c)(3)(A): “An adjustment under subsection (b) for any year shall not be effective with respect to the annuity of an annuitant who is under 62 years of age as of the date on which such adjustment would otherwise first take effect.” That date is December 1, so a FERS retiree who turns 62 on December 2, 2026 gets no COLA in this round (our reading).

Clause (B) limits the rule to annuitants under sections 8412, 8413 and 8414, and carves out an annuitant under section 8412(d)(1) or (e). Section 8412(d)(1) covers separation “after completing 25 years of service as a law enforcement officer, member of the Capitol Police or Supreme Court Police, firefighter, nuclear materials courier, or customs and border protection officer”, and (e) covers air traffic controllers. OPM adds that FERS disability retirees get the adjustment unless the annuity is based on 60 percent of high-3 pay, that a CSRS component inside a FERS annuity gets the CSRS rate, and that “FERS survivors receive the FERS increase on their entire annuity”.

Our reading of subsection (c)(1) and (c)(3)(A) together: a FERS retiree who reaches 62 after retiring is not prorated for the years before 62. The first increase is one-twelfth of the percent change times the months the annuity was payable, capped at 12, so a retiree who has been paid for a year or more gets the full rate in the first December on which they are 62. OPM’s letter to the annuitant is the document to check.

Our arithmetic for a FERS retiree with a $3,000 annuity and no exemption: 2.6% of $3,000 is $78 a month, or $936 a year, not added in 2027 while CPI-W rose 3.62%.

FERS against CSRS, December 2000 to December 2026

The rule that FERS gets a smaller COLA when inflation is above 2 percent is not new, but the dollar cost is rarely shown. The table applies the statute to the COLAs SSA publishes by year (SSA labels a COLA by the December in which it takes effect, which is also OPM’s effective date). OPM says the CSRS rate comes from the same CPI-W comparison, so the CSRS column equals SSA’s. The FERS column and the compounded multiples are our arithmetic; they ignore the dollar rounding and the age-62 rule, and they start from the December 2000 adjustment.

Source: SSA, “Cost-Of-Living Adjustments” series; FERS rate and compounded multiples are our arithmetic under 5 U.S.C. 8462(b)(1).

Over the 27 adjustments the CSRS multiple is 2.006 and the FERS multiple is 1.773. Applied to a $3,000 pension, that is about $6,019 against $5,319 (our arithmetic). Add 2027 and the multiples become 2.078 and 1.819 (our arithmetic). The gap is not constant: it is one point whenever the CPI-W rise is above 3 percent (the Decembers of 2000, 2005, 2006, 2008, 2011, 2021, 2022, 2023 and 2026, the last one being the 2027 increase) and shrinks to zero when inflation is 2 percent or less.

Worked examples for January 2027 (our arithmetic)

The rounding rule is in 5 U.S.C. 8462(d): “The monthly installment of an annuity after adjustment under this section shall be rounded to the next lowest dollar.” The statute also says the installment must rise by at least $1, and OPM repeats that “The minimum COLA increase is $1.00.” These examples use the annuity rate only; they leave out anything else in a monthly payment, such as deductions or a supplement, which we did not verify.

When the money arrives

OPM: “If a COLA is payable, we make the change in December of each year. You’ll receive the adjusted payment in January, the following month.” Under both systems benefits are paid on the first business day of the month after the month they accrue, so the December 2026 benefit, paid January 4, 2027, is the first one that includes the increase. OPM says it sends a letter explaining a first-year prorated increase.

If you also draw Social Security, the same 3.6% CPI-W rise feeds that COLA; our Social Security 2027 COLA page shows how much of it becomes taxable at different income levels, and our IRMAA guide covers the income lines that set Medicare surcharges. For the Roth side of a federal retirement, see the TSP in-plan Roth conversion data.

What a reader can do with this

• Find the month your annuity began and read your row in the proration table; that is the percentage OPM applies, not the headline 3.6% or 2.6%.
• If you are FERS and under 62, check your 62nd birthday against December 1, 2026. Turning 62 on or before that date is what makes the 2027 increase payable (5 U.S.C. 8462(c)(3)(A)); an exempt group or a disability or survivor annuity follows a different rule.
• Plan a 2027 monthly budget on the rounded-down figure, not on the percentage; the examples above show how the dollar rounding works.
• Use the right inflation comparison. CPI-W rose 3.62% over the base quarter; a FERS retiree who gets 2.6% is about one point short of that rise this year, and a FERS retiree under 62 is short of all of it (our arithmetic).
• Check what your own annuity statement says in January against OPM’s letter; OPM states it sends one explaining a prorated increase.

This is analysis of public documents, not investment, legal or tax advice.

More for federal retirees, read from the same kind of primary documents: FEHB and PSHB 2027 premiums, plan by plan, FEGLI Option B premiums after 65, the FERS supplement's 2027 earnings limit, FLTCIP premium increases since 2010, OPM's retirement backlog, month by month, keeping the TSP or rolling it to an IRA and the TSP L Funds' allocations and glide paths.

FAQ

Sources, read and saved on November 11, 2026: U.S. Office of Personnel Management, “Annuity Payments” page (current cost-of-living adjustment text and the CSRS/ORDS and FERS/FERS Special proration tables) and the “Cost of Living Adjustments” FAQ; Bureau of Labor Statistics, CPI-W series CWUR0000SA0 through the BLS public data API and the October 2026 CPI release; Social Security Administration, “2027 Cost-of-Living Adjustment (COLA) Fact Sheet” and “Cost-Of-Living Adjustments” series; 5 U.S.C. 8340, 8412 and 8462 (Legal Information Institute). The quarterly means, the 2000-2026 FERS COLAs, the compounded multiples and the dollar examples are our arithmetic from those documents. This is analysis of public documents, not investment, legal or tax advice.