United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number 14 - 101 Date: 01/30/2014

Subject: Annual Changes 

Background 

Each year, we publish a Benefits Administration Letter (BAL) with updated information 

that changes annually, such as interest rates and cost-of-living adjustments. This BAL 

contains the figures for 2014. 

Cost-of-Living Adjustments 

Many people who receive monthly payments from the Civil Service Retirement System 

(CSRS) or the Federal Employees Retirement System (FERS) will receive a cost-ofliving adjustment (COLA) effective December 1, 2013. They will receive the increase in 

their January 2014 annuity payment. The maximum increase is 1.5% for CSRS and 

FERS annuitants. 

All CSRS annuitants who have been retired at least 1 year will receive the full COLA, or 

maximum increase. FERS COLAs apply to the retiree’s basic annuity only (not annuity 

supplements). For survivor annuitants, the COLA applies to both the basic survivor 

annuity and supplementary annuity. In addition, FERS COLAs generally don’t apply to 

annuitants who are under 62 as of December 1, 2013, except: 

1. Spouse, former spouse or insurable interest survivor annuities; 

2. Certain disability annuitants; 

3. Those who retire under the special provisions for law enforcement officers, 

firefighters, Capitol Police and air traffic controllers; 

4. Those who retire under the special provisions for military reserve technicians (age 

50, 25 years of service) because they ceased to qualify for military membership 

on account of disability; and, 

5. Joint Payroll Office FERS Special annuitants. 

To get the full COLA, a retiree’s annuity has to begin no later than December 31, 2012. 

Retirees whose annuities begin between December 31, 2012 and November 30, 2013, 

will receive a prorated COLA. They will receive one-twelfth of the applicable increase 

for each month they received an annuity. For survivor annuitants (other than children) of 
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deceased annuitants, the proration is determined by the date the annuity was first payable 

to the deceased. COLAs on children’s annuities are never pro-rated. The following table 

shows the prorated percentage increase according to the month in which the annuity 

began. 

CSRS and FERS COLA Proration Table 

Increase in Children's Benefits

CSRS COLA rates apply to children’s benefits, regardless of whether the child’s parent 

was under CSRS or FERS. The following rates apply from December 1, 2013, through 

November 30, 2014. 

When the child has a living parent who was married to the employee or retiree, the 

benefit payable to that child is the lesser of: 

 $502 per month per child; or 

 $1,506 per month divided by the number of eligible children (if over 3). 

When the child has no living parent who was married to the employee or retiree, the 

benefit payable to that child is the lesser of: 

 $602 per month per child; or 

 $1,807 per month divided by the number of eligible children. 

FERS Basic Employee Death Benefit 

When a FERS employee dies, a surviving spouse (or former spouse) may be eligible for a 

death benefit called the Basic Employee Death Benefit (BEDB). This benefit is an 

amount equal to 50 percent of the employee's final annual pay (or average pay if higher), 

Monthly Annuity Began Amount of Percentage Increase

December 2012 or earlier 1.5%

January 2013 1.4%

February 2013 1.3%

March 2013 1.1%

April 2013 1.0%

May 2013 0.9%

June 2013 0.8%

July 2013 0.6%

August 2013 0.5%

September 2013 0.4%

October 2013 0.3%

November 2013 0.1%
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plus $15,000, adjusted for COLA's under CSRS rules. For deaths that occur on or after 

December 1, 2013, and before December 1, 2014, the $15,000 plus COLA’s amount is 

now, $31,786.21. Chapter 70 of the CSRS and FERS Handbook has detailed information 

on the Basic Employee Death Benefit. 

The surviving spouse must elect whether to receive the BEDB in one payment or 36 

monthly installments. The current factor used to determine the monthly installment is 

.0301643. Additional information on this can be found at 

http://www.gpo.gov/fdsys/pkg/FR-2011-09-07/html/2011-22873.htm in the September 7, 

2011 Federal Register. 

Interest Rate for Service Credit Payments, Refunds, and Voluntary Contributions 

The interest rate that applies to both CSRS and FERS remained unchanged at 1.625% in 

2014.

Salary Cap 

Employees who are subject to a salary cap pay retirement deductions on the capped 

amount and the capped amount is used to compute an employee’s high-3 average pay. 

The salary information on the SF-50, Notification of Personnel Action, should reflect the 

capped amount and not the salary that would have been payable without the cap. 

Reminder Regarding Military Deposits

Use the table below to compute military deposits for service during those years and for 

the new 2014 rates. Chapter 23 of the CSRS and FERS Handbook has detailed 

information on Service Credit Payments for Post-56 Military Deposits and BAL 03-105 

provides an explanation of the alternative method for employees under the Uniformed 

Services Employment Reemployment Rights Act (USERRA). 

Employees who want to pay deposits for military service they performed during any of 

these years need to request that the military pay center provide year-by-year earnings so 

that you can compute deposits correctly. 

Military Deposits 

1999 2000 Other Years

CSRS 7.25% 7.40% 7.00%

FERS 3.25% 3.40% 3.00%

This is a reminder that all military deposits have to be paid in full to the employing 

agency prior to the employee’s separation for retirement.
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Reminder Regarding Waiver of Military Retired Pay

Employees requesting to waive military retired pay should submit their request directly to 

the Defense Finance and Accounting Service at the following address 30 days before 

their planned retirement date to avoid delay in the finalization of their retirement. A copy 

of this request must be attached to the retirement application: 

Defense Finance and Accounting Service 

U.S. Military Retirement Pay 

London, KY 40742-7130 

Phone: 1-800-321-1080 

 Phone: 1-800-469-6559 - fax 

Chapter 22 of the CSRS and FERS Handbook (Chapter 22, Section 22 A4.1-2) contains 

information that must be provided and sample wording that can be used. 

Present Value Factors 

The Present value factors were revised on October 1, 2011, and can be found in the 

June 3, 2011 Federal Register, Volume 76, Number 107.

CSRS factors can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2011-06-

03/pdf/2011-13708.pdf) and FERS factors can be accessed at 

http://www.gpo.gov/fdsys/pkg/FR-2011-06-03/pdf/2011-13707.pdf

OPM uses present value factors to compute reductions to: 

 CSRS and FERS retiree’s benefits when the retiree elects the Alternative Form of 

Annuity; 

 CSRS and FERS benefits with a CSRS component when the retirees elect to 

credit refunded service that ended before October 1, 1990, without paying the 

deposit owed for the service 

 CSRS and FERS benefits when the retirees marry after retirement and elect to 

provide a survivor annuity benefits; 

 Retirees’ benefits when the retiree elects to credit Nonappropriated Fund 

Instrumentality (NAF) service for retirement purposes under Public Law 104-106 

or Public Law 107-107; and, 

 Retirement benefits for individuals with certain types of retirement coverage 

errors who can receive credit for service by taking an actuarial reduction under 

the provisions of the Federal Erroneous Retirement Coverage Correction Act. 

OPM uses discount factors to compute the reduction to annuity benefits when retirees 

elect to credit their NAF service. The discounted present value factors used for NAF 

calculation have also been revised and can be found in BAL 11-111. 
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Significant Social Security Figures for 2014 

On October 30, 2013, the Social Security Administration published a Fact Sheet that 

listed 2014 figures that are significant for retirement matters. You can find that Fact 

Sheet on the Social Security Administration's Internet site, at 

http://www.ssa.gov/pressoffice/factsheets/colafacts2014.html. We have included some of 

the figures here for your convenience. 

Social Security Maximum Wage Base: The Social Security maximum taxable wage for 

2014 is $117,000. 

Bend Points: The dollar amounts, or bend points, used in the benefit formula for workers 

who become eligible for benefits in 2014, and in the formula for computing maximum 

individual benefits for 2014, are $816 and $4,917. 

FERS Retiree Annuity Supplement Earnings Limit 

The Social Security earnings limitation for 2014 is $15,480. Any FERS annuitant who is 

receiving a FERS annuity supplement (unless he or she is under age 55 and retired under 

one of the special provisions for law enforcement officers, firefighters, air traffic 

controllers, or military reserve technicians separated for loss of military membership) will 

have his or her annuity supplement offset in 2014 by $1.00 for every $2.00 over this 

amount earned in 2014. 

Increase in Age for Full Social Security Benefits 

Legislation passed in 1983 provided that the age for receiving full Social Security 

benefits will gradually increase from 65 to 67. The first increase took effect in January 

2001. It affects workers born in 1938 or later. More information on this change is 

available on Social Security's web site at www.ssa.gov. 

Note: This change does not affect the entitlement of any person who is age 62 to receive 

reduced benefits if he or she has sufficient Social Security credits to receive a benefit. 

Thrift Savings Plan (TSP) Deferral Limit 

The Internal Revenue Service annual limit on elective deferrals remained unchanged at 

$17,500 for tax year 2014. For purposes of the TSP, the term "elective deferrals" means 

the maximum amount that employees can contribute to their thrift accounts. 

In addition, TSP participants that are age 50 or over can make tax-deferred “catch-up” 

contributions from their basic pay to their TSP accounts. These contributions are a 

supplement to the participant’s regular employee contributions and do not count against 

the Internal Revenue Code’s elective deferral limit. Additional information is available 

at: https://www.tsp.gov/PDF/formspubs/oc91-13.pdf. The catch-up contributions have 
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their own annual limit and eligibility criteria. The limit is once again $5,500 for 2014. 

Additional information is available at: https://www.tsp.gov/PDF/formspubs/oc03-03.pdf. 

 Kenneth J. Zawodny, Jr. 

 Associate Director 

 Retirement Services