Retirement Services 

Quality Benefits for the Federal Family 

United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number 11-112 Date: December 22, 2011

Subject: Cost of Living Adjustment 

Purpose: The purpose of this Benefits Administration Letter (BAL) is to announce the 

3.6% Cost-of-Living Adjustment (COLA) effective December 1, 2011, reflected in the 

annuity payment dated January 3, 2012. 

Background: The U.S. Department of Labor calculates the change in the Consumer 

Price Index (CPI) for urban wage earners and clerical workers from the third quarter 

average of the previous year to the third quarter average for the current year. This 

provides a base for calculating COLAs to retirement and survivor benefits. 

For Civil Service Retirement System (CSRS):

The increase percentage is applied to retirees monthly benefit amounts before any 

deductions, and, 

Is rounded down to the next whole dollar 

For Federal Employees Retirement System (FERS): 

If the increase in the CPI is 2 percent or less, the COLA is equal to the CPI 

increase. 

If the CPI increase is more than 2 percent but no more than 3 percent, the COLA 

is 2 percent. 

If the CPI increase is more than 3 percent, the COLA adjustment is 1 percent less 

than the CPI increase. 

The new amount is rounded down to the next whole dollar. 

To get the full COLA, a retiree or survivor annuitant must have been in receipt of 

payment for a full year. If not, the increase is prorated under both plans. Prorated 

accounts receive one-twelfth of the increase for each month they received benefits. 

FERS COLAs are not provided until age 62, except for disability, survivor benefits, and 

other special provision retirements. FERS disability retirees get the adjustment, except 

when they are receiving a disability annuity based on 60 percent of their high three 
 Retirement Services 

Quality Benefits for the Federal Family 

average salary. Also, under FERS, if you have a CSRS component, the component is 

subject to the CSRS COLA calculation. 

Note: A benefit will not be increased if it would cause the annuitant to receive payments 

in excess of any cap amount specified by law. 

General Guidance for Agencies: 

The COLA is effective December 1, 2011, and is first reflected in the annuity 

payment dated January 3, 2012.

Retired Federal employees and entitled surviving family members of deceased 

Federal employees and retirees have received a COLA effective December 1, 2011, 

which will be first reflected in the benefit payable January 3, 2012. 

Under CSRS the COLA will be 3.6 percent for those who have received benefits for 

at least one year. 

The 3.6 percent increase 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 2008 to the third quarter average of 2010, as provided by the U.S. 

Department of Labor, Bureau of Labor Statistics. 

Under FERS, the COLA will be 2.6 percent for those who have received benefits for 

at least one year. 

This amount was derived from the same CPI comparison as CSRS. 

FERS COLAs are not provided until age 62, except for disability, survivor benefits, 

and other special provision retirements. 

To get the full COLA, a retiree or survivor annuity must have begun prior to January 1, 

2010. If not, the increase is prorated under both plans. Prorated accounts receive one-twelfth 

of the increase for each month they received benefits. For example, if the benefit 

commenced November 1, 2011, the prorated COLA would be one-twelfth of the full COLA. 

Under both plans, benefits are paid on the first business day of the month after the month in 

which they accrue. Benefits which accrue in December 2011 are payable on January 3, 

2012.

The tables below show the actual prorated percentages that apply, under both plans, 

according to the month in which the annuity began. 
 Retirement Services 

Quality Benefits for the Federal Family 

Civil Service Retirement System (CSRS) and 

Federal Employees Retirement System (FERS) 

Month Annuity Began CSRS Percentage Increase FERS Percentage Increase

December 2010 3.6% 2.6% 

January 2011 3.3% 2.4% 

February 2011 3.0% 2.2% 

March 2011 2.7% 2.0% 

April 2011 2.4% 1.7% 

May 2011 2.1% 1.5% 

June 2011 1.8% 1.3% 

July 2011 1.5% 1.1% 

August 2011 1.2% 0.9% 

September 2011 0.9% 0.7% 

October 2011 0.6% 0.4%

November 2011 0.3% 0.2% 

Kenneth J. Zawodny Jr. 

Associate Director, 

Retirement Services