United States

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency 

Benefits Administration Letter 

Number: 21-103 Date: February 2021

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 2021. 

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, 2020. The increase is paid in their 

January 2021 annuity payment. The maximum increase is 1.3% for CSRS. All CSRS 

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

increase. The maximum increase for FERS is 1.3%.

Note: The minimum COLA increase is $1.00. Even if the full COLA rate of 1.3% or a 

prorated COLA would result in the annuity rate not increasing, $1.00 is still added to 

the monthly rate. 

All eligible 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 the 

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

survivor annuity and supplementary annuity. In addition, CSRS COLAs apply to all 

annuities, regardless of the age of the annuitant. FERS COLAs generally do not apply to 

annuitants who are under age 62 as of December 1, 2020 except: 

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

2. Certain disability annuitants;

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

firefighters and Capitol Police;

4. Those who retired under the special provision for air traffic controllers;

5. Those who retired under the special provision for military reserve technicians

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

membership on account of disability; and

6. Joint Payroll Office FERS Special annuitants.
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Pro-rated COLAs are payable on annuities having a commencing date from December 1, 

2019 through November 30, 2020. The CSRS and FERS COLAs are payable on annuities 

with commencing dates no later than November 30, 2020. The proration is based on the 

number of months between the annuity commencing date and the effective date of the 

COLA. 

Annuitants will receive one-twelfth of the applicable increase for each month they 

received an annuity. For survivor annuitants (other than children) of deceased annuitants, 

the proration is determined by the date the annuity was first payable to the deceased. For 

survivors of deceased employees, the proration is determined by the commencing date of the 

survivor annuity. 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.

Prorated CSRS and FERS COLAs Effective 12/01/2020 

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. However, children’s benefits under FERS are offset by 

benefits payable under Title II of the Social Security Act for all children of the deceased. 

In most cases, the Social Security benefit exceeds the FERS benefit which results in no 

FERS benefit being paid. The following rates apply from December 1, 2020 through 

November 30, 2021. 

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

the benefit payable to that child is the lesser of: 

• $552 per month per child; or 

• $1,659 per month divided by the number of eligible children (if over 3). 

Monthly Annuity Began Amount of Percentage Increase 

Retirement System CSRS FERS

December 2019 or earlier 1.3% 1.3% 

January 2020 1.2% 1.2% 

February 2020 1.1% 1.1% 

March 2020 1.0% 1.0% 

April 2020 0.9% 0.9% 

May 2020 0.8% 0.8% 

June 2020 0.7% 0.7% 

July 2020 0.5% 0.5% 

August 2020 0.4% 0.4% 

September 2020 0.3% 0.3% 

October 2020 0.2% 0.2% 

November 2020 0.1% 0.1% 
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When the child has no living parent who was married to the deceased employee or 

retiree, the benefit payable to that child is the lesser of: 

• $ 663 per month per child; or 

• $1,990 per month divided by the number of eligible children (if over 3). 

FERS Basic Employee Death Benefit 

The $15,000 portion of the FERS Basic Employee Death Benefit is adjusted by the CSRS

COLA. The CSRS COLA, effective December 1, 2020, increases the Basic Employee 

Death Benefit for an employee who dies on or after December 1, 2020 and before 

December 1, 2021, to half of his/her final annual pay (or average pay, if higher), plus 

$34,991.07. Chapter 70 of the CSRS and FERS Handbook has detailed information on 

the Basic Employee Death Benefit (BEDB). 

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

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

.0295307 for deaths occurring on or after October 1, 2020. Additional information on 

present value conversion factors applicable to BEDB can be found by visiting: 

https://www.govinfo.gov/content/pkg/FR-2020-09-22/pdf/2020-20784.pdf in Volume 85,

Number 184 of the Federal Register, dated September 22, 2020. 

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

The interest rate that applies to both CSRS and FERS for 2021 is 1.375%.

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 2021 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. 
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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. 

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 Retired Pay 

8899 E 56th Street 

Indianapolis, IN 46249-1200 

Phone: 1-800-321-1080 

Fax: 1-800-469-6559 

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 

On April 6, 2020, OPM provided notice of adjusted present value factors applicable to 

retirees who elect to provide survivor annuity benefits to a spouse based on postretirement marriage, and to retiring employees who elect the alternative form of annuity 

or elect to credit certain service with Non-Appropriated Fund Instrumentalities (NAFI 

service). 

The revised present value factors went into effect on October 1, 2020 and were published 

in Volume 85, Number 66 of the Federal Register on April 6, 2020.

CSRS factors can be found by visiting: 

https://www.govinfo.gov/content/pkg/FR-2020-04-06/pdf/2020-07103.pdf

FERS factors can be found by visiting: 

https://www.govinfo.gov/content/pkg/FR-2020-04-06/pdf/2020-07104.pdf

OPM uses present value factors to compute reductions to: 

• CSRS and FERS retirees’ benefits when the retiree elects the Alternative Form of 

Annuity; 
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• CSRS and FERS benefits with a CSRS component when the retirees elect to 

credit refunded service that ended before March 1, 1991, without paying the 

deposit owed for the service; 

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

provide survivor annuity benefits; 

• Retirees’ benefits when the retirees elect to credit NAFI 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 NAFI service. 

Significant Social Security Figures for 2021 

Every year, the Social Security Administration publishes a Fact Sheet that lists annual 

figures that are significant for retirement matters. The Fact Sheet can be found by 

visiting: https://www.ssa.gov/news/press/factsheets/colafacts2021.pdf

For 2021, the Social Security Maximum Taxable Earnings has increased to $142,800. 

The dollar amounts, or Bend Points, used in the benefit formula for workers who become 

eligible for benefits in 2021, and in the formula for computing maximum individual 

benefits for 2021 are $996 (first) and $6,002 (second). More information on the benefit 

formula Bend points may be found by visiting: 

https://www.ssa.gov/OACT/COLA/bendpoints.html 

FERS Retiree Annuity Supplement Earnings Limit 

The Social Security earnings limitation is $18,960 a year for 2021. Any FERS annuitant 

who is receiving a FERS annuity supplement (unless he or she is under the minimum 

retirement age 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 2021 by 

$1.00 for every $2.00 over this amount earned in 2021. 

Chapter 51 of the CSRS and FES Handbook, Section 51A3.1-1, contains more 

information on the reduction of a FERS annuity supplement due to the Social Security’s 

earnings limitation. 

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 the Social Security's web site by visiting: www.ssa.gov.
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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 did not change for tax 

year 2021 and it remains at $19,500. For purposes of the TSP, the term "elective 

deferrals" means the maximum amount that employees can contribute to their thrift 

accounts. Additional information on TSP contributions can be found by visiting: 

https://www.tsp.gov/making-contributions/contribution-limits/

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. The catch-up contributions have their 

own annual limit and eligibility criteria This limit remains at $6,500 for 2021. More 

information on catch-up contributions can be found by visiting: 

https://www.tsp.gov/publications/tspfs12.pdf 

Kenneth J. Zawodny, Jr. 

Associate Director 

Retirement Services