Federal retirees will receive a cost-of-living adjustment to their annuities of 1.7 percent in January, which translates into an increase of about $50 a month on average for those who retired under the older of the two main federal retirement systems, and about $20 a month on average for those retired under the newer system.

According to the latest Office of Personnel Management data, as of last Oct. 1, there were just under 2 million federal retirees, about three-fourths of them drawing benefits from the Civil Service Retirement System and the rest having retired under the Federal Employees Retirement System.


Federal retirees will receive a 1.7-percent increase in their annuities. (Image buy istock)

The average monthly annuity at that time was $3,303 in the CSRS system and $1,238 in the FERS system, while the median annuity — the point where half are above and half below — were $2,876 and $952, respectively. Those figures do not reflect a 1.5 percent COLA that was paid in January of this year.

In addition, there are about 570,000 survivor beneficiaries who draw benefits averaging less than half of what retirees receive. There are about 43,600 federal retirees and survivor beneficiaries in the District, 159,900 in Maryland and 143,300 in Virginia. The state with the largest number is California, with 215,400.

The retiree COLA announced Wednesday, which is automatic and based on a consumer price index measure, is separate from the pay raise that goes to active employees. The pay raise is set by the White House and Congress; for 2015, barring a late change of direction, active employees will receive a 1 percent raise.

That would represent the fourth year in a row that retirees received COLAs larger than active employees received in raises, on a percentage basis. While retirees received a 1.5 percent boost in January of this year, employees got a 1 percent raise. Retiree COLAs also were paid in 2012 and 2013, years when pay rates were frozen.

While about nine-tenths of current federal employees are covered by FERS, the large majority of retirees draw benefits under CSRS, which covers only those first hired before 1984. CSRS is a stand-alone defined benefit program that doesn’t include Social Security. FERS includes Social Security, a smaller civil service annuity and employer contributions toward the Thrift Savings Plan, the government’s 401(k)-style savings program.

The same COLA also will apply to Social Security benefits, which average about $1,300 a month.

Federal retirees commonly use increases in health insurance costs as a touchstone for the COLA.

“The average 3.8 percent increase in health care premiums for federal employees and retirees in 2015 shows that medical costs continue to outpace the COLA as it is calculated presently,” Joseph A. Beaudoin, president of the National Active and Retired Federal Employees Association, said in a statement. “We need a cost-of-living formula that doesn’t force these Americans to take one step forward, then two steps back.”

OPM recently announced that the enrollee share of Federal Employees Health Benefits Program premiums is increasing by 3.8 percent on average for 2015. In the plan most favored by federal retirees, the Blue Cross-Blue Shield standard option, premiums are increasing by about that same percentage.

In that plan, self-only coverage is increasing by $6.95 a month and family coverage by $18.05 (while active employees pay premiums on a biweekly basis, retirees pay them monthly). However, during an open season that starts Nov. 10, FEHBP enrollees may change to other plans, which have a wide range of premium costs and some of which are reducing their premiums for 2015.

Many federal retirees also are enrolled in Medicare, which acts as the first payer for those who also have FEHBP coverage. Premiums in Medicare Part B will remain the same in 2015 — $104.90 a month for the large majority of enrollees, more for those with high incomes.