Eligible Full-Year FERS Basic Annuities to Rise 2.6% in 2027

Federal retirees with eligible, full-year Federal Employees Retirement System (FERS) basic annuities will receive a 2.6% cost-of-living increase in January 2027, one percentage point below the Social Security adjustment.

Social Security benefits will rise 3.6%. That is also the full 2027 rate for Civil Service Retirement System (CSRS) annuities that have been in payment for at least a year. Federal annuities in payment for less than a year receive a prorated increase.

The gap comes from the FERS formula. When the annual adjustment exceeds 3%, an eligible FERS basic annuity receives a rate one percentage point lower. Applying that rule to the 3.6% adjustment produces the 2.6% FERS rate.

The calculations use the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). They compare the index’s average from July through September with its average over the same months a year earlier. CSRS annuities receive the full resulting adjustment, subject to the proration rule, while eligible FERS basic annuities follow the separate formula.

FERS eligibility has other limits. Nondisabled retirees younger than 62 generally do not receive an adjustment, though exceptions apply. The increase applies to the basic annuity, not the FERS annuity supplement. An eligible annuity that began during the year receives a prorated amount rather than the full 2.6%.

The Social Security adjustment announced Oct. 14 will add about $75 a month to the average retirement benefit. The 2027 rate exceeds the 2.8% increase for 2026 and is the largest since 2023.

Separately, the maximum annual earnings subject to Social Security tax will rise to $192,300 in 2027 from $184,500 in 2026.

The Equal COLA Act would give eligible FERS annuitants the full adjustment. The bill was introduced in January 2025 and has not advanced. The announced benefit increases are scheduled to take effect in January 2027.