How will the 2026 COLA affect different pay scales like GS, FERS, and SES?
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Executive summary
The 2026 COLA was announced as 2.8% for CSRS and Social Security beneficiaries and 2.0% for FERS annuitants; active federal pay raises are a separate matter and the White House proposed a 0% general pay increase in its 2026 budget while some agency and union estimates differ (CSRS/FERS/Social Security: 2.8%/2.0% as reported) [1] [2] [3]. The difference matters because FERS’ COLA rules cap or reduce increases above 2%, producing a “diet” COLA for many FERS retirees even when inflation is higher [4] [5].
1. How the announced 2026 COLA splits across retirement systems
The Social Security Administration/OPM-linked 2026 adjustment gives CSRS annuitants and Social Security beneficiaries a full 2.8% increase while FERS annuities are capped at 2.0% under the system’s statutory rules [1] [2]. Multiple reporting outlets confirm the split and that FERS annuitants will see a smaller percentage increase than CSRS retirees starting with January 2026 payments [6] [5].
2. Why FERS gets less: the statutory “cap” and formula
FERS COLAs are not a straight pass-through of the CPI-W; they are subject to a statutory formula that effectively caps increases. If the CPI change is between 2% and 3%, FERS annuitants receive a 2% COLA; if it is 3% or more, FERS COLAs are reduced by one percentage point relative to the full COLA [4] [5]. That mechanism produced the 2.0% FERS result for 2026 despite the full CSRS/Social Security COLA of 2.8% [2].
3. Practical effects on retirees’ checks and real purchasing power
For a retiree, the difference between a 2.8% and a 2.0% increase is meaningful over time: NARFE and others note the FERS “diet” COLA reduces annuity growth relative to CSRS and Social Security, and critics say this leaves FERS retirees more exposed to rising health-care premiums and other cost pressures [5] [7]. FederalNewsNetwork quantified the typical Social Security bump as about $56 per month for an average beneficiary next year, underscoring that percentage points translate to tangible monthly dollars [6].
4. What this means for active pay scales (GS, SES) versus retirees
The COLA affects retirees and Social Security beneficiaries; federal employee pay raises (General Schedule, Senior Executive Service) are a separate political and budgetary process. The White House’s 2026 budget proposal included no across-the-board basic-pay increase (0%) for most civilian employees, although other proposals and union negotiations suggested different figures [3] [8]. In short: the COLA does not automatically raise GS or SES base pay — those moves require separate executive and congressional action [3].
5. The political and policy context: why the split matters now
Advocacy groups and some members of Congress argue the FERS treatment is inequitable and have introduced legislation to equalize COLAs for all federal retirees [7]. NARFE framed the smaller FERS increase as failing to keep pace with rising Federal Employees Health Benefits premiums, which they say will jump double-digits next year; that complaint links the COLA debate to broader compensation and benefit pressures facing retirees [5] [7].
6. Administrative timing, uncertainty and the shutdown impact
Calculation of the COLA depends on CPI-W data and the timing of official releases; reporting shows the government shutdown and delayed CPI releases compressed agency timelines and created short-term uncertainty before the October announcement [9]. Still, agencies processed the COLA to be effective in January 2026 once the CPI data were available [9] [10].
7. Competing perspectives and open questions
Sources agree on the numerical split (2.8% CSRS/Social Security, 2.0% FERS) but disagree on fairness: unions and NARFE call for parity, while the statutory FERS formula defenders point to its original design when FERS was created [7] [5]. Available sources do not mention how individual locality pay or SES performance awards might be adjusted in 2026 beyond the high‑level budget proposals (not found in current reporting).
Limitations: this summary uses reporting and advocacy statements available in the cited coverage; it does not attempt to compute individual annuity dollar changes beyond the example numbers reported [6] [2].