How should we enter FERS pension information?


As you are aware, a Federal Employees Retirement System (FERS) pension is partially inflation adjusted according to the CPI as follows: increase in CPI up to 2% = FERS COLA same as CPI increase; 2 - 3% increase in CPI = 2% COLA; 3% or more increase in CPI = CPI - 1% increase in COLA. How do we enter this in the pensions tab or what percentage should we enter as "degree of inflation indexation of annual benefit?" Thank you.


dan royer's picture

OK, so if you assume in the Assumption area that inflation is 2% then you'd set your pension to index at inflation at 100%. (i.e., fully matching the 2%). If you assume that inflation is 3% (the default in ESPlanner), then it sounds like your your FERS will only adjust up to 2% which is indexed at 66%. Or in other words, if at 6% inflation, you only got an adjustment of 3%, that would be a 50% index to inflation.

If inflation is 6%, you get 5% with FERS. If 10%, you get 9%. So, it depends...

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