§ 8340. Cost-of-living adjustment of annuities

§ 8340. Cost-of-living adjustment of annuities

(a) For the purpose of this section—

(1) the term “base quarter”, as used with respect to a year, means the calendar quarter ending on September 30, of such year; and

(2) the price index for a base quarter is the arithmetical mean of such index for the 3 months comprising such quarter.

(b) Except as provided in subsection (c) of this section, effective December 1 of each year, each annuity payable from the Fund having a commencing date not later than such December 1 shall be increased by the percent change in the price index for the base quarter of such year over the price index for the base quarter of the preceding year in which an adjustment under this subsection was made, adjusted to the nearest ⅒ of 1 percent.

(c) Eligibility for an annuity increase under this section is governed by the commencing date of each annuity payable from the Fund as of the effective date of an increase, except as follows:

(1) The first increase (if any) made under subsection (b) of this section to an annuity which is payable from the Fund to an employee or Member who retires, to the widow, widower, or former spouse,11 So in original. The comma probably should not appear. of a deceased employee or Member, or to the widow, widower, former spouse, or insurable interest designee of a deceased annuitant whose annuity has not been increased under this subsection or subsection (b) of this section, shall be equal to the product (adjusted to the nearest ⅒ of 1 percent) of—

(A) ^1⁄12 of the applicable percent change computed under subsection (b) of this section, multiplied by

(B) the number of months (not to exceed 12 months, counting any portion of a month as a month)—

(i) for which the annuity was payable from the Fund before the effective date of the increase, or

(ii) in the case of a widow, widower, former spouse, or insurable interest designee of a deceased annuitant whose annuity has not been so increased, since the annuity was first payable to the deceased annuitant.

(2) Effective from its commencing date, an annuity payable from the Fund to an annuitant’s survivor (except a child entitled under section 8341(e) of this title), which annuity commences the day after the death of the annuitant and after the effective date of the first increase under this section, shall be increased by the total percent increase the annuitant was receiving under this section at death. However, the increase in a survivor annuity authorized by section 8 of the Act of May 29, 1930, as amended to July 6, 1950, shall be computed as if the annuity commencing date had been the effective date of the first increase under this section.

(3) For the purpose of computing the annuity of a child under section 8341(e) of this title that commences after October 31, 1969, the items $900, $1,080, $2,700, and $3,240 appearing in section 8341(e) of this title shall be increased by the total percent increases allowed and in force under this section on or after such day and, in case of a deceased annuitant, the items 60 percent and 75 percent appearing in section 8341(e) of this title shall be increased by the total percent allowed and in force to the annuitant under this section on or after such day.

(d) This section does not authorize an increase in an additional annuity purchased at retirement by voluntary contributions.

(e) The monthly installment of annuity after adjustment under this section shall be rounded to the next lowest dollar. However, the monthly installment shall after adjustment reflect an increase of at least $1.

(f) Effective September 1, 1966, or on the commencing date of annuity, whichever is later, the annuity of each surviving spouse whose entitlement to annuity payable from the Fund resulted from the death of—

is increased by 10 percent.

(1) an employee or Member before October 11, 1962; or

(2) a retired employee or Member whose retirement was based on a separation from service before October 11, 1962;

(g)

(1) An annuity shall not be increased by reason of any adjustment under this section to an amount which exceeds the greater of—

(A) the maximum pay payable for GS–15 30 days before the effective date of the adjustment under this section; or

(B) the final pay (or average pay, if higher) of the employee or Member with respect to whom the annuity is paid, increased by the overall annual average percentage adjustments (compounded) in rates of pay of the General Schedule under subchapter I of chapter 53 of this title during the period—

(i) beginning on the date the annuity commenced (or, in the case of a survivor of the retired employee or Member, the date the employee’s or Member’s annuity commenced), and

(ii) ending on the effective date of the adjustment under this section.

(2) For the purposes of paragraph (1) of this subsection, “pay” means the rate of salary or basic pay as payable under any provision of law, including any provision of law limiting the expenditure of appropriated funds.

(Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 576; Pub. L. 90–83, § 1(79), Sept. 11, 1967, 81 Stat. 215; Pub. L. 91–93, title II, § 204, Oct. 20, 1969, 83 Stat. 139; Pub. L. 93–136, § 1, Oct. 24, 1973, 87 Stat. 490; Pub. L. 94–126, § 2(b), Nov. 12, 1975, 89 Stat. 679; Pub. L. 94–183, § 2(35), Dec. 31, 1975, 89 Stat. 1058; Pub. L. 94–440, title XIII, § 1306(a), (c)(1), Oct. 1, 1976, 90 Stat. 1462; Pub. L. 95–454, title IX, § 906(a)(2), (3), Oct. 13, 1978, 92 Stat. 1224; Pub. L. 96–499, title IV, § 401(a), Dec. 5, 1980, 94 Stat. 2605; Pub. L. 97–35, title XVII, § 1702(a), (b), Aug. 13, 1981, 95 Stat. 754; Pub. L. 97–253, title III, §§ 304(a), 309(a), Sept. 8, 1982, 96 Stat. 795, 798; Pub. L. 98–270, title II, § 201(a), Apr. 18, 1984, 98 Stat. 157; Pub. L. 98–369, div. B, title II, § 2201(b), July 18, 1984, 98 Stat. 1058; Pub. L. 99–251, title II, § 204, Feb. 27, 1986, 100 Stat. 25.)

In subsection (a), the words “After January 1, 1964” and “other than 1964” and subsection (a)(1) of former section 2268, are omitted as executed.

In subsection (b), the words “subsection (a) of this section” are substituted for “subsection (a)(1) or (a)(2) of this section” since subsection (a)(1) has been omitted as executed.

Standard changes are made to conform with the definitions applicable and the style of this title as outlined in the preface to the report.

In subsection (a), the words “Effective December 1, 1965 * * * before December 2, 1965,” are substituted for “Effective the first day of the third month which begins after the date of enactment of this amendment * * * not later than such effective date.” In clause (1), the words “month of July 1965” are substituted for “month latest published on date of enactment of this amendment” for clarity and since the July 1965 price index was the price index for the month latest published on September 27, 1965, the date of enactment of the amendment. The word “base” is inserted before “month of July 1965” for clarity and on authority of the second sentence of 5 U.S.C. App. 2268(a) which provided: “The month used in determining the increase based on the per centum rise in the price index under this subsection shall be the base month for determining the per centum change in the price index until the next succeeding increase occurs.” In view of the foregoing and of the definition of “base month” in 5 U.S.C. 8331(16), the quoted sentence is omitted as executed and unnecessary. In clause (2), the words “before October 2, 1956,” are substituted for “on or before October 1, 1956.” In the second sentence, which is based on 5 App. U.S.C. 2268(f), the words “before January 1, 1966,” are substituted for “not later than December 31, 1965.” In clause (B), the words “Act of June 25, 1958 (72 Stat. 219)” are substituted for “Public Law 85–465” to conform to the style of title 5, United States Code.

In the first sentence of subsection (b), the words “after the first increase under this section,” following “Each month,” are omitted as executed and unnecessary.

In subsection (f), the words “September 1, 1966,” are substituted for “the first day of the second month after the enactment of this subsection.”

Editorial Notes

References in Text

Section 8 of the Act of May 29, 1930, as amended to July 6, 1950, referred to in subsec. (c)(2), is the predecessor of section 8338 of this title.

The General Schedule, referred to in subsec. (g)(1)(B), is set out under section 5332 of this title.

Amendments

1986—Subsec. (c)(1). Pub. L. 99–251 substituted “, widower, or former spouse,” for first reference to “or widower”, and “, widower, former spouse, or insurable interest designee” for second and third references to “or widower”.

1984—Subsec. (a). Pub. L. 98–270 substituted provisions defining term “base quarter” as meaning the calendar quarter ending Sept. 30 of a year and providing that the price index for a base quarter is the arithmetical mean of such index for the three months comprising such quarter for former provisions which had directed that, effective Dec. 1, 1965, each annuity payable from the Fund having a commencing date before Dec. 2, 1965, was increased by (1) the percent rise in the price index, adjusted to the nearest ⅒ of 1 percent, determined by the Office of Personnel Management on the basis of the annual average price index for calendar year 1962 and the price index for the base month of July 1965; plus (2) 6½ percent if the commencing date (or in the case of the survivor of a deceased annuitant the commencing date of the annuity of the retired employee) occurred before Oct. 2, 1956, or 1½ percent if the commencing date (or in the case of the survivor of a deceased annuitant the commencing date of the annuity of the retired employee) occurred after Oct. 1, 1956, that each annuity payable from the Fund (other than the immediate annuity of an annuitant’s survivor or of a child entitled under section 8341(e) of this title) having a commencing date after Dec. 1, 1965, but before Jan. 1, 1966, was increased from its commencing date as if the annuity commencing date were Dec. 1, 1965, and that each survivor annuity authorized by (A) section 8 of the Act of May 29, 1930, as amended to July 6, 1950, or (B) section 2 of the Act of June 25, 1958 (72 Stat. 219), was increased by any additional amount required to make the total increase under this subsection equal to the smaller of 15 percent or $10 a month.

Subsec. (b). Pub. L. 98–270 substituted “Except as provided in subsection (c) of this section, effective December 1 of each year, each annuity payable from the Fund having a commencing date not later than such December 1 shall be increased by the percent change in the price index for the base quarter of such year over the price index for the base quarter of the preceding year in which an adjustment under this subsection was made, adjusted to the nearest ⅒ of 1 percent” for “Except as provided in subsection (c) of this section, effective March 1 of each year each annuity payable from the Fund having a commencing date not later than such March 1 shall be increased by the percent change in the price index published for December of the preceding year over the price index published for December of the year prior to the preceding year, adjusted to the nearest ⅒ of 1 percent”.

Subsec. (c)(1)(A). Pub. L. 98–369, § 2201(b)(1), substituted “computed” for “computer”.

Subsec. (c)(2)(B). Pub. L. 98–369, § 2201(b)(2), substituted “not to exceed 12 months, counting” for “counting”.

1982—Subsec. (e). Pub. L. 97–253, § 304(a), substituted “rounded to the next lowest” for “fixed at the nearest”.

Subsec. (g). Pub. L. 97–253, § 309(a), added subsec. (g).

1981—Subsec. (b). Pub. L. 97–35, § 1702(a), substituted provisions that except as provided in subsec. (c), the annuities payable from the Fund having a commencing date not later than March 1 of each year shall be increased by the percent change in the price index published for December of the preceding year over the price index published for December of the year prior to the preceding year, adjusted to the nearest ⅒ of 1 percent, for provisions requiring the Office to determine on Jan. 1 and July 1 of each year the percent change in the price index based on the data for a six month period and to adjust the annuities in March and September of each year according to specified formula when there is a rise in the price index.

Subsec. (c)(1). Pub. L. 97–35, § 1702(b), in opening provision inserted reference to the widow or widower of a deceased annuitant whose annuity has not been increased under this subsection or subsection (b) of this section, in par. (A) substituted “^1⁄12” for “⅙”, and in subpar. (B) designated existing provisions as item (i) and added item (ii).

1980—Subsec. (c)(1). Pub. L. 96–499, substituted formula for computing the first increase to be made under subsec. (b) of this section to an annuity which is payable from the Fund to an employee or Member who retires, to the widow or widower of a deceased employee or Member for provisions that an annuity, except a deferred annuity under section 8338 of this title or any other provision of law, payable from the Fund to an employee or Member who retires, or to the widow or widower of a deceased employee or Member and having a commencing date after the effective date of the then last preceding annuity increase under subsec. (b) of this section shall not be less than the annuity which would have been payable if the commencing date of such annuity had been the effective date of the then last preceding annuity increase under subsec. (b) of this section and that employees or deceased employees were to be deemed, for purposes of section 8339(m) of this title to have to their credit, on the effective date of the last preceding increase under subsec. (b), unused sick leave equal to that unused sick leave to his credit on the date of separation from service.

1978—Subsecs. (a)(1), (b)(1). Pub. L. 95–454 substituted “Office of Personnel Management” for “Civil Service Commission” and “Office” for “Commission”.

1976—Subsec. (b). Pub. L. 94–440, § 1306(a), struck out “1 percent plus” after “shall be increased by”.

Pub. L. 94–440, § 1306(c)(1), substituted provisions requiring that Commission shall determine percent change in price index on Jan. 1 and July 1 of each year and effective Mar. 1 or Sept. 1, each annuity payable from Fund shall be increased by the computed percent change in the price index adjusted to the nearest ⅒ of 1 percent, for provisions requiring that Commission shall determine percent change in price index on a monthly basis and effective the first day of the third month that begins after the price index change equals a rise of 3 percent for 3 consecutive months over the prior price index, each annuity payable from Fund shall be increased by the highest rise in the price index over those months adjusted to the nearest ⅒ of 1 percent.