
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 5USC8462]

 
             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
 
                           PART III--EMPLOYEES
 
                   Subpart G--Insurance and Annuities
 
            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
 
          SUBCHAPTER VI--GENERAL AND ADMINISTRATIVE PROVISIONS
 
Sec. 8462. Cost-of-living adjustments

    (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;
        (2) the price index for a base quarter is the arithmetical mean 
    of such index for the 3 months comprising such quarter; and
        (3) the term ``percent change in the price index'', as used with 
    respect to a year, means the percentage derived by--
            (A) reducing--
                (i) the price index for the base quarter of such year, 
            by
                (ii) the price index for the base quarter of the 
            preceding year in which an adjustment under this subsection 
            was made;

            (B) dividing the difference under subparagraph (A) by the 
        price index referred to in subparagraph (A)(ii); and
            (C) multiplying the quotient under subparagraph (B) by 100.

    (b)(1) Except as provided in subsection (c), effective December 1 of 
any year in which an adjustment under this subsection is to be made, as 
determined under paragraph (2), each annuity payable from the Fund under 
this chapter (other than an annuity under section 8443) having a 
commencing date not later than such December 1 shall be adjusted as 
follows:
        (A) If the percent change in the price index for the year does 
    not exceed 3 percent, each annuity subject to adjustment under this 
    subsection shall be increased by the lesser of--
            (i) the percent change in the price index (rounded to the 
        nearest one-tenth of 1 percent); or
            (ii) 2 percent.

        (B) If the percent change in the price index for the year 
    exceeds 3 percent, each annuity subject to adjustment under this 
    subsection shall be increased by the excess of--
            (i) the percent change in the price index (rounded to the 
        nearest one-tenth of 1 percent), over
            (ii) 1 percent.

    (2) An adjustment under this subsection shall be made in a year only 
if the price index for the base quarter of such year exceeds the price 
index for the base quarter of the preceding year in which an adjustment 
under this subsection was made.
    (3) An annuity under this chapter shall not be subject to adjustment 
under section 8340. Nothing in the preceding sentence shall affect the 
computation of any amount under section 8443(a)(2).
    (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) to an 
    annuity which is payable from the Fund to an annuitant or survivor 
    (other than a child under section 8443) whose annuity has not been 
    increased under this subsection or subsection (b) shall be equal to 
    the product (adjusted to the nearest one-tenth of 1 percent) of--
            (A) one-twelfth of the applicable percent change computed 
        under subsection (b), 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 survivor 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 (other than a widow or widower 
    whose annuity is computed under section 8442(g) or a child under 
    section 8443) shall be increased by the total percentage by which 
    the deceased annuitant's annuity had been increased under this 
    section during the period beginning on the date the deceased 
    annuitant's annuity commenced and ending on the date of the deceased 
    annuitant's death.
        (3)(A) An adjustment under subsection (b) for any year shall not 
    be effective with respect to the annuity of an annuitant who is 
    under 62 years of age as of the date on which such adjustment would 
    otherwise first take effect.
        (B)(i) Except as provided in clause (ii), this paragraph applies 
    only with respect to an annuitant under section 8412, 8413, or 8414.
        (ii) This paragraph does not apply with respect to an annuitant 
    under subsection (d) or (e) of section 8412 or (in the case of an 
    annuitant separated from service as a military reserve technician as 
    a result of disability) under section 8414(c).
        (4) The first increase (if any) made under subsection (b) to an 
    annuity which is payable from the Fund to a widow or widower whose 
    annuity is computed under section 8442(g) shall be equal to the 
    product (adjusted to the nearest one-tenth of 1 percent) of--
            (A) one-twelfth of the applicable percent change computed 
        under subsection (b), multiplied by
            (B) the number of months (not to exceed 12 months, counting 
        any portion of a month as a month) since--
                (i) the effective date of the adjustment last made under 
            this section in the annuity of the annuitant on whose 
            service on the widow's or widower's annuity is based; or
                (ii) if the annuity of the annuitant (referred to in 
            clause (i)) has not been increased under this section, the 
            commencement date of such annuitant's annuity (determined 
            subject to section 8452(a)(1)(B)).

    (d) The monthly installment of an 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.
    (e) The $15,000 amount referred to in section 8442(b)(1)(A)(ii) 
shall be increased at the same time that, and by the same percent as the 
percentage by which, annuities under subchapter III of chapter 83 are 
increased.

(Added Pub. L. 99-335, title I, Sec. 101(a), June 6, 1986, 100 Stat. 
572; amended Pub. L. 99-556, title I, Sec. 117(b), Oct. 27, 1986, 100 
Stat. 3134.)


                               Amendments

    1986--Subsec. (b)(3). Pub. L. 99-556 inserted provision relating to 
the computation of any amount under section 8443(a)(2).


Delay in Cost-of-Living Adjustments During Fiscal Years 1994, 1995, and 
                                  1996

    Any cost-of-living increase scheduled to take effect during fiscal 
year 1994, 1995, or 1996 under subsec. (b) of this section delayed until 
first day of third calendar month after date such increase would 
otherwise take effect, see section 11001 of Pub. L. 103-66, set out as a 
note under section 8340 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 8348, 8418, 8442, 8452 of 
this title; title 22 section 4071g.
