(a) The phased retirement annuity under §831.1741 is increased by cost-of-living adjustments in accordance with 5 U.S.C. 8340.

(b) A composite retirement annuity under §831.1742 is increased by cost-of-living adjustments in accordance with 5 U.S.C. 8340, except that 5 U.S.C. 8340(c)(1) does not apply.

(c)

(1) For the purpose of computing the amount of phased retirement annuity used in the computation under §831.1742(a)(1), the initial cost-of-living adjustment applied is prorated in accordance with 5 U.S.C. 8340(c)(1).

(2) If the individual enters full retirement status on the same day as the effective date of a cost-of-living adjustment (usually December 1st), that cost-of-living adjustment is applied to increase the phased retirement annuity used in the computation under §831.1742(a)(1).

(d)

(1) For the purpose of computing the actuarial reduction used in the computation under §831.1742(d)(1), the initial cost-of-living adjustment applied is prorated in accordance with 5 U.S.C. 8340(c)(1).

(2) If the individual enters full retirement status on the same day as the effective date of a cost-of-living adjustment (usually December 1st), that cost-of-living adjustment is applied to increase the actuarial reduction used in the computation under §831.1742(d)(1).

(3) When applying each cost-of-living adjustment to the actuarial reduction used in the computation under §831.1742(d)(1), the actuarial reduction is rounded up to the next highest dollar.