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Cost-of-living adjustments (COLAs)
Approval process
Cost-of-living adjustments are granted to retired members of the MTRS by vote of the Massachusetts Legislature. Every year, the Public Employee Retirement Administration Commission (PERAC) files with the Legislature a report detailing the increase or decrease in the Consumer Price Index (CPI). The Legislature then votes whether to grant a COLA based on the increase in the CPI or 3%, whichever is less.
Calculation
Currently, the retirement base on which a COLA is granted is $12,000. Accordingly, if the Legislature grants a 3% COLA effective July 1, a retiree may have his or her pension increased by up to $360. Since 2000, the Legislature has granted a 3% COLA every year. Each allowed a 3% increase on the first $12,000 of a retiree’s allowance, for the maximum annual increase of $360, or $30 per month.
Eligibility
Retirees are eligible to receive a COLA after one full fiscal year of retirement. [For example, to be eligible to receive the FY2008 COLA (effective July 1, 2007 through June 30, 2008), a retiree had to have retired on or before June 30, 2006.]
Historical note
Prior to 1976, COLAs were automatic. The percentage was based on the previous year’s consumer price index (CPI) increase. In 1975, the Legislature repealed this formula, effective 1976. Beginning in 1981, the provisions of Proposition 2-1/2 required the state to fund all local government COLA costs. Prior to 1981, the state funded state and teacher retirees’ COLAs, while local governments were required to fund city, town and county COLAs.
MTRS COLA history
| Year | COLA Amount | Maximum annual amount | Notes* | |
|---|---|---|---|---|
| Allowed percentage | Retirement benefit base | |||
| 1971 | 6.00% | of $6,000.00 | $360.00 | |
| 1972 | 4.30% | of $6,000.00 | $258.00 | |
| 1973 | 3.30% | of $6,000.00 | $198.00 | |
| 1974 | 6.20% | of $6,000.00 | $372.00 | |
| 1975 | 11.00% | of $6,000.00 | $660.00 | |
| 1976 | 5.00% | of $6,000.00 | $300.00 | |
| 1977 | 5.00% | of $6,000.00 | $300.00 | |
| 1978 | 6.50% | of $6,000.00 | $390.00 | |
| 1979 | 5.00% | of $6,000.00 | $300.00 | |
| 1980 | 6.00% | of $6,000.00 | $360.00 | |
| 1981 | 3.00% | of $7,000.00 | $210.00 | |
| 1982 | 3.00% | of $7,000.00 | $210.00 | |
| 1983 | 3.00% | of $7,000.00 | $210.00 | |
| 1984 | 4.00% | of $7,000.00 | $280.00 | |
| 1985 | 4.00% | of $8,000.00 | $320.00 | |
| 1986 | 4.00% | of $9,000.00 | $360.00 | |
| 1987 | 3.00% | of $9,000.00 | $270.00 | |
| 1988 | 4.00% | of $9,000.00 | $360.00 | |
| 1989 | NO COLA | |||
| 1990 | NO COLA | |||
| 1991 | NO COLA | |||
| 1992 | 5.00% | of $9,000.00 | $450.00 | effective 01/01/1992 |
| 1993 | NO COLA | |||
| 1994 | 3.00% | of $9,000.00 | $270.00 | |
| 1995 | NO COLA | |||
| 1996 | 3.00% | of $9,000.00 | $270.00 | effective 11/01/1996 |
| 1997 | NO COLA | |||
| 1998 | 2.10% | of $12,000.00 | $252.00 | |
| 1999 | 3.00% | of $12,000.00 | $360.00 | |
| 2000 | 3.00% | of $12,000.00 | $360.00 | |
| 2001 | 3.00% | of $12,000.00 | $360.00 | |
| 2002 | 3.00% | of $12,000.00 | $360.00 | |
| 2003 | 3.00% | of $12,000.00 | $360.00 | |
| 2004 | 3.00% | of $12,000.00 | $360.00 | |
| 2005 | 3.00% | of $12,000.00 | $360.00 | |
| 2006 | 3.00% | of $12,000.00 | $360.00 | |
| 2007 | 3.00% | of $12,000.00 | $360.00 | |
*Unless otherwise noted, all COLAs are effective on a fiscal year basis (e.g., the COLA listed as “2007,” above, will be effective for the 2008 fiscal year of July 1, 2007 – June 30, 2008).