Am I Automatically Entitled to an Annual Cost-of-Living Increase in the Allowance I am Receiving as a Beneficiary?
No, Cost-of-Living Adjustments (COLAs) are not automatic. The Procedure for granting a COLA is as follows:
- The decision to grant a COLA is made by the state legislature and Governor for retirees from the State and Teachers’ Retirement Systems.
- Each year the PERAC Actuary advises the Retirement Boards of the increase in the Consumer Price Index. The Retirement Boards then can grant a COLA, not to exceed 3%. Notice must be given to the legislative body before the Board grants the COLA.
- Once the legislation has been accepted by the Retirement Board and the legislative body,
a retirement system can vote to grant an increase for a given year.
- Every member and beneficiary in that system who was receiving an allowance as of June 30 of the prior fiscal year would then be entitled to a COLA.
What is the COLA Amount?
- The percentage increase in an allowance will be made on the full amount of an allowance up to a base of $12,000.
- A retirement board, with the approval of the local legislative body, may increase the COLA base beyond the $12,000 level in $1,000 increments.
- The cost of living percentage is based on the cost of living increase granted under the Consumer Price Index, not to exceed 3.0%.
- If the COLA granted under the Consumer Price Index is less than 3% then, pursuant to another local option section, the total COLA payable may be increased up to no more than 3% of $12,000 or the locally accepted COLA base.
- Effective February 16, 2012, the COLA base for retirees of the State Retirement System and the Teachers’ Retirement System will be $13,000.