PERAC's Main Guide-Cost-of-Living Adjustment
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Main Guide



Am I automatically entitled to an annual cost-of-living increase in my retirement allowance?

No, Cost-of-Living Adjustments (COLAs) are not automatic.

  1. 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.

  2. 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, but not over 3%. Notice must be given to the legislative body before the board grants the COLA.

  3. 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.

  4. 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.

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 incrementally beyond the $12,000 level.

• 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 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.

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