An ex-spouse may be entitled to a portion of a retiree’s cost-of-living adjustment (COLA), not as an option beneficiary, but as part of the overall distribution from the retiree’s monthly retirement benefit while the retiree is still living. A DRO will be reviewed to determine whether it permits, forbids, or requires the ex-spouse to receive a COLA distribution.
NYSLRS will interpret general terms in a DRO as intent to provide an ex-spouse with a share of the COLA, unless otherwise indicated. For example, NYSLRS will interpret DRO that define the retirement benefit to include any “supplemental” payments as intent to provide the ex-spouse with a COLA. If the intent is to prohibit an ex-spouse from receiving a share of the COLA, the DRO must be drafted to reflect that intent.
If a DRO awards an ex-spouse a flat dollar amount, a COLA will not be payable unless the DRO specifically directs NYSLRS to provide COLA increases.
Retirement and Social Security Law Section 78-A (g) does not permit a non-spouse option beneficiary to receive a COLA after the retiree’s death. Therefore, an ex-spouse (as a non-spouse) who is receiving a COLA distribution from the retiree’s monthly retirement benefit while the retiree is alive will not be entitled to any COLA if the retiree dies before them. This applies even if the ex-spouse is entitled to receive a continuing pension payment option benefit as a beneficiary, and even if COLA were previously awarded while the retiree was alive.