Cost-of-Living Adjustment

A Cost-of-Living Adjustment (COLA) is a permanent annual increase to your pension, based on the cost-of-living index and a formula set by State law. Once you are eligible, you automatically receive a COLA increase each September.

 


How COLA is Determined

The law requires COLA payments to be calculated based on 50 percent of the annual rate of inflation, measured at the end of the State fiscal year (March 31). Once you are eligible, your COLA will be at least 1 percent, but no more than 3 percent.

The percentage is applied up to the first $18,000 of your annual pension benefit as if you had chosen the Single Life Allowance pension payment option, even if you selected a different option at retirement. Using the Single Life Allowance gives you the highest COLA amount possible, since this option pays the highest benefit.

 


This Year’s COLA Increase

The September 2024 COLA is 1.8 percent, for a maximum annual increase of $324, or $27 per month before taxes.

The increase you receive each September is added to your existing monthly COLA amount. You can view your benefit payment pay stub to see a breakdown of your pension payment, including your total monthly COLA amount, in your Retirement Online account.

You will also receive a notification of the net change in your monthly amount by mail at the end of September. It will show both your previous month’s and new monthly COLA amount, which represents the total accumulated amount for all the COLA increases you’ve received since you became eligible. Your 2024 COLA is the difference between Last Month and This Month.

Net change letter sample 2024

Sample Net Change Letter

 


When You’ll Be Eligible

To begin receiving COLA payments, you must be:

  • Age 62 or older and receiving a service retirement benefit for five or more years; or
  • Age 55 or older and receiving a service retirement benefit for ten or more years (applies to uniformed employees such as police officers, firefighters and correction officers who are covered by a special retirement plan that allows for retirement, regardless of age, after 20 or 25 years); or
  • Receiving a disability retirement benefit for five or more years; or
  • The spouse of a deceased retiree receiving a lifetime benefit under an option elected by the retiree at retirement (you’ll receive half the retiree’s COLA amount); or
  • A beneficiary receiving the accidental death benefit for five or more years on behalf of a deceased Employees' Retirement System (ERS) member.

 


Receiving Your First COLA

Your first COLA will be added to the pension payment you receive the month after you become eligible. It will include a pro-rated amount for the month you became eligible. For example, if you become eligible for a COLA in the middle of June, you’ll receive your first COLA payment at the end of July, and the payment will be for one and a half months.

If you are the spouse of a deceased retiree and you are receiving a lifetime pension benefit, you will receive half of the COLA amount that would have been paid to the retiree.

 


Rev. 7/24

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