A Cost-of-Living Adjustment (COLA) is a permanent annual increase to your pension to help offset the impact of inflation. Once you are eligible, you automatically receive a COLA increase each September.
How COLA is Determined
In accordance with State law, the annual COLA percentage is 50 percent of the rate of inflation at the end of the State fiscal year (March 31), rounded up to the nearest tenth. COLA cannot be less than 1 percent or more than 3 percent annually.
This Year’s COLA Increase
The COLA for September 2025 through August 2026 is 1.2 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. Because the Single Life Allowance pays the maximum pension benefit, using this option gives you the highest possible COLA. If your annual pension benefit is $18,000 or more, you will receive the maximum monthly increase of $18 (for a total maximum annual increase of $216) before taxes.
COLA is cumulative, meaning the increase you receive each September is added to your existing monthly COLA amount. For example, a retiree receiving an annual pension benefit of $24,000 (a monthly pension payment of $2,000) who became eligible for COLA last year would continue receiving last year’s monthly COLA increase of $27 in addition to this year’s monthly COLA increase of $18.
2024 | ||||||
|---|---|---|---|---|---|---|
| Pension Amount | COLA Increase | Pension Amount w/ COLA | ||||
| $18,000×1.8% | ||||||
| Monthly | $2,000 | + | $27 | = | $2,027 | → |
| Annually | $24,000 | + | $324 | = | $24,324 | → |
2025 | |||||
|---|---|---|---|---|---|
| Pension Amount | COLA Increase | Pension Amount w/ COLA | |||
| $18,000×1.2% | |||||
| Monthly | $2,027 | + | $18 | = | $2,045 |
| Annually | $24,324 | + | $216 | = | $24,540 |
You will receive a notice of the change to your net monthly retirement benefit by mail at the end of September. It will show the previous and new monthly amounts for your net retirement benefit (the total pension payment amount you receive after credits, deductions and taxes), COLA, and federal taxes withheld, if applicable. To determine your monthly increase, subtract the amount listed under ‘Last Month’ from the amount listed under ‘This Month.’
Sample Net Change Letter
For a breakdown of credits and deductions and to see year-to-date totals throughout the year, you can view your pension pay stub online.
- Sign in to Retirement Online.
- Look under I want to… (located at the top right).
- Click View Pension Check link.
- Select date of the pension payment to view.
Eligibility
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.
Rev. 8/25