Cost-of-Living Adjustment (COLA)

 

September 23, 2020

Benefit Recipients with Benefit Effective Date Prior to April 1, 2018, to Receive 0.5% COLA

At its September meeting, the Board of Trustees voted to approve a 0.5% cost-of-living adjustment (COLA) increase for eligible retirees and beneficiaries in 2021. Previously, COLAs were suspended from 2018 through 2020.

As a result of HB 49, passed in 2017, the COLA is now based on the June-to-June change in the Consumer Price Index for Urban Wage Earners (CPI-W), with a range of 0% to 2.5%, unless the Board chooses to adjust the COLA above or below the CPI-W. However, any adjustment is only enacted if the System’s actuary determines it will not materially impair the fiscal integrity of the System or is necessary to preserve the fiscal integrity of the System.

Benefits that originate from the same member account will not have more than a four-year waiting period in total.

All SERS pension increases should be reported to Social Security if you are receiving Social Security benefits based on your spouse’s Social Security earnings.

 

December 10, 2020

How is SERS’ COLA Calculated?

As we mentioned in our September 23 story and latest issue of Retiree Focus, the Board unanimously voted to approve a 0.5% cost-of-living adjustment (COLA) for eligible retirees and beneficiaries in 2021. Previously, COLAs were suspended from 2018 through 2020.

You may be curious how SERS calculated the 2021 COLA and why ours differs from Social Security’s COLA percentage.

In calculating the annual COLA, SERS compares the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) at June of the preceding year to the June CPI-W figure of the current year, capped at 2.5%. The CPI-W in June of 2019 was 249.747 and the CPI-W in June 2020 was 251.054, an increase of 0.5%.

In contrast, Social Security compares the average CPI-W across the preceding year’s third quarter to that of the current year’s third quarter. For this year, the increase was 1.3%. Social Security describes their calculation in further detail on their website.

You are eligible to receive a COLA if you began receiving your SERS benefit before April 1, 2018. If you began receiving your SERS benefit on or after April 1, 2018, you must wait until the fourth anniversary of your allowance before you are eligible to receive a COLA.

Not all benefit recipients will receive the 0.5% COLA because some will still be in their waiting period.

If you are eligible to receive a COLA on your SERS service pension or disability allowance, and you also receive a Social Security benefit based on a spouse, ex-spouse, or deceased spouse’s work record, you must report your COLA to Social Security.

The below chart illustrates when you need to report your SERS pension to Social Security.

 

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