The Supplemental Cost of Living Adjustment (Supplemental COLA) maintains retirees’ purchasing power at no less than 85% of their original pension allowance. The Supplemental COLA is a non-vested (non-guaranteed) benefit which is evaluated and reauthorized annually by the Board of Retirement. It is funded by the Supplemental Retiree Benefits Reserve (SRBR). The Supplemental COLA is a separate benefit from the vested COLA.
Annual Supplemental COLA Date
Who Receives 2023 Supplemental COLA?
|Tier 1||Retired on or before 04/01/1982|
|Tier 2||Retired on or before 04/01/2001|
Supplemental COLA Reflected In Retirement Payment
April 28, 2023
What Is Purchasing Power?
Purchasing power is the value of your dollars in terms of how much stuff they’ll buy. In the context of the Supplemental COLA, if it takes more than $1.15 today to purchase what $1.00 would purchase at the time of your retirement, you’ve lost at least 15% of your purchasing power. When this occurs, you may qualify for a Supplemental COLA to make up the difference and bring you back to 85% of your purchasing power.
How Do You Qualify For the Supplemental COLA?
As noted is the vested COLA posting, annual CPI increases that exceed the maximum legal percentage for your tier (2% or 3%) are banked for use in years that the CPI increase is below the maximum. So if the CPI is 4% and you can only get a 3% COLA, then 1% goes in your COLA bank. If you have a banked amount of more than 15%, you automatically qualify to receive Supplemental COLA.
How Much Supplemental COLA Will You Receive?
Your Supplemental COLA will be calculated individually each year based on your original retirement benefit, any accumulated COLA, and the percentage you have in the COLA bank. Your Supplemental COLA amount from the previous year has no connection with your new Supplemental COLA amount.
How Is This Year’s Supplemental COLA Different From Last Year’s?
Tier 1 and Tier 2 retirees who received a Supplemental COLA in 2022 will also receive a Supplemental COLA in 2023. Additionally, the cutoff dates moved forward for both tiers, allowing additional members to receive the Supplemental COLA as follows:
- The cutoff date for Tier 1 members moved forward one year, so now Tier 1 members who retired between 04/02/1981 and 04/01/1982 will also receive a Supplemental COLA.
- The cutoff date for Tier 2 members stayed the same, so Tier 2 members who retired on or before 04/01/2001 will continue to receive a Supplemental COLA.
Do You Need to Do Anything to Receive the Supplemental COLA?
No. As detailed above, calculations for who receives the Supplemental COLA are standardized, and if you qualify, you will receive the Supplemental COLA automatically in your monthly ACERA retirement benefit.