The goal of the Supplemental Cost of Living Adjustment (Supplemental COLA) is to maintain retirees’ purchasing power at no less than 85% of their original retirement allowance. What this means: 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 buying power. When this occurs, you may qualify for a Supplemental COLA to make up the difference and bring you back to 85% of your buying power.
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.
How You Qualify
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 qualify to receive Supplemental COLA.
Who Receives a Supplemental COLA on April 30, 2020?
Tier 1 retirees who retired:
On or before 04/01/1981 will receive a Supplemental COLA increase to their retirement allowances.
Tier 2 retirees who retired:
On or before 04/01/2000 will receive a Supplemental COLA increase to their retirement allowances.
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?
The same Tier 1 retirees will receive a Supplemental COLA in 2020 as did in 2019. For Tier 2, more members will receive the Supplemental COLA since the cut off date for 2019 was 04/01/1999, and the cutoff has move up a year for 2020.