Cost-of-Living Adjustment

What is Cost-of-Living Adjustment (COLA)?

A Cost-of-Living Adjustment (COLA) is a permanent annual increase to your retirement benefit that is based on the cost-of-living index and a formula set by State law. Included in your monthly pension benefit (once you become eligible), it’s designed to address inflation as it occurs.


How COLA is Determined

The law requires that COLA payments be calculated based on 50 percent of the annual rate of inflation, measured at the end of the State fiscal year (March 31). The annual COLA will be at least 1 percent, but no more than 3 percent, of your benefit. This percentage is then applied up to the first $18,000 of your pension 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 provides you the highest COLA amount possible, since this option offers the highest benefit. If your Single Life Allowance is less than $18,000, the COLA calculation is based on your actual retirement benefit.


This Year’s COLA Increase

The September 2022 COLA equals 3 percent, for a maximum annual increase of $540.00, or $45.00 per month before taxes. You can sign in to your Retirement Online account to view a current breakdown of your pension payment. Retirees who receive their pension through direct deposit will also receive a notification of the net change in your monthly pension amount at the end of September if you are eligible to receive this COLA increase.

2022 Net Change Letter Sample

Sample Net Change Letter



To begin receiving COLA payments, you must be:

  • Age 62 or older and retired for five or more years; or
  • Age 55 or older and retired for ten or more years (uniformed employees such as police officers, firefighters and correction officers covered by a special plan that allows for retirement, regardless of age, after a specific number of years); or
  • A disability retiree for five years; or
  • The spouse of a deceased retiree receiving a lifetime benefit under an option elected by the retiree at retirement; or
  • A beneficiary receiving the accidental death benefit for five or more years on behalf of a deceased Employees' Retirement System (ERS) member.


Receiving COLA for the First Time

You will receive your first COLA increase in the month following the month you become eligible. This payment includes the prorated portion due, if any, for the month in which you became eligible plus the COLA for the month you receive the payment. For example, if you become eligible for COLA on June 12, your end-of-July pension payment will include COLA for all of July plus June 12 through June 30.

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

Once you are eligible, you will automatically receive an annual COLA increase each September.


Rev. 7/22