Cost of Living Adjustments

A Cost of Living Adjustment (COLA) is provided to SFERS’ retired members to help post-retirement income keep pace with inflation (the cost of living in the local area).

Retired members may receive up two COLAs from SFERS each year: a Basic COLA and a Supplemental COLA.

Basic COLA

• The Basic COLA is an adjustment to your monthly retirement benefit on July 1st of each year (subject to approval by the Retirement Board).
• In years when the Basic COLA is approved, eligible members will receive an adjustment to their monthly benefit amount, equal to the annual percentage increase in the local Consumer Price Index (CPI), a measurement of inflation, rounded to the nearest 1% (up to a maximum of 2%)
• The adjustment is calculated based on the gross amount of your retirement benefit on June 30th and is paid to eligible members in the allowance dated July 31st.
• In years when the CPI increase is more than 2%, the amount exceeding the maximum 2% is accumulated in a “COLA Bank” for those members eligible for the Basic COLA in that year
• In years when the CPI increase is less than 2%, the Basic COLA can be paid to eligible members entirely, or in part, from the COLA Bank to bring the Basic COLA up to the maximum 2%
• If the CPI decreases in a particular year, your COLA can also decrease. However, your monthly retirement benefit will never decrease below the original amount

Supplemental COLA

An additional adjustment may be paid along with the Basic COLA, following a year in which there are sufficient excess investment earnings on the Retirement Fund to pay it. This additional adjustment is called the Supplemental COLA. 

For members hired on and after January 7, 2012, a Supplemental COLA may be paid to eligible retired members following a year when the Retirement Fund realizes sufficient excess investment earnings and the Fund is fully funded based on the market value of assets.

• The Supplemental COLA is effective July 1st in years when it is paid
• The Supplemental COLA is paid in increments of 0.5% up to a maximum of 1.5% 
• When combined with the Basic COLA, the Supplemental COLA can increase your monthly retirement benefit up to a maximum of 3.5% over the amount of your previous June 30th retirement allowance
• In any year that a Supplemental COLA is not paid, members hired before January 7, 2012 will continue to receive the Supplemental COLAs paid in previous years. For members hired on or after January 7, 2012, retirement allowances will revert to the level they would have been if Supplemental COLA adjustments had never been made.
• When paid, the Supplemental COLA is always paid in the allowance dated February 28th (or 29th) in the year following the July 1st effective date
• If you are eligible to receive the Supplemental COLA, your February allowance will include seven months of retroactive Supplemental COLA pay (July through January), plus the regular February allowance which includes the Supplemental COLA increase
• Your allowance dated March 31st will reflect the actual amount of your monthly allowance (includes Basic and Supplemental COLAs that were effective July 1st of the prior year)

The COLA Bank cannot be used to fund the Supplemental COLA.