Cost of Living Adjustments (COLA)

A Cost of Living Adjustment (COLA) is provided to SFERS’ retired members to help their post-retirement income keep pace with inflation (the cost of living in the local area). SFERS administers two COLAs: a Basic COLA and Supplemental COLA.

Basic COLA

  • The Basic COLA is an automatic adjustment to your monthly retirement benefit on July 1st of each year
  • The Basic COLA is calculated based on the gross amount of your retirement benefit on June 30th, and is paid to eligible members on the allowance dated July 31st
  • When paid, you will receive an adjustment to your monthly benefit amount, equal to the annual percentage increase in the local Consumer Price Index (CPI is a measurement of inflation) rounded to the nearest 1% (up to a maximum of 2%)
  • In years when the CPI increase is more than 2%, the increase above 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 entirely or in part (to eligible members) from the COLA Bank to bring the Basic COLA up to the maximum 2%

Supplemental COLA

An additional adjustment may be paid along with the Basic COLA, following years when there are sufficient excess investment earnings on the Retirement Fund. This additional adjustment is called the Supplemental COLA.  The Supplemental COLA is not payable to all retirees when the Retirement System is less than fully funded based on the market value of assets.

  • The Supplemental COLA is effective July 1 in years when it is paid
  • The Supplemental COLA can be paid in increments of 0.5% up to a maximum of 1.5% if the Basic COLA is 2%
  • 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


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