Teammate Handbook Cover

Cost-of-Living Adjustment

Cost-of-living adjustments (COLA) are provided by law and are based on the Consumer Price Index (CPI) for all United States cities. You are eligible to receive your first COLA in the second calendar year after your retirement date. The adjustment is paid on the May 1 check and then every year thereafter. Public agencies can contract for a maximum of 2, 3, 4, or 5 percent. The COLA percent your employer is contracted for gets compounded annually and is not a flat percentage paid each year. The amount you actually receive is the lower of either the compounded CPI or the compounded percentage. In years with a low rate of inflation, it’s possible the annual adjustment would result in less than a 1 percent increase to your retirement allowance. In these circumstances, the law states no adjustment will be made that year (Government Code section 21329). If you work for other employers throughout your CalPERS career, such as the State of California or schools, those employers provide for a maximum of 2 percent COLA. If you have multiple employers with different contracted COLA percentages, we calculate the adjustment based on the contracted percentage for each of your employers and then add them together.

Inflation Protection

Added protection against inflation is provided by the Purchasing Power Protection Account (PPPA), created to restore your monthly allowance to 80 percent of its original purchasing power.

You will automatically receive PPPA supplemental payments on a monthly basis if your allowance falls below the 80 percent purchasing power level.

28

C a l P E RS Memb e r P u b l i c a t i o n | L o c a l S a f e t y