COLA Adjustment Set; Goes Into Effect in July


Michael Wilkinson, LACERS/Legal Representative

By Michael R. Wilkinson, LACERS Commissioner

The LACERS Board has set the cost-of-living adjustment (COLA) to go into effect with the July pension payment based on the local Consumer Price Index (CPI) for the previous calendar year. For many members this will be a 2.5 percent increase.

Having a COLA feature in our LACERS plan is important to protect the buying power of our pension check. Without this benefit our pension would be worth less each year because products like food and gasoline go up each year, and our same dollars would buy less.

It is important to note that “your mileage may vary” as to whether the change in the CPI reflects your situation since we all are different, and the CPI is set for the average consumer. Let’s see how this works out. If the CPI uses the assumption that a person buys a new car and takes a driving vacation, that may not apply to you. Instead, you take an international trip, and that is not part of the assumption. If so, then your own inflation costs would differ from the CPI because you are not the typical consumer.

The CPI for the Los Angeles-Long Beach-Anaheim area (our CPI) was 1.6 percent, so all Tier 1 and Tier 3 (members who entered the system on or after Feb. 21, 2016) will receive at least that amount. However, most members qualified for a larger COLA with the use of a COLA bank.

Tier 1 members receive a COLA set by the CPI up to 3.0 percent. Any excess more than 3.0 percent goes to a COLA bank to be used in future years when the CPI is less than 3.0 percent. Tier 3 members receive a COLA up to 2.0 percent and do not have a COLA bank.

This year, members who retired before July 2, 1980 receive a 3.0 percent COLA. Those retiring from July 2, 1980 to June 30, 2018 will receive 2.5 percent. Those retiring from July 1, 2018 to June 30, 2019 will receive 1.7 percent, and those on or after July 1, 2020 will receive 1.6 percent. The COLA for a partial year will be prorated.