The actual COLA percentage you receive is the lower of the two compounded amounts. We determine the COLA amount to be paid to retirees by first comparing the compounded rate of inflation to the compounded COLA percentage based on the employer contract. How Does CalPERS Determine the COLA Percentage to Pay Retirees? * These retirement years include PPPA adjustments 4% Provision Year of Retirement
* These retirement years include PPPA adjustments 3% provision Year of Retirement Public Agency 2% Provision Year of RetirementĪllowance Increase (COLA and PPPA) effective May 1, 2023 Multiplying your current gross allowance by the chart’s COLA and PPPA (if applicable) allowance increase percent, will provide an estimate of your 2023 COLA increase. There are select retirement years that also include Purchasing Power Protection Allowance (PPPA) benefits. The chart below provides the percent allowance increase a retiree will receive based on their employer contracted COLA percentage and their retirement year.
Visit the Social Security Administration website for more information. The Social Security Administration uses a different method for calculating COLA benefits and is payable in January versus CalPERS benefits being paid in May. Social Security Administration COLA compared to CalPERS COLA If the rate of inflation since retirement is higher than the employer contracted COLA percentage, by law, we must apply the lessor of the two. Most state and all school agencies contract for a 2% per year COLA, and public agencies can contract for a 2%, 3%, 4%, or 5% per year COLA. (Use the Current Year Annual CPI – Previous Year Annual CPI) / Previous Year Annual CPI = Current Year Rate of Inflation To calculate the rate of inflation for 2022, we: The CPI represents the cost of an item compared to the cost in 1967. The 2022 annual CPI is 876.664 and the rate of inflation is 8.00%. CPI is determined by the BLS and, by law, it’s the official measure used by CalPERS to calculate COLA. We use the CPI at the time of retirement to calculate what your value of money should be when we adjust for COLA. Your employer contracted COLA percentage (e.g., 2%, 3%, 4%, or 5%)ĬPI determines the rate of inflation and is compared annually.The Consumer Price Index for All Urban Consumers (CPI, 1967), published by the Bureau of Labor Statistics (BLS) annually.Eligible retirees, including survivors and beneficiaries who receive a monthly benefit, receive COLA on their May 1 retirement check. COLA is an annual cost-of-living increase that begins the second calendar year after retirement and helps your retirement benefit keep up with the rate of inflation.
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