News & Announcements
2025 Cost-of-Living Adjustment (COLA) Update
May 6, 2025
Eligible PERA retirees will be receiving a 0.63% compounding COLA, which will be included with your July 31, 2025, benefit payment. A letter from PERA's actuarial firm Gabriel, Roeder, Smith and Company that details the COLA calculation can be found here.
In July 2023, PERA transitioned to a profit-share COLA model. The compounding COLA increase will be based on our funded ratio and investment return of the prior year. The funded ratio reflects the ratio between the available assets on hand and the liabilities that we have incurred. Our funded ratio as of 6/30/24 is 67.20% and PERA’s net investment return was 8.66%.
In a public pension system, asset smoothing recognizes market gains and losses gradually over several years. This means that future COLA’s will not be solely based on the volatility of the markets but, on our returns that are “smoothed” over a 4-year period. This model guarantees a minimum 0.5% (half of one percent) COLA and a maximum of 3% (three percent) going forward. Once PERA reaches 100% funded status, the maximum COLA will increase to 5% (five percent).
Eligible retirees who meet the following criteria are excluded from the profit-sharing COLA and will instead receive a 2.5% COLA: (1) normal retired members who worked a minimum of 25 years whose pension benefit is less than $25,000 annually; or (2) disability retired members whose pension benefit is less than $25,000 annually; or (3) normal retired members who were 75 years of age on or before June 30, 2020.