COST OF LIVING ADJUSTMENT (COLA)
A COLA or cost of living adjustment is an annual adjustment added to the base pension of each eligible retiree and beneficiary. The COLA goes into effect on January 1 each year.
To receive the full amount, you must have been retired for more than eleven months. If you retired less than one year before the effective date, your COLA will be prorated.
Your base pension is defined as the pension you received at the time of your retirement.
Each year on January 1, ERF will calculate the COLA and then adjust your pension to determine your new pension amount for the year. The Health Benefit Supplement is not included in your base pension and therefore is not subject to a COLA.
EXAMPLE COLA CALCULATION
The examples below show the COLA calculation for 2017, 1.446%.
The formula for calculating the COLA would be:
$2,968 (Base Pension) x 1.446% = $43
$43 + $3,469 (Current Pension) = $3,512
$3,512 + $125 (Health Supplement) = $3,637 (New Monthly Benefit)
CALCULATING THE COLA
Each year the COLA is calculated two ways; the greater of which is added to your base pension.
The COLA is based on the greater of either:
The percentage of change in the price index for October of the current year over October of the previous year up to 5% or
The percentage of the annual average change in the price index for the latest 12 months available, up to 5%.