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At its May 12, 2023 meeting, SDCERS’ Board of Administration approved the Cost of Living Adjustment (“COLA”) that will be applied to eligible SDCERS retirees’ (including active DROP participants) monthly pension benefit amount beginning with their July 2023 payment. Your pension benefit will receive a COLA for Fiscal Year 2024 if your retirement or DROP entry date is on or before June 30, 2023.
Per San Diego Municipal Code section 24.1505 and section 1301 of the Port and Airport Plans, the COLA is calculated every year based on the change in the cost of living between the two previous Decembers, as published by the Bureau of Labor Statistics Consumer Price Index (“CPI”), United States – All items. However, the maximum allowable increase in any given year is 2.0%.
In years where the COLA is greater than the maximum 2.0% (such as this year), the amount over 2% is added to what is called a “COLA bank.” A retiree’s COLA bank accumulates based on their fiscal year of retirement (or DROP entry), and each annual retiree group has its own COLA bank. In years that the CPI’s published COLA is less than 2%, each retiree group’s COLA bank may be able to increase the actual COLA received by the retiree up to a maximum of 2%, if that retiree group’s COLA bank has accrued enough funds from previous years where the published COLA was greater than 2%.
According to the CPI, the change in cost of living between December 31, 2021 and December 31, 2022 was 6.5% (rounded to the nearest 1/10th of a percent). This means that everyone who is retired or participating in DROP as of June 30, 2023 will receive the maximum 2% COLA increase to their pension benefit, and bank the additional 4.5%.
This means that those who receive the fiscal year 2024 COLA and add the additional 4.5% to their COLA banks are guaranteed to receive a 2% COLA in fiscal years 2025 and 2026, at the very least (assuming we do not experience a negative COLA in either year). Let’s look at a theoretical scenario to really see the significance – but please remember that we have absolutely no way of predicting what the CPI’s published COLA will be in future years, and this is therefore very much a hypothetical example:
If Sam Diego retires or enters DROP in June of 2023 and his initial monthly pension benefit is $5,000:
You can see how the 4.5% addition to Sam’s COLA bank right off the bat can help ensure his benefit receives the maximum 2% increase in future years, when the published COLA is less than 2%. In the example above, we assumed that the published COLA applicable to fiscal years 2025-2030 was always between 1.3% and 2.0%. Note that if the published COLA is less in any given years, more would be subtracted from Sam’s COLA bank for those years. Conversely, if the published COLA is greater than 2.0% in any of the given years, then the amount above 2.0% would be once again added to his bank.
This article is not an attempt to persuade you to retire or enter DROP before July 1, 2023 – there are certainly other factors to consider, such as your age, upcoming salary increases, etc. (please review this article discussing factors to consider before deciding when to retire, or this article discussing considerations when deciding upon a DROP entry date). However, as this is the second highest published COLA we’ve seen since 1982, and it is very rare for a retiree to add such a large amount to their COLA bank in a single year, it’s worth noting and may factor into your decision to retire or enter DROP before July 1, 2023. (Note: You must enter DROP at the beginning of a pay period – please consult your payroll specialist to confirm your pay period start dates in June.)
If you are eligible to receive a fiscal year 2024 COLA, the applicable increase will be reflected in your July 2023 pension payment.
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At its May 13, 2022 meeting, SDCERS’ Board of Administration approved the Cost of Living Adjustment (“COLA”) that will be applied to eligible SDCERS retirees’ (including active DROP participants) monthly pension benefit amount from July 1, 2022 – June 30, 2023. Your pension benefit will receive a COLA for Fiscal Year 2023 if your retirement or DROP entry date is on or before June 30, 2022.
Per San Diego Municipal Code section 24.1505 and section 1301 of the Port and Airport Plans, the COLA is calculated every year based on the change in the cost of living between the two previous Decembers, as published by the Bureau of Labor Statistics Consumer Price Index (“CPI”), United States – All items. However, the maximum allowable increase in any given year is 2.0%.
In years where the COLA is greater than the maximum 2.0% (such as this year), the amount over 2% is added to what is called a “COLA bank.” A retiree’s COLA bank accumulates based on their fiscal year of retirement (or DROP entry), and each annual retiree group has its own COLA bank. In years that the CPI’s published COLA is less than 2%, each retiree group’s COLA bank may be able to increase the actual COLA received by the retiree up to a maximum of 2%, if that retiree group’s COLA bank has accrued enough funds from previous years where the published COLA was greater than 2%.
According to the CPI, the change in cost of living between December 31, 2020 and December 31, 2021 was 7.0% (rounded to the nearest 1/10th of a percent). This means that everyone who is retired or participating in DROP as of June 30, 2022 will receive the maximum 2% COLA increase to their pension benefit, and bank the additional 5.0%.*
*The two members who are in the 1981 retirement plan will receive a COLA increase of 3.2%.
This is significant because that means those who receive the fiscal year 2023 COLA and add the additional 5.0% to their COLA banks are guaranteed to receive a 2% COLA in fiscal years 2024 and 2025, at the very least (assuming we do not experience a negative COLA in either year). Let’s look at a theoretical scenario to really see the significance – please remember that we have absolutely no way of predicting what the CPI’s published COLA will be in future years and this is very much a hypothetical example: If Sam Diego retires or enters DROP in June of 2022 and his monthly pension benefit is $5,000:
You can see how the 5% addition to Sam’s COLA bank right off the bat can help ensure his benefit receives the maximum 2% increase in future years, when the published COLA is less than 2%. In the example above, we assumed that the published COLA applicable to fiscal years 2024-2029 was always between 1.4% and 2.0%. Note that if the published COLA is less in any given years, more would be subtracted from Sam’s COLA bank for those years. Conversely, if the published COLA is greater than 2.0% in any of the given years, then the amount above 2.0% would be once again added to his bank.
This article is not an attempt to persuade you to retire or enter DROP before July 1, 2022 – there are certainly other factors to consider, such as your age, upcoming salary increases, etc. (please review this article discussing factors to consider before deciding when to retire or enter DROP). However, as this is the highest published COLA we’ve seen since 1982, and it is very rare for a retiree to add such a large amount to their COLA bank in a single year, it’s worth noting and may factor into your decision to retire or enter DROP before July 1, 2022. (Note: You must enter DROP at the beginning of a pay period - so, if you enter in June 2022, your entry date must be either June 11 or June 25, 2022.)
If you are eligible to receive a fiscal year 2023 COLA, the applicable increase will be reflected in your July 2022 pension payment.
Learn More...
At its May 14, 2021 meeting, SDCERS’ Board of Administration approved the Cost of Living Adjustment (“COLA”) that will be applied to eligible SDCERS retirees’ (including active DROP participants) monthly pension benefit amount from July 1, 2021 – June 30, 2022. You will receive a COLA for Fiscal Year 2022 if your retirement or DROP entry date is on or before June 30, 2021.
Per San Diego Municipal Code section 24.1505 and section 1301 of the Port and Airport Plans, the COLA is calculated every year based on the change in the cost of living between the two previous Decembers, as published by the Bureau of Labor Statistics Consumer Price Index (“CPI”), United States – All items. However, the maximum allowable increase in any given year is 2.0%.
In years where the COLA is greater than the maximum 2.0% (such as last year), the amount over 2% is added to what is called a “COLA bank.” A retiree’s COLA bank accumulates based on their fiscal year of retirement (or DROP entry), and each annual retiree group has its own COLA bank. In years that the CPI’s published COLA is less than 2%, each retiree group’s COLA bank may be able to increase the actual COLA received by the retiree up to a maximum of 2%, if that retiree group’s COLA bank has accrued enough funds from years where the published COLA was greater than 2%.
According to the CPI, the change in cost of living between December 31, 2019 and December 31, 2020 was 1.362%. Due to the fact that this year’s COLA is less than 2%, different COLAs were approved for different retiree groups, depending on the member’s retirement (or DROP entry) date and COLA bank. (Please open the full article to review the different COLAs.)
If you are eligible to receive a Fiscal Year 2022 COLA, the applicable increase will be reflected in your July 2021 pension payment.
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At its May 8, 2020 meeting, SDCERS’ Board of Administration approved the Cost of Living Adjustment (“COLA”) that will be applied to eligible SDCERS retirees’ monthly benefit amount from July 1, 2020 – June 30, 2021. You will receive a COLA for Fiscal Year 2021 if your retirement or DROP entry date is on or before June 30, 2020. As usual, two separate COLAs were approved and differ depending on the member’s retirement date, as follows:
Members whose retirement date is before July 1, 2020 will receive a COLA increase of 2.0%, and 0.3% will be added to their COLA banks (see below for more details).
The two members who are in the 1981 retirement plan will receive a COLA increase of 1.0%.
Per San Diego Municipal Code section 24.1505 and section 1301 of the Port and Airport Plans, the COLA is calculated every year based on the change in the cost of living between the two previous January firsts, as published by the Bureau of Labor Statistics Consumer Price Index, United States – All items. This year, the change in cost of living between January 1, 2019 and January 1, 2020 was 2.3%.
However, the maximum allowable increase in any given year is 2.0%. In years where the COLA is greater than the maximum 2.0% (such as this year), the excess will be added to what is called a “COLA bank.” A retiree’s COLA bank accumulates based on their fiscal year of retirement (or DROP entry), and each annual retiree group has its own COLA bank.
If you are eligible to receive a Fiscal Year 2021 COLA, the applicable increase will be reflected in your July 2020 pension check.
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At its May 10, 2019 meeting, the Board approved two Cost of Living Adjustments (“COLA”) that will be applied to eligible retirees’ monthly benefit from July 2019 – June 2020. Members whose retirement date is before July 1, 2018 will receive a COLA increase of 2.0%. Members whose retirement date is between July 1, 2018 and June 30, 2019 will receive a COLA increase of 1.9%. Also, 2019-2020 Health Open Enrollment for eligible City Retirees will run from June 3 – 28, 2019. This year’s Health Open Enrollment Help Day is Friday, June 14 at the Balboa Park Club Ballroom. There will be no formal presentations, but SDCERS staff and representatives from sponsored health plans will be available to answer questions from 10:00 a.m. – noon. You may also submit your enrollment forms directly to SDCERS staff at this event. Click here for more information
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A Cost of Living Adjustment (COLA) was approved by the SDCERS' Board of Administration at its May 11, 2018 meeting. The COLA will be applied to the retirement benefits of eligible SDCERS retirees effective July 1, 2018. Two separate COLAs were approved and differ depending on when the eligible member retired:-Eligible retirees who retired before July 1, 2018 will receive a COLA increase of 2.0%
-Eligible retirees who are in the 1981 retirement plan will receive a COLA increase of 1.4%
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A Cost of Living Adjustment (COLA) was approved by the SDCERS’ Board of Administration at its May 12, 2017 meeting. The COLA will be applied to the retirement benefits of eligible SDCERS retirees effective July 1, 2017. Two separate COLAs were approved and differ depending on when the eligible member retired. Learn More...
A Cost of Living Adjustment (COLA) was approved by the SDCERS’ Board of Administration at its May 13, 2016 meeting. The COLA will be applied to the retirement benefits of eligible SDCERS retirees effective July 1, 2016.Three separate COLAs were approved and differ depending on when the eligible member retired.
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July 1, 2015 recommended COLAs have been determined. Click title for more information. Learn More...
Date:
Jun 11, 2014
Categories: COLA
Funding for the Supplemental Cost of Living Adjustment (COLA) benefit currently being paid to approximately 600 City of San Diego members has been confirmed. The City Council’s approval of Mayor Faulconer’s FY 2015 budget extended funding of the Supplemental COLA benefit for one year. Funding for fiscal 2015 and beyond will be brought before the Council for approval on a year-by-year basis. Learn More...
Date:
May 09, 2014
Categories: COLA
A Cost of Living Adjustment (COLA) was approved by the SDCERS’ Board of Administration at its May 9, 2014 meeting. The COLA will be applied to the retirement benefits of eligible SDCERS retirees effective July 1, 2014. Learn More...
Date:
May 20, 2013
Categories: COLA
A Cost of Living Adjustment (COLA) was approved by the SDCERS’ Board of Administration at its May 17, 2013 meeting. The COLA will be applied to the retirement benefits of eligible SDCERS retirees effective July 1, 2013. Learn More...
The SDCERS Board of Administration has approved the annual Cost of Living Adjustment (COLA), effective July 1, 2012, to be applied to the retirement benefits of eligible SDCERS retirees. The COLA is also applied to survivor benefits.
For eligible retirees who retired prior to July 1, 2012, a COLA increase of 2% will be applied. Eligible 1981 Plan retirees will receive a 1.4% COLA increase. Special Safety Class retirees are not eligible for COLA increases. Survivors receiving a continuance receive the COLA of whichever group to which the deceased member belonged. Learn More...
Date:
Jul 01, 2009
Categories: COLA
A Cost of Living Adjustment (COLA) increase will be applied to the retirement benefits of eligible SDCERS retirees, effective July 1, 2009. Learn More...