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.