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.
The Supplemental COLA, which was established in 1998, increased the retirement allowance of members (and their survivors) who retired prior to July 1, 1982. Retirement allowances for this group were increased by an amount that as of July 1, 1998, raised benefits to the equivalent of 75 percent of purchasing power of the original retirement allowance.
To pay for this benefit, the San Diego City Council created a special Supplemental COLA Reserve account of $35 million, plus annual interest. However, the City specified in the Municipal Code that benefits could only be paid until the reserve was depleted. The reserve was projected to be depleted in October 2013, but the mayor’s budget approved by the Council this week provides funding for this benefit for all of fiscal 2015.
COLA-eligible retirees’ annual retirement benefits would be diminished by 25-30 percent, on average, without the continuance.
The Supplemental COLA is paid to members who meet the eligibility requirements and retired as a:
- General or Safety Member; or
- Special Class Safety Member receiving a fixed monthly retirement benefit; or
- A survivor of one of the above eligible retirees; or
- An industrial disability retiree who had less than 10 years of service; or
- A survivor of a Special Safety retiree who had a fluctuation monthly benefit; or
- A survivor who receives a Special Death Benefit
To be eligible for the benefit, eligible retirees and their survivors receive the Supplemental COLA if the retiree meets all of the following requirements:
- Retired on or before June 30, 1982;
- Has at least 10 years of creditable service at retirement; and
- Received a retirement allowance on July 1, 1988 which as determined by the System’s Actuary, was at a level less that the equivalent of 75 percent of the present value of the retiree’s Base Retirement Benefit when combined with the retiree’s Annual Supplemental Benefit (Thirteenth Check).
San Diego Unified Port District (UPD) retirees who participated in the City’s plan are also eligible for the Supplemental COLA if they meet the eligibility requirements stated above. The UPD has decided to continue to transfer funds to SDCERS each year to pay the Supplemental COLA going forward.