Supplemental COLA Reserve Fund Continued for City Retirees

Date: Jul 12, 2013

 

Funding for the Supplemental Cost of Living Adjustment (COLA) benefit currently being paid to roughly 650 City members was confirmed on June 10. The City Council’s approval of Mayor Bob Filner’s FY 2014 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 ordinance is pending approval by the City Council following a first and second reading, which is expected to take place in July. If approved, the soonest effective date would be in August.
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% 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 2014. 
COLA-eligible retirees would have seen their annual retirement benefits diminished by 25-30%, 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;
Have 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% of the present value of your Base Retirement Benefit when combined with your Annual Supplemental Benefit (Thirteenth Check).
 




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