A Cost of Living Adjustment (COLA) is provided by SFERS to help post-retirement income keep pace with inflation (the cost of living in the local area). Retired members may receive up to two COLAs from SFERS each year: a Basic and Supplemental COLA.
Retired members may receive an automatic adjustment to their monthly retirement benefit on July 1st of each year, payable to eligible members on the check dated July 31st. The Basic COLA benefit is calculated based on the gross amount of the retirement benefit payable on the preceding June 30th. When paid, retirees will receive an adjustment equal to the annual percentage increase in the local Consumer Price Index (CPI is a measurement of inflation) rounded to the nearest 1% (up to a maximum of 2%).
In years when the CPI increase is more than 2%, the increase above the maximum 2% is accumulated in a “COLA Bank” for those members eligible for the Basic COLA in that year. In years when the CPI increase is less than 2%, the Basic COLA can be paid entirely or in part (to eligible members) from the COLA Bank to bring the Basic COLA up to the maximum 2%.
The COLA Bank is only applicable to the Basic COLA.
Supplemental COLAs may be paid in addition to Basic COLAs following years when the Retirement Fund realizes sufficient excess investment earnings to pay for the Supplemental COLA. The supplemental COLA, when paid, is payable effective July 1st and can be paid in increments of 0.5%. When combined with the Basic COLA, the Supplemental COLA can increase the monthly retirement benefit up to a maximum of 3.5% over the previous June 30th gross retirement allowance.
When paid, the Supplemental COLA is paid in the check dated February 28th (or 29th) in the year following the July 1st effective date. For retired members who are eligible to receive the Supplemental COLA, the February check will include seven months of retroactive Supplemental COLA pay (July through January), plus the regular February allowance which includes the Supplemental COLA increase. The check dated March 31st will be the correct monthly allowance which includes any Basic and Supplemental COLAS that were effective July 1st of the prior year.