A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2025 COLA percentages by retirement date and plan. When will I receive the 2025 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked amounts in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? If the legislature changes the current law, most of these retirees could receive a one-time increase in July. There are several bills that could affect this decision. You can track all bills here.

Member contribution rates have been approved by the legislature and signed by the governor for the 2025-2027 biennium. Rates for most plans are effective on July 1, 2025. Rates for TRS and SERS will go into effect on Sept. 1, 2025. 2025-2027 member contribution rates [table id=402 /] Member and employer contribution rates for Washington’s retirement systems are established every two years. Rates for most retirement plans are approved by the Washington State Pension Funding Council; rates for the Law Enforcement Officers’ and Fire Fighters’ (LEOFF) Retirement System Plan 2 are approved by the LEOFF Plan 2 Retirement Board. The rate your employer pays isn’t reflected in your online account. However, you can see what employers pay overall, including historical data, on the employer website. For more information, see Member Contribution Rates.

If you’re getting ready to retire, or considering leaving public service, there’s a good chance you have a balance of unused leave. You may have the option to cash-out this leave, but you'll still have to pay the taxes on the extra income. Luckily, some employers allow you to roll over leave into your DCP account or towards future health care costs. Your employer must already be participating in DCP. Talk to your employer about what is available. See the list of employers who offer DCP. Sick leave could be transferable to a VEBA* account for future health care expenses or cashed-out into your DCP account. Vacation leave could be cashed-out to DCP. You can choose DCP Roth, pretax, or both for your contributions. But you can’t put in more than the IRS will allow. For 2025, you can contribute up to $23,500 annually to your DCP account ($31,000 if you’re age 50 or older). You don’t have to contribute the full balance. You could apply some of the leave to DCP and cash-out the rest. *Note: If your participation in VEBA (Voluntary Employees’ Beneficiary Association) is funded by sick leave cash-outs, those funds may not be directed to DCP. Please check with your payroll or human resources department to verify VEBA participation and how it is funded. Tax advantages If you have a large balance of leave, taking it as a cash payout could be enough to put you in a different tax bracket. So, putting that money into a tax-deferred account like DCP where it can be invested could be a great option. Consult a tax advisor for information about federal income taxes on your contribution. What else should I consider? Depending on your financial situation, you may not need the money right now. Some people like the option of being able to set the money aside so they won’t be tempted to spend it. They might think: “if I have that money in my bank account, I might waste it. So, I want to put the money in an account where it’s going to be invested for my future.” How to contribute your leave to DCP Complete the following steps at least 30 days before your leave cash-out is paid. First, you’ll need this information from your employer’s payroll office: The dollar amount of your leave cash-out eligible for DCP deferral (after applicable withholdings such as Social Security and Medicare). Be sure to deduct federal income tax for Roth contributions and confirm the dollar amount before you decide to contribute all or a portion of your leave to DCP. The date the leave cash-out will be paid. Next, complete the DCP Lump Sum or Leave Cash-Out Deferral form and submit it to DRS. The amount you put on this form will be withheld. Confirm the amount with your employer so you have enough leave to cover your contribution request. The form can take 10 business days to process. You and your employer will receive a confirmation email when the deferral is set up. To update the deferral amount, submit a new form. Requests or changes made less than 30 days before the pay date may not be processed in time. Prefer to listen? Tune in to the podcast episode In this episode, our guest Malia shares insights on transferring leave balances into the Deferred Compensation Program (DCP), offering potential tax savings and investment opportunities.

At the end of July, state employees under PERS may notice a 3% increase to their paycheck. This increase is thanks to legislation that passed in April 2025 and is intended to help you with the cost of inflation. One of the best things about getting a paycheck increase is that it gives you more flexibility with your budget. Use the extra money to:  increase your DCP contributions for retirement pay off credit card debt save for a big vacation open an account or add to your child’s 529 college savings fund No matter how you decide to use the extra funds, setting aside a small amount of $50 or $100 to an account every month can add up overtime and help you achieve any goal. Consider a percentage increase for your DCP contributions If you could get $100 with $20, would you? That’s basically what happens when you invest your money. On average, the global stock market has grown at a rate of 10% per year over the last 100 years. Which means investments have doubled every 7-10 years. So, the money you put in DCP today has the potential to grow significantly by the time you retire. The earlier you invest, the more time your money has to multiply. Example: if you’re contributing 5% now, increase it to 6%. How to change your contributions: Log in and select your DCP account At the Voya main menu select Accounts and then Washington State DCP Select Contributions & Savings, then Manage Contributions The page will show what your current contribution rate is. Select Update My Contributions to make the change. Log into your account Don’t have a DCP account? It only takes 3 minutes to enroll online. Got a few minutes? Listen to the DCP podcast episode In episode 11, you’ll find out how DCP can help you save for retirement. This short episode explains how taxes are applied, the importance of contributing with a percentage of your income and tools for maximizing your investment. You can also read the transcript of the episode.