Also see COLA Percentages by Plan
A COLA is an adjustment to your monthly benefit after you retire. The type of COLA you are eligible for depends on your retirement system and plan.
All retirement plans we administer, with the exception of the Judges Retirement Fund, provide one or more COLAs.
|COLA Type||COLA Applies to|
LEOFF Plans 1 and 2
PERS Plans 2 and 3
SERS Plans 2 and 3
TRS Plans 2 and 3
WSPRS Plans 1 and 2
Removed in May 2011
|TRS Plan 1
PERS Plan 1
|Minimum COLA||TRS Plan 1
PERS Plan 1
|Adjusted Minimum Benefit||TRS Plan 1
PERS Plan 1
|Age 65 COLA||TRS Plan 1
PERS Plan 1
|Optional COLA||TRS Plan 1
PERS Plan 1
A Base COLA is applied to your benefit after you have been retired for one full year. The COLA adjusts the benefit based on the change, if any, in the Consumer Price Index (CPI) for the Seattle-Tacoma-Bremerton area. The only exception is the Judicial Retirement System, which bases its COLA on the CPI for U.S. cities. Here are the details:
|Base COLA Plans|
|All Plan 2
All Plan 3
WSPRS Plan 11
|LEOFF Plan 1|
|Base COLA Eligibility||You must have been retired for at least one year by July 1. There is no age requirement.||You must have been retired for at least one year by April 1. There is no age requirement.|
|Base COLA is applied||July 1||April 1|
|Base COLA Maximum||The COLA is limited to a maximum benefit adjustment of 3% and includes COLA Banking.||LEOFF Plan 1 Base COLA does not have a maximum and does not include COLA Banking. Based on your retirement date, you may qualify for a first-year COLA adjustment.|
$1,500 (monthly benefit) X .78% (July 1, 2011 COLA2) = $11.70 (increase to benefit for a new monthly benefit of $1,511.70
Retirees do not apply for this benefit. Learn more about the CPI indexes at the Office of the State Actuary.
From 1995-2010 eligible PERS Plan 1 and TRS Plan 1 retirees received an Annual Increase each July. Though it was referred to as a COLA, the Annual Increase was based on years of service, not changes in the cost of living.
How it worked: to be eligible you must have been retired for at least one year by July 1 and reached age 66 by Dec. 31 of that same year. The Annual Increase was calculated by multiplying the retiree's years of service by the Uniform COLA Amount provided by the Office of the State Actuary.
Provisions in law will continue Annual Increases for PERS and TRS Plan 1 retirees who currently receive a benefit that falls below a minimum level. This applies to two groups of retirees:
The original Minimum Benefit was first introduced in the 1960s to ensure a minimum benefit level for PERS Plan 1 and TRS Plan 1 retirees. The Annual Increase was added to the Minimum Benefit in 1995 to provide a uniform benefit increase each year without legislative action. Those eligible for these benefits generally received lower compensation while working and/or did not have many years of service. Retirees do not apply for this benefit. The Minimum Benefit and the Annual Increase have no age requirements, other than eligibility for retirement; and you don't have to be retired for a year. The Minimum Benefit and Annual Increase are independent from any other COLA.
If you qualify at retirement, you will receive the Minimum Benefit and in the years that follow the Annual Increase will be applied to your pension amount. If you qualify after retirement, you won't receive the Minimum Benefit; instead, the Annual Increase will be added to your current pension amount.
Eligibility at retirement is determined by comparing your initial benefit (minus specific adjustments) against the current minimum amount. If your benefit is under the threshold, you receive the Minimum Benefit and the Annual Increases automatically at retirement.
Sam is a 60-year-old PERS Plan 1 member, who retired July 1, 2011. Sam has 10 years of service and elected to provide an Option 2 survivor benefit to his wife Sally who is 4 years younger. In calculating Sam's benefit DRS compared his initial benefit using the 2% formula with the minimum benefit formula. Whichever is greater is the formula that will be used to calculate Sam's benefit. For example:
Initial Benefit using the 2% Formula:
.02 X 10 (Years of Service) X $1,500 (Average Final Compensation) X .862 (Option 2 factor based on spouse age) = $258.60 (monthly benefit)
Minimum Benefit Formula:
10 (Years of Service) X $44.57 (2011 Minimum Benefit Amount) X .862 (Option 2 factor based on spouse age) = $384.19 (monthly minimum benefit amount)
In this example Sam's benefit calculation falls under the minimum amount formula therefore, Sam received $384.19 as a monthly benefit in July 2011 and the Annual Increase every year after.
Retirees are evaluated annually to determine if their current benefit (minus specific adjustments) has fallen below the current minimum amount. If your benefit falls below the threshold, the Annual Increase will be added to your current pension amount.
When Jack retired July 1, 2010 with 10 years of service, and an Average Final Compensation of $2,200, he elected to provide an Option 2 survivor factor to his wife who is 4 years younger. To calculate Jack's benefit, DRS compared his initial benefit, using the 2% formula with the minimum benefit formula.
2010 Initial Benefit using the 2% Formula:
.02 X 10 (Years of Service) X $2,200 X.862 (Option 2 factor based on spouse age) = $379.28 (monthly benefit)
2010 Minimum Benefit Formula:
10 (Years of Service) X $42.63 (2010 Minimum Benefit Amount) X .862 (Option 2 factor based on spouse age) = $367.47 (monthly minimum benefit amount in 2010)
Since Jack received a higher benefit under the 2% formula, he did not qualify for the Minimum Benefit at his retirement.
But in July 2011, the minimum benefit amount increased to $44.57 per year of service credit and Jack did not receive any other cost-of-living adjustments. So Jack's current benefit of $379.28 was compared again to the minimum benefit formula, this time using the 2011 minimum benefit amount:
2011 Minimum Benefit Formula:
10 (Years of Service) X $44.57 (2011 Minimum Benefit Amount) X .862 (Option 2 factor based on spouse age) = $384.19 (monthly minimum benefit amount in 2011)
Jack's initial benefit now falls under his 2011 minimum benefit threshold of $384.19, so the 2011 Annual Increase of $1.94 per year of service credit, is added to his current pension benefit:
New Monthly Benefit
Annual Increase = 10 (Years of Service) X $1.94 (2011 Annual Increase Amount) = $19.40
$19.40 (Annual Increase) + $379.28 (current pension benefit) = Jack's $398.68 new monthly benefit
Legislation passed in 2004 and expanded in 2006 and 2011 establishes a minimum benefit level for qualifying PERS Plan 1 and TRS Plan 1 retirees. It is only available to retirees who:
A retiree who qualifies for the adjusted minimum benefit receives an automatic 3% increase each July. Retirees do not apply for this benefit. Learn more about qualifying requirements at Adjusted Minimum Benefit FAQ.
The Age 65 COLA legislation was enacted in July of 1989 and was replaced by the Uniform COLA in 1995. PERS Plan 1 and TRS Plan 1 members, who lost 40% of the purchasing power possessed at age 65, were eligible. Those previously covered under the Age 65 COLA were given the choice to stay with the Age 65 COLA instead of being converted to the Uniform COLA. Only those retirees who chose this COLA in 1995 are eligible. This COLA is not an option for new retirees.
The Optional COLA has been available to PERS Plan 1 and TRS Plan 1 members since 1987. It is optional at the time of retirement. Eligible members can choose to reduce their initial retirement benefit in exchange for an annual cost-of-living adjustment. The Optional COLA has no age requirement and is limited to a maximum of 3% of your monthly benefit. The Consumer Price Index for Seattle-Tacoma-Bremerton (CPI-W) is used to calculate the Optional COLA.
The Optional COLA and Base COLA (except for the LEOFF Plan 1 Base COLA) include a 3% maximum COLA increase for the year, combined with a feature called COLA banking. Here's how it works.
In years where the CPI increase is more than the 3% maximum, the difference is banked for future years. The banked percentage is used in years when the COLA is less than the maximum. For example, let's say in year one the CPI was 6.48%, and you received a 3% increase and the remaining 3.48% is banked for you. In year two the CPI was negative .27%. So in July of year two you used that banked amount and ended with a positive 3% COLA, and still had a CPI increase in the bank for future years.
There is another time when COLA banking is useful. There is a period between your retirement date and when your COLA begins. Using the example from above, let's say you retired in August of year one. You're not eligible to receive the COLA in July of year two, so the entire 6.48% was banked. In July of year three, when the CPI was negative .27%, you would receive a full 3% COLA, and still have a CPI increase in the bank for future years.
The Consumer Price Index (CPI) is an index of inflation based on the change in prices of goods and services purchased by urban households. Some of our Cost of Living Adjustments (COLAs) are based on CPIs.
CPIs are maintained by the United States Bureau of Labor Statistics. If you're curious about what types of goods and services are included, or how the calculation is performed, learn more at the Bureau of Labor Statistics Consumer Price Index Frequently Asked Questions.
Separate CPIs are produced for regional urban areas and the nation as a whole. Indexes are further specified "all urban consumers" (CPI-U), and "urban wage-earners and clerical workers" (CPI-W).
The Base COLA, Age 65 COLA and Optional COLA are legislatively mandated to use the regional Seattle-Tacoma-Bremerton (CPI-W) with only one exception: the Judicial Retirement System is legislatively mandated to use the U.S. Cities (CPI-W).
If you have any questions about COLAs, please contact us for more information.
1Before July 1, 2001, WSPRS Plan 1 had an annual 2% post-retirement increase.
2This COLA increase percentage is for a member who retired between Jan. 1, 2010, and July 1, 2010 (or for a LEOFF 1 member who retired between Jan. 1, 2010, and April 1, 2010). This percentage could vary depending on when you retire.