Eligible Benefit Recipients to Receive 5% Cost-of-Living Adjustment Effective January 1, 2023
At the October 24, 2022 Board of Trustees meeting, the Board voted to provide a 5% cost-of-living adjustment (COLA) for eligible benefit recipients effective January 1, 2023. The total increase in the CPI-U for the 12 months in fiscal year 2022 (July 1, 2021 to June 30, 2022) was 9.06%. Missouri law states that a 5% COLA must be granted when the CPI-U equals or exceeds 5%. Missouri law also states that 5% is the maximum COLA allowed, therefore 5% is the highest COLA the board can provide in any given year.
This is the second year in a row that eligible benefit recipients will receive this maximum increase. A 5% COLA has only been given three times in the history of the Systems, with a 5% COLA also provided in 2009.
"The ability to provide some relief during this extended period of high inflation pleases the Board," said Board Chair Jason Steliga. "We understand the challenges that many systems across the nation are facing, and we know how fortunate we are to be able to provide these COLA increases to our retirees."
How COLAs are granted varies from system to system across the nation. Some are determined on an ad-hoc basis and rarely receive a COLA; some are set at a fixed rate and others vary based on the CPI or other factors. COLAs are a significant expense to all defined benefit pension plans and because of this, COLAs have been an area of great discussion and change in recent years. Retirement systems are evaluating the financial impact of COLAs on their plans, while still supporting the financial stability of their retirees. No matter the state or the retirement system, granting a 5% COLA is rare, as most plans have lower maximum COLA amounts.
PSRS/PEERS benefit recipients who are eligible for a COLA will receive specific information regarding the impact on their benefits as part of their annual Benefit Statement, available in January 2023.